UNITED STATES
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, 2004,
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

|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.)
|--------------------------------------------------------------------- | ---------------------------------------------------------- | ----------------------------------------------
|                                                                      | 22 Victoria Street
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)     

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

Indicate by check mark whether the registrant is an accelerated filer (under Rule 12b-2 of the Exchange
Act). Yes ý    No

As of July 31, 2004, 31,790,601 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 11,943,901 Class A shares and 2,459,399 Class B shares owned by Sea Containers Ltd.



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PART IFINANCIAL INFORMATION

ITEM 1. Financial Statements

Orient-Express Hotels Ltd. and Subsidiaries    Consolidated Balance Sheets (unaudited)

|                                                                                        |                                                                             | June 30,
2004     |           | December 31,
2003 |    
|--------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | ----------------- | --------- | ----------------- | ---
|
|Assets                                                                                  |                                                                             |                   |           |                   |    
|Cash and cash equivalents                                                               |                                                                             | $                 | 58,032    |                   | $  
|Accounts receivable, net of allowances of $962 and $976                                 |                                                                             |                   | 36,909    |                   |    
|Due from related parties                                                                |                                                                             |                   | 11,062    |                   |    
|Prepaid expenses and other                                                              |                                                                             |                   | 14,638    |                   |    
|Inventories                                                                             |                                                                             |                   | 27,053    |                   |    
|                                                                                        |                                                                             |                   |           |                   |    
|Total current assets                                                                    |                                                                             |                   | 147,694   |                   |    
|Property, plant and equipment, net of accumulated depreciation of $143,541 and $127,772 |                                                                             |                   | 829,756   |                   |    
|Investments                                                                             |                                                                             |                   | 151,799   |                   |    
|Goodwill                                                                                |                                                                             |                   | 29,529    |                   |    
|Other assets                                                                            |                                                                             |                   | 16,686    |                   |    
|                                                                                        |                                                                             |                   |           |                   |    
|                                                                                        |                                                                             | $                 | 1,175,464 |                   | $  
|                                                                                        |                                                                             |                   |           |                   |    
|Liabilities and Shareholders' Equity                                                    |                                                                             |                   |           |                   |    
|Working capital facilities                                                              |                                                                             | $                 | 52,763    |                   | $  
|Accounts payable                                                                        |                                                                             |                   | 24,855    |                   |    
|Due to related parties                                                                  |                                                                             |                   | 5,474     |                   |    
|Accrued liabilities                                                                     |                                                                             |                   | 42,351    |                   |    
|Deferred revenue                                                                        |                                                                             |                   | 19,583    |                   |    
|Current portion of long-term debt and capital leases                                    |                                                                             |                   | 65,904    |                   |    
|                                                                                        |                                                                             |                   |           |                   |    
|Total current liabilities                                                               |                                                                             |                   | 210,930   |                   |    
|Long-term debt and obligations under capital leases                                     |                                                                             |                   | 440,167   |                   |    
|Deferred income taxes                                                                   |                                                                             |                   | 1,908     |                   |    
|                                                                                        |                                                                             |                   |           |                   |    
|                                                                                        |                                                                             |                   | 653,005   |                   |    
|                                                                                        |                                                                             |                   |           |                   |    
|Minority interest                                                                       |                                                                             |                   | 4,085     |                   |    
|                                                                                        |                                                                             |                   |           |                   |    
|Shareholders' equity:                                                                   |                                                                             |                   |           |                   |    
|                                                                                        | Preferred shares $0.01 par value (30,000,000 shares authorized, issued nil) |                   |           |                  |    
|                                                                                        | Class A common shares $0.01 par value (120,000,000 shares authorized):      |                   |           |                   |    
|                                                                                        |                                                                             | Issued31,790,601 |           |                   | 318
|                                                                                        | Class B common shares $0.01 par value (120,000,000 shares authorized):      |                   |           |                   |    
|                                                                                        |                                                                             | Issued20,503,877 |           |                   | 205
|Additional paid-in capital                                                              |                                                                             |                   | 278,821   |                   |    
|Retained earnings                                                                       |                                                                             |                   | 259,138   |                   |    
|Accumulated other comprehensive loss, net of income taxes                               |                                                                             |                   | (19,927   | )                 |    
|Less: reduction due to Class B common shares owned by a subsidiary 18,044,478          |                                                                             |                   | (181      | )                 |    
|                                                                                        |                                                                             |                   |           |                   |    
|Total shareholders' equity                                                              |                                                                             |                   | 518,374   |                   |    
|                                                                                        |                                                                             |                   |           |                   |    
|Commitments and contingencies                                                           |                                                                             |                   |          |                   |    
|                                                                                        |                                                                             |                   |           |                   |    
|                                                                                        |                                                                             | $                 | 1,175,464 |                   | $  
|                                                                                        |                                                                             |                   |           |                   |    

See notes to consolidated financial statements.

2

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Orient-Express Hotels Ltd. and Subsidiaries    Statements of Consolidated Operations (unaudited)

|                                                       |                                     | Three months ended June 30, |        
|------------------------------------------------------ | ----------------------------------- | --------------------------- | -------
|
|
|Revenue                                                |                                     | $                           | 100,536
|                                                       |                                     |                             |        
|Expenses:                                              |                                     |                             |        
|                                                       | Depreciation and amortization       |                             |        
|                                                       | Operating                           |                             |        
|                                                       | Selling, general and administrative |                             |        
|                                                       |                                     |                             |        
|Total expenses                                         |                                     |                             | 84,007 
|                                                       |                                     |                             |        
|Earnings from operations before net finance costs      |                                     |                             | 16,529 
|Interest expense, net                                  |                                     |                             | (4,906 
|Interest and related income                            |                                     |                             | 30     
|                                                       |                                     |                             |        
|Net finance costs                                      |                                     |                             | (4,876 
|                                                       |                                     |                             |        
|Earnings before income taxes                           |                                     |                             | 11,653 
|Provision for income taxes                             |                                     |                             | 2,375  
|                                                       |                                     |                             |        
|Earnings before earnings from unconsolidated companies |                                     |                             | 9,278  
|Earnings from unconsolidated companies net of tax      |                                     |                             | 3,633  
|                                                       |                                     |                             |        
|Net earnings on class A and class B common shares      |                                     | $                           | 12,911 
|                                                       |                                     |                             |        
|Net earnings per class A and class B common share:     |                                     |                             |        
|                                                       | Basic and diluted                   |                             | $      
|                                                       |                                     |                             |        
|Dividends per class A and class B common share         |                                     | $                           | 0.025  
|                                                       |                                     |                             |        

See
notes to consolidated financial statements, including Note 1(j) regarding reclassification of earnings from unconsolidated companies.

