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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|(Mark One)                                        |                                                                                         
|------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                 | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|For the Quarterly Period Ended September 30, 2002
|or                                               
|o                                                 | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|For the transition period from
 to               

Commission file number 1-16017

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

|Bermuda(State or other jurisdiction of
incorporation or organizaton)                              |  | 98-0223493(IRS Employer Identification No.)
|------------------------------------------------------------------------------------------------- |  | -------------------------------------------
|41 Cedar Avenue, P.O. Box HM 1179,
Hamilton HMEX, Bermuda(Address of principal executive offices) |  | (zip code)                                 
|441-295-2244(Registrant's telephone number, including area code)                                 

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

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

As
of October 31, 2002, 28,340,601 Class A common shares and 20,503,877 Class B common shares of Orient-Express Hotels Ltd. were outstanding, including
18,044,478 Class B shares owned by a subsidiary of Orient-Express Hotels Ltd. and 15,122,101 Class A shares and 2,459,399 Class B shares owned by Sea Containers Ltd.

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PART I

Orient-Express Hotels Ltd. and Subsidiaries Consolidated Balance Sheets

|                                                                                    |                                                                        | September 30,
2002
(unaudited) |         | December 31,
2001 |  
|----------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------------ | ------- | ----------------- | -
|
|Assets                                                                              |                                                                        |                                |         |                   |  
|Cash and cash equivalents                                                           |                                                                        | $                              | 56,355  |                   | $
|Accounts receivable, net of allowances of $495 and $514                             |                                                                        |                                | 56,682  |                   |  
|Inventories                                                                         |                                                                        |                                | 20,349  |                   |  
|                                                                                    |                                                                        |                                |         |                   |  
|Total current assets                                                                |                                                                        |                                | 133,386 |                   |  
|Property, plant and equipment, less accumulated
depreciation of $98,577 and $81,741 |                                                                        |                                | 721,653 |                   |  
|Investments                                                                         |                                                                        |                                | 79,466  |                   |  
|Intangible assets                                                                   |                                                                        |                                | 29,529  |                   |  
|Other assets                                                                        |                                                                        |                                | 3,179   |                   |  
|                                                                                    |                                                                        |                                |         |                   |  
|                                                                                    |                                                                        | $                              | 967,213 |                   | $
|                                                                                    |                                                                        |                                |         |                   |  
|Liabilities and Shareholders' Equity                                                |                                                                        |                                |         |                   |  
|Working capital facilities                                                          |                                                                        | $                              | 19,318  |                   | $
|Accounts payable                                                                    |                                                                        |                                | 16,994  |                   |  
|Accrued liabilities                                                                 |                                                                        |                                | 37,584  |                   |  
|Deferred revenue                                                                    |                                                                        |                                | 14,891  |                   |  
|Current portion of long-term debt                                                   |                                                                        |                                | 38,038  |                   |  
|                                                                                    |                                                                        |                                |         |                   |  
|Total current liabilities                                                           |                                                                        |                                | 126,825 |                   |  
|Long-term debt                                                                      |                                                                        |                                | 413,691 |                   |  
|Deferred income taxes                                                               |                                                                        |                                | 5,750   |                   |  
|                                                                                    |                                                                        |                                |         |                   |  
|                                                                                    |                                                                        |                                | 546,266 |                   |  
|                                                                                    |                                                                        |                                |         |                   |  
|Minority interest                                                                   |                                                                        |                                | 3,691   |                   |  
|                                                                                    |                                                                        |                                |         |                   |  
|Preferred shares $0.01 par value (30,000,000 shares authorized)                     |                                                                        |                                |        |                   |  
|                                                                                    |                                                                        |                                |         |                   |  
|Shareholders' equity:                                                               |                                                                        |                                |         |                   |  
|                                                                                    | Class A common shares $0.01 par value (120,000,000 shares authorized): |                                |         |                   |  
|                                                                                    | Issued28,340,601 (200128,340,601)                                    |                                |         | 283               |  
|                                                                                    | Class B common shares $0.01 par value (120,000,000 shares authorized): |                                |         |                   |  
|                                                                                    | Issued20,503,877 (200120,503,877)                                    |                                |         | 205               |  
|Additional paid-in capital                                                          |                                                                        |                                | 226,963 |                   |  
|Retained earnings                                                                   |                                                                        |                                | 224,698 |                   |  
|Accumulated other comprehensive loss                                                |                                                                        |                                | (34,712 | )                 |  
|Less: reduction due to class B common shares
owned by a subsidiary18,044,478       |                                                                        |                                | (181    | )                 |  
|                                                                                    |                                                                        |                                |         |                   |  
|Total shareholders' equity                                                          |                                                                        |                                | 417,256 |                   |  
|                                                                                    |                                                                        |                                |         |                   |  
|Commitments                                                                         |                                                                        |                                |         |                   |  
|                                                                                    |                                                                        |                                |         |                   |  
|                                                                                    |                                                                        | $                              | 967,213 |                   | $
|                                                                                    |                                                                        |                                |         |                   |  