3

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Orient-Express Hotels Ltd. and Subsidiaries    Statements of Consolidated Operations (unaudited)

|                                                       |                                     | Six months ended June 30, |        
|------------------------------------------------------ | ----------------------------------- | ------------------------- | -------
|
|
|Revenue                                                |                                     | $                         | 164,370
|                                                       |                                     |                           |        
|Expenses:                                              |                                     |                           |        
|                                                       | Depreciation and amortization       |                           |        
|                                                       | Operating                           |                           |        
|                                                       | Selling, general and administrative |                           |        
|                                                       |                                     |                           |        
|Total expenses                                         |                                     |                           | 150,774
|                                                       |                                     |                           |        
|Earnings from operations before net finance costs      |                                     |                           | 13,596 
|Interest expense, net                                  |                                     |                           | (9,950 
|Interest and related income                            |                                     |                           | 94     
|                                                       |                                     |                           |        
|Net finance costs                                      |                                     |                           | (9,856 
|                                                       |                                     |                           |        
|Earnings before income taxes                           |                                     |                           | 3,740  
|Provision for income taxes                             |                                     |                           | 1,363  
|                                                       |                                     |                           |        
|Earnings before earnings from unconsolidated companies |                                     |                           | 2,377  
|Earnings from unconsolidated companies net of tax      |                                     |                           | 5,928  
|                                                       |                                     |                           |        
|Net earnings on class A and class B common shares      |                                     | $                         | 8,305  
|                                                       |                                     |                           |        
|Net earnings per class A and class B common share:     |                                     |                           |        
|                                                       | Basic and diluted                   |                           | $      
|                                                       |                                     |                           |        
|Dividends per class A and class B common share         |                                     | $                         | 0.05   
|                                                       |                                     |                           |        

See
notes to consolidated financial statements, including Note 1(j) regarding reclassification of earnings from unconsolidated companies.

4

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Orient-Express Hotels Ltd. and Subsidiaries    Statements of Consolidated Cash Flows (unaudited)

|                                                             |                                                                                     | Six months ended June 30,                                                         |        
|------------------------------------------------------------ | ----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | -------
|
|
|Cash flows from operating activities:                        |                                                                                     |                                                                                   |        
|                                                             | Net earnings                                                                        |                                                                                   | $      
|                                                             |                                                                                     |                                                                                   |        
|                                                             | Adjustments to reconcile net earnings to net cash provided by operating activities: |                                                                                   |        
|                                                             |                                                                                     | Depreciation and amortization                                                     |        
|                                                             |                                                                                     | Undistributed earnings of affiliates                                              |        
|                                                             |                                                                                     | Other non-cash items                                                              |        
|                                                             |                                                                                     | Change in assets and liabilities net of effects from acquisition of subsidiaries: |        
|                                                             |                                                                                     | Increase in receivables, prepaid expenses and other                               |        
|                                                             |                                                                                     | Increase in inventories                                                           |        
|                                                             |                                                                                     | Increase in payables, accrued liabilities, deferred revenue and minority interest |        
|                                                             |                                                                                     |                                                                                   |        
|Total adjustments                                            |                                                                                     |                                                                                   | 14,392 
|                                                             |                                                                                     |                                                                                   |        
|Net cash provided by operating activities                    |                                                                                     |                                                                                   | 22,697 
|                                                             |                                                                                     |                                                                                   |        
|Cash flows from investing activities:                        |                                                                                     |                                                                                   |        
|                                                             | Capital expenditures                                                                |                                                                                   |        
|                                                             | Acquisitions and investments, net of cash acquired                                  |                                                                                   |        
|                                                             | Proceeds from sale of fixed assets and other                                        |                                                                                   |        
|                                                             |                                                                                     |                                                                                   |        
|Net cash (used in) investing activities                      |                                                                                     |                                                                                   | (39,991
|                                                             |                                                                                     |                                                                                   |        
|Cash flows from financing activities:                        |                                                                                     |                                                                                   |        
|                                                             | Net proceeds from working capital facilities and redrawable loans                   |                                                                                   |        
|                                                             | Issuance of long-term debt                                                          |                                                                                   |        
|                                                             | Principal payments under long-term debt                                             |                                                                                   |        
|                                                             | Payment of common share dividends                                                   |                                                                                   |        
|                                                             |                                                                                     |                                                                                   |        
|Net cash (used in)/provided by financing activities          |                                                                                     |                                                                                   | (5,652 
|                                                             |                                                                                     |                                                                                   |        
|Effect of exchange rate changes on cash and cash equivalents |                                                                                     |                                                                                   | (369   
|                                                             |                                                                                     |                                                                                   |        
|Net decrease in cash and cash equivalents                    |                                                                                     |                                                                                   | (23,315
|Cash and cash equivalents at beginning of period             |                                                                                     |                                                                                   | 81,347 
|                                                             |                                                                                     |                                                                                   |        
|Cash and cash equivalents at end of period                   |                                                                                     | $                                                                                 | 58,032 
|                                                             |                                                                                     |                                                                                   |        

See
notes to consolidated financial statements.

5

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Orient-Express Hotels Ltd. and Subsidiaries    Statement of Changes in Consolidated Shareholders' Equity and Comprehensive Loss (unaudited)

|(Dollars in thousands)     |                                                          | Preferred
Shares
At Par
Value |   | Class A
Common
Shares
at Par
Value |   | Class B
Common
Shares
at Par
Value |   | Additional
Paid-In
Capital |     | Retained
Earnings |   | Accumulated
Other
Comprehensive
Loss |   | Common
Shares
Owned by
Subsidiary |         | Total
Comprehensive
Income/(Loss) |  
|-------------------------- | -------------------------------------------------------- | ----------------------------- | - | ---------------------------------- | - | ---------------------------------- | - | -------------------------- | --- | ----------------- | - | ------------------------------------ | - | --------------------------------- | ------- | --------------------------------- | -
|Balance, January 1, 2004   |                                                          | $                             |  |                                    | $ | 318                                |   | $                          | 205 |                   | $ | 278,821                              |   | $                                 | 252,484 |                                   | $
|Dividends on common shares |                                                          |                               |  |                                    |   |                                   |   |                            |    |                   |   |                                     |   |                                   | (1,651  | )                                 |  
|Comprehensive income:      |                                                          |                               |   |                                    |   |                                    |   |                            |     |                   |   |                                      |   |                                   |         |                                   |  
|                           | Net earnings                                             |                               |   |                                   |   |                                    |  |                            |     |                  |   |                                      |  |                                   |         | 8,305                             |  
|                           | Foreign currency translation adjustments                 |                               |   |                                   |   |                                    |  |                            |     |                  |   |                                      |  |                                   |         |                                  |  
|                           | Change in fair value of derivative financial instruments |                               |   |                                   |   |                                    |  |                            |     |                  |   |                                      |  |                                   |         |                                  |  
|                           |                                                          |                               |   |                                    |   |                                    |   |                            |     |                   |   |                                      |   |                                   |         |                                   |  
|                           |                                                          |                               |   |                                    |   |                                    |   |                            |     |                   |   |                                      |   |                                   |         |                                   |  
|                           |                                                          |                               |   |                                    |   |                                    |   |                            |     |                   |   |                                      |   |                                   |         |                                   |  
|Balance, June 30, 2004     |                                                          | $                             |  |                                    | $ | 318                                |   | $                          | 205 |                   | $ | 278,821                              |   | $                                 | 259,138 |                                   | $
|                           |                                                          |                               |   |                                    |   |                                    |   |                            |     |                   |   |                                      |   |                                   |         |                                   |  

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

In this report Orient-Express Hotels Ltd. is referred to as the "Company", and the Company and its subsidiaries are referred to collectively as "OEH". At
June 30, 2004, Sea Containers Ltd., a Bermuda company ("SCL"), owned 42% of the equity shares in the Company.