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 September 30, |       
|-------------------------------------------------- | ----------------------------------- | -------------------------------- | ------
|
|
|Revenue                                            |                                     | $                                | 80,602
|Earnings from unconsolidated companies             |                                     |                                  | 2,486 
|                                                   |                                     |                                  |       
|                                                   |                                     |                                  | 83,088
|                                                   |                                     |                                  |       
|Expenses:                                          |                                     |                                  |       
|                                                   | Depreciation and amortization       |                                  |       
|                                                   | Operating                           |                                  |       
|                                                   | Selling, general and administrative |                                  |       
|                                                   |                                     |                                  |       
|Total expenses                                     |                                     |                                  | 67,297
|                                                   |                                     |                                  |       
|Earnings from operations before net finance costs  |                                     |                                  | 15,791
|Interest expense, net                              |                                     |                                  | (5,349
|Interest and related income                        |                                     |                                  | 34    
|                                                   |                                     |                                  |       
|Net finance costs                                  |                                     |                                  | (5,315
|                                                   |                                     |                                  |       
|Earnings before income taxes                       |                                     |                                  | 10,476
|Provision for income taxes                         |                                     |                                  | 1,363 
|                                                   |                                     |                                  |       
|Net earnings                                       |                                     | $                                | 9,113 
|                                                   |                                     |                                  |       
|Net earnings per class A and class B common share: |                                     |                                  |       
|                                                   | Basic and diluted                   |                                  | $     
|                                                   |                                     |                                  |       

See
notes to consolidated financial statements.

3

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

|                                                   |                                     | Nine months ended
September 30, |        
|-------------------------------------------------- | ----------------------------------- | ------------------------------- | -------
|
|
|Revenue                                            |                                     | $                               | 209,016
|Earnings from unconsolidated companies             |                                     |                                 | 6,836  
|                                                   |                                     |                                 |        
|                                                   |                                     |                                 | 215,852
|                                                   |                                     |                                 |        
|Expenses:                                          |                                     |                                 |        
|                                                   | Depreciation and amortization       |                                 |        
|                                                   | Operating                           |                                 |        
|                                                   | Selling, general and administrative |                                 |        
|                                                   |                                     |                                 |        
|Total expenses                                     |                                     |                                 | 176,825
|                                                   |                                     |                                 |        
|Earnings from operations before net finance costs  |                                     |                                 | 39,027 
|Interest expense, net                              |                                     |                                 | (15,197
|Interest and related income                        |                                     |                                 | 515    
|                                                   |                                     |                                 |        
|Net finance costs                                  |                                     |                                 | (14,682
|                                                   |                                     |                                 |        
|Earnings before income taxes                       |                                     |                                 | 24,345 
|Provision for income taxes                         |                                     |                                 | 3,228  
|                                                   |                                     |                                 |        
|Net earnings                                       |                                     | $                               | 21,117 
|                                                   |                                     |                                 |        
|Net earnings per class A and class B common share: |                                     |                                 |        
|                                                   | Basic and diluted                   |                                 | $      
|                                                   |                                     |                                 |        

See
notes to consolidated financial statements.