(a) Accounting policies

For a description of significant accounting policies and basis of presentation, see Notes 1, 4 and 15 to the consolidated financial statements in the Company's
2003 Form 10-K annual report. As of June 30, 2004, these significant accounting policies have not changed from December 2003. "SFAS" means Statement of Financial
Accounting Standards and "FIN" means an accounting interpretation, both of the U.S. Financial Accounting Standards Board.

The
consolidated financial statements are unaudited and have been prepared following the rules and regulations of the U.S. Securities and Exchange Commission.

In
the opinion of management, all adjustments necessary for a fair statement of the results of operations for the six and three months ended June 30, 2004 and 2003, which are all
of a normal recurring nature, have been reflected in the information provided. Due to the seasonal nature of OEH's business, operating results for the interim period are not necessarily indicative of
a full year's operating results.

(b) Earnings per share

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

Six months ended
June 30,2004

2003Basic

34,250

30,800Effect of dilution

109

Diluted

34,359

30,800


Three months ended
June 30,2004

2003Basic

34,250

30,800Effect of dilution

89

Diluted

34,339

30,800


Stock
options with exercise prices greater than the average market price of the common shares have been excluded from the computations of diluted weighted average shares outstanding.
There were approximately 33,701 and 248,444 of these options for the six months ended June 30, 2004 and 2003, respectively, and approximately 47,442 and 198,158 of these options for the three
months ended June 30, 2004 and 2003, respectively.

7

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(c) Derivative financial instruments

For the six months ended June 30, 2004 and 2003, the change in the fair market value of derivative instruments resulted in a charge of $52,000 and
$147,000, respectively, to other comprehensive loss.

(d) Goodwill

OEH's goodwill consists of $700,000 related to the tourist trains and cruises reporting segment and $28,829,000 related to the hotels and restaurants reporting
segment. There were no changes in the carrying amount of goodwill for the six month period ended June 30, 2004.

(e) Stock-based compensation

OEH's compensation cost for share options is measured as the excess, if any, of the quoted market price of the Company's shares at the date of the grant over the
amount an employee must pay to acquire the shares, in accordance with the intrinsic value method under Accounting Principles Board Opinion No. 25. If compensation cost for the Company's stock
option plan had been determined based

8

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on
fair values as of the date of grant, OEH's net earnings and earnings per share would have been reported as follows (dollars in thousands, except per share amounts):

Six months ended
June 30,2004

2003Net earnings on common shares:As reported

$
8,305

$
6,811Deduct: Total stock-based employee compensation expense determined under fair value based method, net of related tax


(374
)

(474
)Pro forma

$
7,931

$
6,337Basic and diluted earnings per share:As reported:Basic and diluted

$
0.24

$
0.22Pro forma:Basic and diluted

$
0.23

$
0.21


Three months ended
June 30,2004

2003Net earnings on common shares:As reported

$
12,911

$
9,419Deduct: Total stock-based employee compensation expense determined under fair value based method, net of related tax


(187
)

(237
)Pro forma

$
12,724

$
9,182Basic and diluted earnings per share:As reported:Basic and diluted

$
0.38

$
0.31Pro forma:Basic and diluted

$
0.37

$
0.30


The
pro forma figures in the preceding tables may not be representative of pro forma amounts in future years.

(f) Dividends

On March 19 and June 18, 2004, the Company declared a quarterly dividend of $0.025 per common share.

9

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(g) Pensions

Components of net periodic pension benefit cost were as follows (dollars in thousands):

Six months ended
June 30,2004

2003Service cost

$
413

$
255Interest cost


192


173Expected return on plan assets


(218
)

(134
)Amortization of prior service cost





5Amortization of net loss


68


40Net periodic benefit cost

$
455

$
339


Three months ended
June 30,2004

2003Service cost

$
205

$
127Interest cost


95


87Expected return on plan assets


(108
)

(67
)Amortization of prior service cost





3Amortization of net loss


33


20Net periodic benefit cost

$
225

$
170


As
reported in Note 7 to the financial statements in the Company's 2003 Form 10-K annual report, OEH expected to contribute $954,000 to its pension plans in
2004. As of June 30, 2004, $393,000 of contributions have been made. OEH anticipates contributing an additional $486,000 to fund its pension plans in 2004 for a total of $879,000.

(h) Earnings from unconsolidated companies

Earnings from unconsolidated companies are presented net of tax and include OEH's share of the net earnings of its equity investments as well as interest income
related to loans and advances to the equity investees amounting to $3,949,000 and $3,054,000 for the six months ended June 30, 2004 and 2003, respectively and $2,020,000 and $1,561,000 for the
three months ended June 30, 2004 and 2003, respectively.

(i) Recent accounting pronouncements

In January 2003, the Financial Accounting Standards Board issued FIN No. 46 "Consolidation of Variable Interest Entities", as amended by FIN
No. 46R which applied immediately to variable interest entities created after January 31, 2003, and with respect to variable interest entities held before February 1, 2003,
applied beginning with OEH's quarter ended March 31, 2004. OEH has evaluated all of its existing joint-venture agreements, and has determined that none of its joint ventures is within the scope
of FIN No. 46R. The adoption of FIN No. 46R had no impact on OEH.

10

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(j) Reclassifications

Certain items in 2003 have been reclassified to conform to the 2004 presentation. Earnings from unconsolidated companies are now presented below earnings/(losses)
from operations before net finance costs.

2. Acquisitions and investments

On May 25, 2004, OEH acquired a 50% interest in a luxury French canal and river cruise business called Afloat in France. As part of this investment OEH
also acquired the five canal barges operated in the business. The total investment was $3,000,000 paid in cash.

On
February 2, 2004, OEH entered into an agreement with the Pansea Hotel group, the owner of five deluxe hotels in Southeast Asia. Under this agreement, OEH is to provide a
maximum of $8,000,000 in loans to the hotel holding company which are convertible after three years into approximately 25% of the holding company's shares. As of June 30, 2004, OEH had provided
$2,125,000 in loans to Pansea which is recorded in other assets. In addition, OEH paid $1,400,000 which is recorded in other assets for options exercisable after three to five years to acquire all of
the holding company's shares, and the existing shareholders have the right to sell their shares to OEH after five years. OEH is not managing the hotels but is marketing them along with its other
properties.

On
April 25, 2003, OEH acquired a 50% interest in the Hotel Ritz in Madrid, Spain through a 50/50 joint venture with a Spanish real estate investment company. The purchase price
was $135,000,000, and each joint venture partner contributed $22,000,000 with the balance financed by loans. Subsidiaries of the Company are obligated on $27,000,000 of these loans until the
completion of various legal procedures in Spain, when the debt is expected to become entirely non-recourse to OEH. In addition to its interest in the hotel, OEH acquired the exclusive
long-term management contract of the hotel. This investment is accounted for under the equity method of accounting.

11

---



Summarized
financial data for OEH's unconsolidated companies for the periods during which the investments were held by OEH are as follows (dollars in thousands):

June 30,
2004

December 31,
2003Current assets

$
47,540

$
42,172Property, plant and equipment, net


276,559


279,298Other assets


5,442


4,472Total assets

$
329,541

$
325,942Current liabilities

$
45,270

$
43,538Long-term debt


141,284


144,251Other liabilities


76,787


71,351Total shareholders'equity


66,200


66,802Total liabilities and shareholders' equity

$
329,541

$
325,942


Six months ended June 30,2004

2003Revenue

$
65,257

$
44,180Earnings from operations before net finance costs

$
9,610

$
4,894Net earnings/(losses)

$
741

$
(1,560
)


3. Property, plant and equipment

The major classes of property, plant and equipment are as follows (dollars in thousands):

June 30,
2004

December 31,
2003Freehold and leased land and buildings

$
688,260

$
678,683Machinery and equipment


135,156


135,584Fixtures, fittings and office equipment


131,614


119,191River cruiseship


18,267


16,571973,297


950,029Less: accumulated depreciation


(143,541
)

(127,772
)$
829,756

$
822,257


12

---



The
major classes of assets under capital leases are as follows (dollars in thousands):

June 30,
2004

December 31,
2003Land and buildings

$
13,359

$
14,080Machinery and equipment


2,007


1,964Fixtures, fittings and office equipment


4,317


4,22919,683


20,273Less: accumulated depreciation


(2,016
)

(1,626
)$
17,667

$
18,647


4. Long-term debt and obligations under capital lease

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

|                                                                                                                                                                                    |  | June 30,
2004 |         | December 31,
2003
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | -----------------
|Bank loans on property, plant and equipment payable over periods of 1 to 12 years, with a weighted average interest rate of 3.78% and 3.74%, respectively, primarily based on LIBOR |  | $             | 484,466 |                  
|Bank loans on a river cruiseship payable over 5 years, with a weighted average interest rate of 2.76% and 2.78%, respectively, based on LIBOR                                       |  |               | 2,500   |                  
|Obligations under capital lease                                                                                                                                                     |  |               | 19,105  |                  
|                                                                                                                                                                                    |  |               |         |                  
|                                                                                                                                                                                    |  |               | 506,071 |                  
|Less: current portion                                                                                                                                                               |  |               | 65,904  |                  
|                                                                                                                                                                                    |  |               |         |                  
|                                                                                                                                                                                    |  | $             | 440,167 |                  
|                                                                                                                                                                                    |  |               |         |                  

In
March 2004, the last guarantee by SCL of an OEH bank loan (December 31, 2003$19,088,000 principal amount) that predated the Company's initial public
offering in August 2000 was released and cancelled.

13

---



Certain credit agreements of OEH have restrictive covenants. At June 30, 2004, OEH was in compliance with these covenants. OEH does not currently have any covenants in any of its
loan agreements which limit the payment of dividends.

The
following is a summary of the aggregate maturities of long-term debt, including obligations under capital lease, at June 30, 2004 (dollars in thousands):

Year ending
December 31,2005

$
28,8802006


109,0142007


98,7812008


152,6652009 and thereafter


50,827$
440,167


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

The provision for income taxes consists of the following (dollars in thousands):

Six months ended June 30, 2004Current

Deferred

TotalUnited States

$
590

$
(33
)
$
557Other foreign


1,578


(772
)

806$
2,168

$
(805
)
$
1,363


Six months ended June 30, 2003Current

Deferred

TotalUnited States

$
642

$
983

$
1,625Other foreign


1,349


(1,677
)

(328
)$
1,991

$
(694
)
$
1,297


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.

14

---



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,
2004

December 31,
2003Gross deferred tax assets

$
71,012

$
71,467Less: Valuation allowance


(39,886
)

(39,886
)Net deferred tax assets


31,126


31,581Deferred tax liabilities


(33,034
)

(34,427
)Net deferred tax liabilities

$
(1,908
)
$
(2,846
)


The
deferred tax assets consist of tax loss carry forwards. In addition, at June 30, 2004, OEH has recorded a deferred tax asset of $691,000 (December 31,
2003$691,000) representing the future tax benefits of accrued pension costs recognized in other comprehensive income pursuant to SFAS No. 87, "Employers' Accounting for Pensions".
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.

6. Supplemental cash flow information

Six months ended June 30,2004

2003(Dollars in thousands)Cash paid for:Interest

$
9,838

$
9,720Income taxes

$
2,323

$
1,872


In
conjunction with acquisitions and investments (see Note 2), liabilities were assumed relating to non-cash investing and financing activities as follows (dollars in
thousands):

Six months ended June 30,2004

2003Fair value of assets acquired

$
3,000

$
49,777Cash paid


(3,000
)

(22,000
)Liabilities assumed

$


$
27,777


15

---



7. Accumulated other comprehensive loss

The accumulated balances for each component of other comprehensive loss are as follows (dollars in thousands):

|                                         |  | June 30,
2004 |         | December 31,
2003 |  
|---------------------------------------- |  | ------------- | ------- | ----------------- | -
|Foreign currency translation adjustments |  | $             | (18,354 | )                 | $
|Derivative financial instruments         |  |               | 40      |                   |  
|Minimum pension liability, net of tax    |  |               | (1,613  | )                 |  
|                                         |  |               |         |                   |  
|                                         |  | $             | (19,927 | )                 | $
|                                         |  |               |         |                   |  

8. Commitments

Outstanding contracts to purchase fixed assets were approximately $11,300,000 at June 30, 2004 (December 31, 2003$11,200,000).

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

As reported in the Company's 2003 Form 10-K annual report, OEH has two reporting 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):

|                               |                            | Six months ended June 30, |        
|------------------------------ | -------------------------- | ------------------------- | -------
|
|Revenue:                       |                            |                           |        
|                               | Hotels and restaurants     |                           |        
|                               |                            | Owned hotelsEurope       |        
|                               |                            | North America            |        
|                               |                            | Rest of world            |        
|                               |                            | Hotel management fees     |        
|                               |                            | Restaurants               |        
|                               |                            |                           |        
|                               |                            |                           | 139,508
|                               | Tourist trains and cruises |                           |        
|                               |                            |                           |        
|                               |                            | $                         | 164,370
|                               |                            |                           |        
|Depreciation and amortization: |                            |                           |        
|                               | Hotels and restaurants     |                           |        
|                               |                            | Owned hotelsEurope       |        
|                               |                            | North America            |        
|                               |                            | Rest of world            |        
|                               |                            | Restaurants               |        
|                               |                            |                           |        
|                               |                            |                           | 12,344 
|                               | Tourist trains and cruises |                           |        
|                               |                            |                           |        
|                               |                            | $                         | 13,969 
|                               |                            |                           |        
|                               |                            |                           |        