4

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

|                                                             |                                                                                     | Nine months ended September 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 and other non-cash items                       |                                 |         
|                                                             | Change in assets and liabilities net of effects from acquisition of subsidiaries:   |                                 |         
|                                                             | (Increase)/decrease in accounts receivable                                          |                                 |         
|                                                             | Increase in inventories                                                             |                                 |         
|                                                             | (Decrease)/increase in accounts payable                                             |                                 |         
|                                                             |                                                                                     |                                 |         
|                                                             | Total adjustments                                                                   |                                 |         
|                                                             |                                                                                     |                                 |         
|Net cash provided by operating activities                    |                                                                                     |                                 | 31,505  
|                                                             |                                                                                     |                                 |         
|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                        |                                                                                     |                                 | (106,696
|                                                             |                                                                                     |                                 |         
|Cash flows from financing activities:                        |                                                                                     |                                 |         
|                                                             | Working capital facilities and redrawable loans drawn/(repaid)                      |                                 |         
|                                                             | Issuance of long-term debt                                                          |                                 |         
|                                                             | Principal payments under long-term debt                                             |                                 |         
|                                                             | Purchase and cancellation of common shares                                          |                                 |         
|                                                             |                                                                                     |                                 |         
|Net cash provided by financing activities                    |                                                                                     |                                 | 72,923  
|                                                             |                                                                                     |                                 |         
|Total cash flows                                             |                                                                                     |                                 | (2,268  
|Effect of exchange rate changes on cash and cash equivalents |                                                                                     |                                 | 760     
|                                                             |                                                                                     |                                 |         
|Net increase in cash and cash equivalents                    |                                                                                     |                                 | (1,508  
|Cash and cash equivalents at beginning of period             |                                                                                     |                                 | 57,863  
|                                                             |                                                                                     |                                 |         
|Cash and cash equivalents at end of period                   |                                                                                     | $                               | 56,355  
|                                                             |                                                                                     |                                 |         

See
notes to consolidated financial statements.

5

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Orient-Express Hotels Ltd. and Subsidiaries Statements of Consolidated Shareholders' Equity

|                            |                                              | Class A
Common
Shares
at Par
Value |     | Class B
Common
Shares
at Par
Value |   | Additional
Paid-In
Capital |  | Retained
Earnings |         | Accumulated
Other
Comprehensive
Income/(Loss) |   | Common
Shares
Owned by
Subsidiary |        | Total
Comprehensive
Income/(Loss)
|--------------------------- | -------------------------------------------- | ---------------------------------- | --- | ---------------------------------- | - | -------------------------- |  | ----------------- | ------- | --------------------------------------------- | - | --------------------------------- | ------ | ---------------------------------
|
|Balance, January 1, 2002    |                                              | $                                  | 283 |                                    | $ | 205                        |  | $                 | 226,963 |                                               | $ | 203,581                           |        | $                                
|Comprehensive income:       |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                  
|                            | Net earnings on common shares for the period |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   | 21,117 |                                  
|                            | Other comprehensive income                   |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                  
|                            |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                  
|                            |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                  
|                            |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                  
|                            |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                  
|Balance, September 30, 2002 |                                              | $                                  | 283 |                                    | $ | 205                        |  | $                 | 226,963 |                                               | $ | 224,698                           |        | $                                
|                            |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                  

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

(a)Accounting policies

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

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

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

(b)  Net earnings per share

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

|                   |  | Nine months ended September 30,
|------------------ |  | -------------------------------
|
|Basic              |  | 30,800                         
|Effect of dilution |  |                               
|                   |  |                                
|Diluted            |  | 30,800                         
|                   |  |                                

For
the nine months ended September 30, 2002, the anti-dilutive effect of stock options on 62,299 class A common shares was excluded from the computation of
diluted earnings per share.

|                   |  | Three months ended September 30,
|------------------ |  | --------------------------------
|
|Basic              |  | 30,800                          
|Effect of dilution |  |                                
|                   |  |                                 
|Diluted            |  | 30,800                          
|                   |  |                                 

For
the three months ended September 30, 2002, the anti-dilutive effect of stock options on 182,750 class A common shares was excluded from the computation of
diluted earnings per share.