16

---



|Earnings from operations:                              |                            |                                           |        |       |        |        |     
|------------------------------------------------------ | -------------------------- | ----------------------------------------- | ------ | ----- | ------ | ------ | ----
|                                                       | Hotels and restaurants     |                                           |        |       |        |        |     
|                                                       |                            | Owned hotelsEurope                       |        | $     | 4,881  |        | $   
|                                                       |                            | North America                            |        |       | 5,887  |        |     
|                                                       |                            | Rest of world                            |        |       | 4,191  |        |     
|                                                       |                            | Hotel management fees                     |        |       | 3,428  |        |     
|                                                       |                            | Restaurants                               |        |       | 1,423  |        |     
|                                                       |                            |                                           |        |       |       
|                                                       |                            |                                           | 19,810 |       |        | 20,545 |     
|                                                       | Tourist trains and cruises |                                           |        | 1,200 |        |        | (647
|                                                       |                            |                                           |        |       |       
|                                                       |                            |                                           | 21,010 |       |        | 19,898 |     
|Central selling, general and administrative costs      |                            |                                           | (7,414 | )     |        | (5,903 | )   
|                                                       |                            |                                           |        |       |       
|                                                       |                            |                                           | 13,596 |       |        | 13,995 |     
|Net finance costs                                      |                            |                                           | (9,856 | )     |        | (9,700 | )   
|                                                       |                            |                                           |        |       |       
|Earnings before income taxes                           |                            |                                           | 3,740  |       |        | 4,295  |     
|Provision for income taxes                             |                            |                                           | 1,363  |       |        | 1,297  |     
|                                                       |                            |                                           |        |       |       
|Earnings before earnings from unconsolidated companies |                            |                                           | 2,377  |       |        | 2,998  |     
|Earnings from unconsolidated companies                 |                            |                                           | 5,928  |       |        | 3,813  |     
|                                                       |                            |                                           |        |       |       
|Net earnings                                           |                            | $                                         | 8,305  |       | $      | 6,811  |     
|                                                       |                            |                                           |        |       |       
|Earnings from unconsolidated companies:                |                            |                                           |        |       |        |        |     
|                                                       | Hotels and restaurants     |                                           |        |       |        |        |     
|                                                       |                            | Hotel management/part ownership interests |        | $     | 4,255  |        | $   
|                                                       |                            | Restaurants                               |        |       | 157    |        |     
|                                                       |                            |                                           |        |       |       
|                                                       |                            |                                           | 4,412  |       |        | 3,416  |     
|                                                       | Tourist trains and cruises |                                           |        | 1,516 |        |        | 397 
|                                                       |                            |                                           |        |       |       
|                                                       |                            | $                                         | 5,928  |       | $      | 3,813  |     
|                                                       |                            |                                           |        |       |       
|Capital expenditure:                                   |                            |                                           |        |       |        |        |     
|                                                       | Hotels and restaurants     |                                           |        |       |        |        |     
|                                                       |                            | Owned hotelsEurope                       |        | $     | 16,274 |        | $   
|                                                       |                            | North America                            |        |       | 4,559  |        |     
|                                                       |                            | Rest of world                            |        |       | 7,314  |        |     
|                                                       |                            | Restaurants                               |        |       | 146    |        |     
|                                                       |                            | Hotel management/part ownership interests |        |       |       |        |     
|                                                       |                            |                                           |        |       |       
|                                                       |                            |                                           | 28,293 |       |        | 25,787 |     
|                                                       | Tourist trains and cruises |                                           |        | 636   |        |        | 835 
|                                                       |                            |                                           |        |       |       
|                                                       |                            | $                                         | 28,929 |       | $      | 26,622 |     
|                                                       |                            |                                           |        |       |       

17

---



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

Six months ended June 30,2004

2003Revenue:Europe

$
72,239

$
68,614North America


51,045


47,623Rest of world


41,086


33,426$
164,370

$
149,663


10. Related party transactions

For the six months ended June 30, 2004, OEH paid subsidiaries of SCL $2,676,000 (2003$2,181,000) for the provision of various services during
this period 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.

OEH
guarantees a $3,000,000 bank loan to Eastern and Oriental Express Ltd. in which OEH has a minority shareholder interest. This guarantee was in place before December 31,
2002.

OEH
manages under a long-term contract the Charleston Place Hotel (accounted for under the equity method) and has made loans to the hotel-owning company. For the six months
ended June 30, 2004, OEH earned $2,231,000 (2003$2,233,000) in management fees which are recorded in revenue, and $3,949,000 (2003$3,414,000) in interest income on
partnership and other loans, which are recorded in earnings from unconsolidated companies.

OEH
manages under long-term contracts the Hotel Monasterio and the Machu Picchu Sanctuary Lodge owned by its 50/50 joint venture with local Peruvian interests, as well as the
50/50-owned PeruRail operation, and provides loans, guarantees and other credit accommodation to these joint ventures. In the six months ended June 30, 2004, OEH earned management and guarantee
fees of $1,606,000 (2003$657,000), which are recorded in revenue, and loan interest of $50,000 (2003$109,000) which is recorded in earnings from unconsolidated companies from
the joint ventures. At June 30, 2004, loans to the hotels aggregated $2,000,000, bear interest at a spread over LIBOR and come due in 2005. At the same date, OEH had a $750,000 subordinated
loan to the PeruRail operation with an indefinite maturity date and interest also at a spread over LIBOR. All of the guarantees relating to the Company's investments in Peru were in place prior to
December 31, 2002.

OEH
manages under a long-term contract the Hotel Ritz in Madrid, Spain, in which OEH acquired a 50% interest on April 25, 2003 (see Note 2) and is accounted for
under the equity method. For the six months ended June 30, 2004, OEH earned $448,000 (2003$485,000) in management fees, which are included in revenue.

18

---





ITEM 2. 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, 2004 and June 30, 2003, expressed as a percentage of revenue, were as follows:

|                                              |                                     | Three months ended
June 30 |   
|--------------------------------------------- | ----------------------------------- | -------------------------- | --
|
|
|Revenue:                                      |                                     |                            |   
|                                              | Hotels and restaurants              |                            | 82
|                                              | Tourist trains and cruises          |                            | 18
|                                              |                                     |                            |   
|                                              |                                     | 100                        |   
|Expenses:                                     |                                     |                            |   
|                                              | Depreciation and amortization       |                            | 7 
|                                              | Operating                           |                            | 48
|                                              | Selling, general and administrative |                            | 29
|Net finance costs                             |                                     | 5                          |   
|                                              |                                     |                            |   
|Earnings before income taxes                  |                                     | 11                         |   
|Provision for income taxes                    |                                     | (2                         | ) 
|Earnings from unconsolidated companies        |                                     | 4                          |   
|                                              |                                     |                            |   
|Net earnings as a percentage of total revenue |                                     | 13                         |   
|                                              |                                     |                            |   

Net
earnings as adjusted for interest, tax, depreciation and amortization ("EBITDA") of OEH's operations for the three months ended June 30, 2004 and 2003 are analyzed as follows
(dollars in millions):

|             |                        | Three months ended
June 30                    |     
|------------ | ---------------------- | --------------------------------------------- | ----
|
|EBITDA:      |                        |                                               |     
|             | Hotels and restaurants |                                               |     
|             |                        | Owned hotelsEurope                           |     
|             |                        | North America                                |     
|             |                        | Rest of world                                |     
|             |                        | Hotel management and part ownership interests |     
|             |                        | Restaurants                                   |     
|             | Trains and cruises     |                                               |     
|             | Central overheads      |                                               |     
|             |                        |                                               |     
|Total EBITDA |                        | $                                             | 27.2
|             |                        |                                               |     

19

---



The
foregoing EBITDA reconciles to net earnings as follows (dollars in millions):

|             |                               | Three months ended
June 30
|------------ | ----------------------------- | --------------------------
|
|Net earnings |                               | $                         
|Add:         |                               |                           
|             | Depreciation and amortization |                           
|             | Net finance costs             |                           
|             | Provision for income taxes    |                           
|             |                               |                           
|EBITDA       |                               | $                         
|             |                               |                           

Management
believes that EBITDA is a useful measure of operating performance, to help determine the ability to incur capital expenditure or service indebtedness, because it is not
affected by non-operating factors such as leverage and the historic cost of assets. EBITDA is also a financial performance measure commonly used in the hotel and leisure industry. However,
EBITDA does not represent cash flow from operations as defined by U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund all cash flow needs and should
not be considered as an alternative to earnings from operations under U.S. generally accepted accounting principles for purposes of evaluating results of operations.

20

---



Operating
information for OEH's owned hotels for the three months ended June 30, 2004 and June 30, 2003 is as follows:

|                                | Three months ended
June 30 |     |  |     | 
|------------------------------- | -------------------------- | --- |  | --- | 
|
|Average Daily Rate (in dollars) |                            |     |  |     | 
|                                | Europe                     | 657 |  | 506 | 
|                                | North America              | 317 |  | 300 | 
|                                | Rest of the world          | 215 |  | 213 | 
|                                | Worldwide                  | 377 |  | 357 | 
|Rooms Sold (in thousands)       |                            |     |  |     | 
|                                | Europe                     | 34  |  | 45  | 
|                                | North America              | 39  |  | 35  | 
|                                | Rest of the world          | 44  |  | 32  | 
|                                |                            |     |  |     | 
|                                | Worldwide                  | 117 |  | 112 | 
|RevPAR (in dollars)             |                            |     |  |     | 
|                                | Europe                     | 375 |  | 314 | 
|                                | North America              | 229 |  | 204 | 
|                                | Rest of the world          | 114 |  | 83  | 
|                                | Worldwide                  | 225 |  | 194 | 

|                               |                   |  |     |  |     | Change % |   
|------------------------------ | ----------------- |  | --- |  | --- | -------- | --
|
|Same Store RevPAR (in dollars) |                   |  |     |  |     |          |   
|                               | Europe            |  | 378 |  | 340 |          | 11
|                               | North America     |  | 236 |  | 204 |          | 16
|                               | Rest of the world |  | 114 |  | 83  |          | 38
|                               | Worldwide         |  | 224 |  | 190 |          | 18

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.

Three Months Ended June 30, 2004 Compared To Three Months Ended June 30, 2003

Overview

The net earnings for the period was $12.9 million ($0.38 per common share) on revenue of $100.5 million, compared with net earnings of
$9.4 million ($0.31 per common share) on revenue of $89.3 million in the prior year second quarter. During the quarter OEH experienced a broad recovery in demand for all its products in
all markets, although EBITDA from European owned hotels was slightly down, due to absence of the Hotel Quinta do Lago earnings since that property was sold late in 2003. EBITDA from tourist trains,
which was largely based in Europe, more than doubled from $2 million to $4.6 million in the quarter. The Madrid railway bombing in March 2004 impacted the Hotel Ritz in April but
results were back to normal in June and July.

EBITDA
from North American properties was up 33% to $4.7 million from $3.6 million in the prior year quarter while hotels in the rest of the world improved
six-fold to $2.5 million from

21

---



$0.4 million.
Management and part-ownership interests were marginally ahead at $4.8 million versus $4.6 million and restaurants EBITDA was up 29% to
$1.3 million from $1.0 million.

Overall,
the average daily room rate of owned hotels in U.S. dollars was up 6% in the second quarter to $377 from $357 in the prior year period. Same store RevPAR in U.S. dollars was up
18% to $224 from $190 in the year earlier period. EBITDA margin for the quarter was 26% compared with 24% in the prior year period.

Capital
expenditure on existing properties is beginning to produce solid returns. OEH currently plans to complete the Hotel Caruso in Ravello, Italy in time for the summer season of 2005
with a June 2005 opening planned.

Revenue

Total revenue increased by $11.3 million, or 13%, from $89.3 million in the three months ended June 30, 2003 to $100.5 million in the
three months ended June 30, 2004. Hotels and restaurants revenue increased by $6.9 million, or 9%, from $75.3 million in the three months ended June 30, 2003 to
$82.2 million in the three months ended June 30, 2004. Excluding the revenue from the Hotel Quinta do Lago which was sold in November 2003, hotels and restaurants revenue increased by
$11.1 million, or 16%, from $71.1 million for the three months ended June 30, 2003 to $82.2 million in the three months ended June 30, 2004. Tourist trains and
cruises revenue increased by $4.3 million, or 31%, from $14.0 million for the three months ended June 30, 2003 to $18.3 million for the three months ended June 30,
2004.

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

Europe.Excluding revenue from the Hotel Quinta do Lago in the second quarter of 2003 ($4.1 million) revenue increased
by $3.0 million, or 9%, from $34.3 million for the three months ended June 30, 2003 to $37.3 million in the three months ended June 30, 2004.

On
a same store basis, excluding the Quinta do Lago, RevPAR in local currency increased by 1% but in U.S. dollars this translated into an increase of 11% as the euro was stronger against
the dollar in the second quarter of 2004 compared to the second quarter of 2003.

North America.Revenue increased by $2.4 million, or 14%, from $17.6 million in the three months ended
June 30, 2003 to $20.0 million in the three months ended June 30, 2004.

On
a same store basis, RevPAR increased by 16% which was driven primarily by the Windsor Court Hotel, La Samanna and Maroma Resort and Spa.

Rest of the World.Revenue increased by $4.8 million, or 38%, from $12.6 million in the three months ended
June 30, 2003 to $17.4 million in the three months ended June 30, 2004. Revenue from all hotels was up and most significantly at the Copacabana Palace Hotel in Rio de Janeiro and
the Bora Bora Lagoon Resort.

The
RevPAR on a same store basis for the rest of the world region increased by 31% in local currencies in the three months ended June 30, 2004 compared to the three months ended
June 30, 2003. This translated to a 38% increase when expressed in U.S. dollars primarily as the South African rand and Australian dollar were significantly stronger against the U.S. dollar in
the period over the comparable period of 2003.

Depreciation and amortization

Depreciation and amortization increased by $0.5 million, or 8%, from $6.5 million in the three months ended June 30, 2003 to
$7.0 million in the three months ended June 30, 2004, primarily due to

22

---



the
effect of acquisitions and capital expenditures in 2003 as well as the effect of the weakness of the U.S. dollar against currencies in which OEH records some of its assets.

Operating expenses

Operating expenses increased by $4.3 million, or 10%, from $43.6 million in the three months ended June 30, 2003 to $47.9 million in
the three months ended June 30, 2004, primarily due to the effect of the weakness of the U.S. dollar against currencies in which OEH incurs operating expenses and increased occupancy at the
hotels and trains and cruises.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $3.2 million, or 12%, from $25.9 million in the three months ended June 30, 2003 to
$29.1 million in the three months ended June 30, 2004, mainly due to the effect of the weakness of the U.S. dollar against currencies in which OEH incurs these expenses and increased
occupancy at OEH's businesses.

Earnings from operations before net finance costs

Earnings from operations increased by $3.2 million from earnings of $13.3 million in the three months ended June 30, 2003 to earnings of
$16.5 million in the three months ended June 30, 2004, due to the factors described in the overview above.

Net finance costs

Net finance costs increased by $0.1 million to $4.9 million in the three months ended June 30, 2004 compared to the three months ended
June 30, 2003.

Provision for income taxes

The provision for income taxes increased by $0.6 million, from a provision of $1.8 million in the three months ended June 30, 2003 to a
provision of $2.4 million in the three months ended June 30, 2004. 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. The increase was mainly due to the increased profitability of some of these subsidiaries.

Earnings from unconsolidated companies

Earnings from unconsolidated companies increased by $0.9 million, or 36%, from $2.7 million in the three months ended June 30, 2003 to
$3.6 million in the three months ended June 30, 2004. This was mainly due to improved earnings from OEH's investments in Peru.

Net earnings

Net earnings increased by $3.5 million, or 37%, from $9.4 million in the three months ended June 30, 2003 to $12.9 million in the
three months ended June 30, 2004. Net earnings represent earnings from operations less net finance costs and provision for income taxes.

23

---



Six Months ended June 30, 2004 compared to Six Months ended June 30, 2003

OEH's operating results for the six months ended June 30, 2004 and 2003, expressed as a percentage of revenue, were as follows:

|                                              |                                     | Six months ended
June 30, |   
|--------------------------------------------- | ----------------------------------- | ------------------------- | --
|
|
|Revenue                                       |                                     |                           |   
|                                              | Hotels and restaurants              |                           | 85
|                                              | Tourist trains and cruises          |                           | 15
|                                              |                                     |                           |   
|                                              |                                     | 100                       |   
|Expenses:                                     |                                     |                           |   
|                                              | Depreciation and amortization       |                           | 8 
|                                              | Operating                           |                           | 50
|                                              | Selling, general and administrative |                           | 33
|Net finance costs                             |                                     | 7                         |   
|                                              |                                     |                           |   
|Earnings before income taxes                  |                                     | 2                         |   
|Provision for incomes taxes                   |                                     | (1                        | ) 
|Earnings from unconsolidated companies        |                                     | 4                         |   
|                                              |                                     |                           |   
|Net earnings as a percentage of total revenue |                                     | 5                         |   
|                                              |                                     |                           |   

EBITDA
of OEH's operations for the six months ended June 30, 2004 and 2003 is analyzed as follows, including a reconciliation to earnings from operations before net finance costs
(dollars in millions):

|             |                        | Six months ended
June 30,                               |     
|------------ | ---------------------- | ------------------------------------------------------- | ----
|
|EBITDA:      |                        |                                                         |     
|             | Hotels and restaurants |                                                         |     
|             |                        | Owned hotelsEurope                                     |     
|             |                        | North America                                          |     
|             |                        | Rest of world                                          |     
|             |                        | Hotel management interests and part ownership interests |     
|             |                        | Restaurants                                             |     
|             | Trains and cruises     |                                                         |     
|             | Central overheads      |                                                         |     
|             |                        |                                                         |     
|Total EBITDA |                        | $                                                       | 33.5
|             |                        |                                                         |     

24

---



The
foregoing EBITDA reconciles to net earnings as follows (dollars in millions):

|             |                               | Six months ended
June 30
|------------ | ----------------------------- | ------------------------
|
|Net earnings |                               | $                       
|Add:         |                               |                         
|             | Depreciation and amortization |                         
|             | Net finance costs             |                         
|             | Provision for income taxes    |                         
|             |                               |                         
|EBITDA       |                               | $                       
|             |                               |                         

Operating
information for OEH's owned hotels for the six months ended June 30, 2004 and 2003 is as follows:

|                                | Six months ended
June 30, |     |  |     | 
|------------------------------- | ------------------------- | --- |  | --- | 
|
|Average Daily Rate (in dollars) |                           |     |  |     | 
|                                | Europe                    | 571 |  | 432 | 
|                                | North America             | 346 |  | 339 | 
|                                | Rest of the world         | 236 |  | 227 | 
|                                | Worldwide                 | 351 |  | 327 | 
|Rooms Sold (in thousands)       |                           |     |  |     | 
|                                | Europe                    | 49  |  | 67  | 
|                                | North America             | 73  |  | 70  | 
|                                | Rest of the world         | 91  |  | 79  | 
|                                |                           |     |  |     | 
|                                | Worldwide                 | 213 |  | 216 | 
|RevPAR (in dollars)             |                           |     |  |     | 
|                                | Europe                    | 301 |  | 236 | 
|                                | North America             | 236 |  | 232 | 
|                                | Rest of the world         | 130 |  | 105 | 
|                                | Worldwide                 | 205 |  | 179 | 

|                               |                   |  |     |  |     | Change % |   
|------------------------------ | ----------------- |  | --- |  | --- | -------- | --
|
|Same Store RevPAR (in dollars) |                   |  |     |  |     |          |   
|                               | Europe            |  | 306 |  | 275 |          | 11
|                               | North America     |  | 246 |  | 233 |          | 6 
|                               | Rest of the world |  | 130 |  | 103 |          | 26
|                               | Worldwide         |  | 205 |  | 181 |          | 13

Revenue

Total revenue increased by $14.7 million, or 10%, from $149.7 million in the six months ended June 30, 2003 to $164.4 million in the
six months ended June 30, 2004. Hotels and restaurants revenue increased by $9.8 million, or 7%, from $129.7 million in the six months ended June 30, 2003 to
$139.5 million in the six months ended June 30, 2004. Excluding revenue from the Quinta do Lago in 2003, revenue from hotels and restaurants increased by $15.5 million, or 13%,
from $124.0 million for

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the
six months ended June 30, 2003 to $139.5 million for the six months ended June 30, 2004. Tourist trains and cruises revenue increased by $4.9 million, or 24%, from
$20.0 million for the six months ended June 30, 2003 to $24.9 million for the six months ended June 30, 2004.

Overall,
OEH's same store RevPAR at its owned hotels increased by 13% in U.S. dollars in the six months ended June 30, 2004 compared to the six months ended June 30, 2003.

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

Europe.Excluding the revenue from the Quinta do Lago for 2003, revenue increased by $3.8 million, or 8%, from
$45.3 million for the six months ended June 30, 2003 to $49.1 million for the six months ended June 30, 2004. Same store RevPAR was flat in local currencies in the six
months ended June 30, 2004 compared to the six months ended June 30, 2003. This translates to an increase of 11% in U.S. dollars as the euro was significantly stronger against the U.S.
dollar in the period compared to the comparable period in the prior year.

North America.Revenue increased by $2.6 million, or 7%, from $36.9 million in the six months ended
June 30, 2003 to $39.5 million in the six months ended June 30, 2004. Same store RevPAR for the North American region increased by 6% in the six months ended June 30, 2004
compared to the six months ended June 30, 2003.

Rest of the World.Revenue increased by $7.5 million, or 25%, from $30.0 million in the six months ended
June 30, 2003 to $37.5 million in the six months ended June 30, 2004. The same store RevPAR for the rest of the world region increased by 12% in local currencies in the six months
ended June 30, 2004 compared to the six months ended June 30, 2003 but, when translated to U.S. dollars, increased by 26% primarily as the South African rand and Australian dollar were
significantly stronger against the U.S. dollar in the period over the comparable period in 2003.

Depreciation and amortization

Depreciation and amortization increased by $2.0 million, or 17%, from $11.9 million in the six months ended June 30, 2003 to
$13.9 million in the six months ended June 30, 2004, primarily due to the effect of acquisitions as well as the effect of the weakness of the U.S. dollar against currencies in which OEH
records some of its assets.

Operating expenses

Operating expenses increased by $7.3 million, or 10%, from $74.5 million in the six months ended June 30, 2003 to $81.8 million in the
six months ended June 30, 2004, which was mainly due to higher occupancies at OEH's businesses.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $5.8 million, or 12%, from $49.2 million in the six months ended June 30, 2003 to
$55.0 million in the six months ended June 30, 2004, which was mainly due to higher occupancies at OEH's businesses.

Earnings from operations

Earnings from operations decreased by $0.4 million, or 3%, from $14.0 million in the six months ended June 30, 2003 to $13.6 million
in the six months ended June 30, 2004.

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Net finance costs

Net finance costs increased by $0.2 million, or 2%, from $9.7 million in the six months ended June 30, 2003 to $9.9 million in the six
months ended June 30, 2004.

Taxes on income

The provision for income taxes increased by $0.1 million, or 5%, from $1.3 million in the six months ended June 30, 2003 to
$1.4 million in the six months ended June 30, 2004. The increase was mainly due to the increased profitability of some of OEH's taxpaying subsidiaries.

Earnings from unconsolidated companies

Earnings from unconsolidated companies increased by $2.1 million, or 55%, from $3.8 million in the six months ended June 30, 2003 to $5.9 million in
the six months ended June 30, 2004.

Net earnings

Net earnings increased by $1.5 million, or 22%, from $6.8 million in the six months ended June 30, 2003 to $8.3 million in the six
months ended June 30, 2004.

Liquidity and Capital Resources

Working Capital

OEH had cash and cash equivalents of $58.0 million at June 30, 2004, $23.3 million less than the $81.3 million at December 31,
2003. At June 30, 2004 and December 31, 2003, the undrawn amounts available to OEH under its short-term lines of credit were $43.7 million and $35.8 million,
respectively. In addition, at June 30, 2004 and December 31, 2003 there were undrawn amounts committed under long-term facilities of $30.0 million and
$32.0 million, respectively. OEH's total cash and availability at June 30, 2004 was $131.7 million including the undrawn short-term lines.

Current
assets less current liabilities, including the current portion of long-term debt, resulted in a working capital deficit of $63.2 million at June 30,
2004, a decrease in the working capital of $74.0 million from a surplus of $10.8 million at December 31, 2003. 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 increased by $6.7 million from $16.0 million
cash surplus for the six months ended June 30, 2003 to $22.7 million for the six months ended June 30, 2004. Of the increase, $1.5 million was attributable to reduced
earnings.

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Investing Activities.Cash used in investing activities decreased by $36.3 million to $40.0 million for the six
months ended June 30, 2004, compared to $76.3 million for the six months ended June 30, 2003.

Financing Activities.Cash used in financing activities for the six months ended June 30, 2004 was $5.7 million
compared to cash provided by financing activities of $39.5 million for the six months ended June 30, 2003, a reduction of $45.2 million. In the six months ended June 30,
2004, OEH had proceeds from borrowings under long-term debt of $13.0 million compared to proceeds of $54.3 million for the six months ended June 30, 2003.

Capital Commitments.There were $11.3 million of capital commitments outstanding as of June 30, 2004 mainly on
investments in owned hotels.

Indebtedness

At June 30, 2004, OEH had $506.1 million of long-term debt collateralized by assets ($448.0 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 3.78%. See Note 4 to the financial statements regarding the maturity of
long-term debt.

Approximately
50% of the outstanding principal was drawn in European euros and the balance primarily in U.S. dollars. At June 30, 2004, OEH had all its borrowings in floating
rates.

Liquidity

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

Recent Accounting Pronouncements

As of June 30, 2004, the Company's significant accounting policies and estimates, which are described in Notes 1, 4, and 15 to the financial
statements in the Company's 2003 Form 10-K annual report, have not changed from December 31, 2003, except for the adoption of FIN No. 46R described in
Note 1(i) to the financial statements in this report which had no impact on OEH.

Critical Accounting Policies

For a discussion of these, see under the heading "Critical Accounting Policies" in Item 7Management's Discussion and Analysis in the Company's 2003
Form 10-K annual report.

ITEM 3. 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 OEH's
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. If interest rates increased by 10%, with all other variables held constant, annual net finance costs
of OEH would have increased by approximately $1.9 million on an annual basis based on borrowings at June 30, 2004. 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.

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The
market risk relating to foreign currencies and its effects have not changed materially during the first six months of 2004 from those described in the Company's 2003
Form 10-K annual report.

ITEM 4. Controls and Procedures

The Company's chief executive and financial officers have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in SEC
Rule 13a-15(e)) as of June 30, 2004 and found no material deficiencies or weaknesses. There have been no changes in the Company's internal control over financial reporting
(as defined in SEC Rule 13a-15(f)) during the second quarter of 2004 that have materially affected, or are reasonably likely to materially affect, the Company's internal control
over financial reporting.

It
should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In
addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

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PART IIOTHER INFORMATION

ITEM 4. Submission of Matters to a Vote of Security Holders

The Company convened and held an annual general meeting of shareholders on June 7, 2004. 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, Georg R. Rafael, James B. Sherwood and
Simon M.C. Sherwood as directors of the Company, (ii) duly approved the Orient-Express Hotels Ltd. 2004 Stock Option Plan and (iii) duly appointed Deloitte &
Touche LLP as the Company's independent auditor. The number of votes on each matter was as follows:

Name

For

Authority WithheldJ.D. Campbell

22,606,258

693,605J.B. Hurlock

23,141,623

158,240J.R. Lovejoy

23,144,517

155,346D.J. O'Sullivan

22,642,930

656,933G.R. Rafael

23,163,700

136,163J.B. Sherwood

22,605,374

694,489S.M.C. Sherwood

22,649,674

650,189


ITEM 6. Exhibits and Reports on Form 8-K

|Date of Report on Front Cover |  | Item No. |  | Description                                                                                                
|----------------------------- |  | -------- |  | -----------------------------------------------------------------------------------------------------------
|May 3, 2004                   |  | 7 and 12 |  | Excerpts from the 2003 annual shareholders report of the Company furnished to the Commission.              
|May 4, 2004                   |  | 7 and 12 |  | News release regarding first quarter 2004 consolidated earnings of the Company furnished to the Commission.
|June 7, 2004                  |  | 7 and 12 |  | Slides shown at an investor presentation in New York, New York on June 7, 2004 furnished to the Commission.

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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, 2004 |  |                           

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EXHIBIT INDEX

3.1        Memorandum of Association and Certificate of Incorporation of the Company, filed as Exhibit 3.1 to Amendment No. 2 to
the Company's Registration Statement on Form S-1 (Registration No. 333-12030) and incorporated herein by reference.

3.2        Bye-Laws
of the Company, filed as Exhibit 3.2 to Amendment No. 4 to the Company's Registration Statement on
Form S-1 (Registration No. 333-12030) and incorporated herein by reference.

31         Rule 13a-14(a)/15d-14(a)
Certifications.

32         Section 1350
Certification.

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