(c)  Intangible assets

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

7

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

|                                        |  | September 30,
2002 |        | December 31,
2001
|--------------------------------------- |  | ------------------ | ------ | -----------------
|Goodwill                                |  | $                  | 2,144  |                  
|Other intangibles with indefinite lives |  |                    | 27,385 |                  
|                                        |  |                    |        |                  
|Total net intangibles                   |  | $                  | 29,529 |                  
|                                        |  |                    |        |                  

Other
intangibles consist primarily of trademarks associated with acquired businesses.

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

|                                                                                                                           |  | Period ended
September 30, 2001
|-------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------
|
|Reported net earnings on common shares                                                                                     |  | $                              
|Add: Amortization of goodwill and other intangible assets with indefinite lives, net of tax                                |  |                                
|                                                                                                                           |  |                                
|Adjusted net earnings                                                                                                      |  | $                              
|                                                                                                                           |  |                                
|Reported basic and diluted earnings per share                                                                              |  | $                              
|Add: Amortization of goodwill and other intangible assets with indefinite lives, net of tax, per share  basic and diluted |  |                                
|                                                                                                                           |  |                                
|Adjusted basic and diluted earnings per share                                                                              |  | $                              
|                                                                                                                           |  |                                

(d)  Derivative financial instruments

As reported in Note 1(t) to the financial statements in the Form 10-K annual report for the year ended December 31, 2001, the
Company adopted with effect on January 1, 2001, SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137 and No. 138. The
initial adoption of SFAS No. 133 resulted in an unrealized loss of $1,333,000 in accumulated other comprehensive income/(loss) as of January 1, 2001. For the nine months ended
September 30, 2002 and 2001, the change in the fair market value of derivative instruments resulted in a credit of $1,756,000 and a charge of $617,000 to other comprehensive income/(loss),
respectively.

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

|                                   |                                                                                              | Nine months ended September 30, |       
|---------------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------- | ------
|
|Net earnings on common shares      |                                                                                              | $                               | 21,117
|Other comprehensive income/(loss): |                                                                                              |                                 |       
|                                   | Foreign currency translation adjustments                                                     |                                 |       
|                                   | Cumulative effect of change in accounting principle (SFAS 133) on other comprehensive income |                                 |       
|                                   | Changes in fair value of derivatives                                                         |                                 |       
|                                   |                                                                                              |                                 |       
|Comprehensive income               |                                                                                              | $                               | 24,669
|                                   |                                                                                              |                                 |       

8

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2.    Acquisitions and investments

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

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

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

3.    Property, plant and equipment

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

|                                        |  | September 30,
2002 |         | December 31,
2001
|--------------------------------------- |  | ------------------ | ------- | -----------------
|Freehold and leased land and buildings  |  | $                  | 604,966 |                  
|Machinery and equipment                 |  |                    | 119,846 |                  
|Fixtures, fittings and office equipment |  |                    | 79,189  |                  
|River cruiseship                        |  |                    | 16,229  |                  
|                                        |  |                    |         |                  
|                                        |  |                    | 820,230 |                  
|Less: accumulated depreciation          |  |                    | 98,577  |                  
|                                        |  |                    |         |                  
|                                        |  | $                  | 721,653 |                  
|                                        |  |                    |         |                  

At
September 30, 2002, the balance under capital lease for land and buildings was $9,185,000 (December 31, 2001$8,574,000), for machinery and equipment
$1,904,000 (December 31, 2001$1,675,000), and for fixtures and fittings $926,000 (December 31, 2001$716,000). Accumulated depreciation related to assets under
capital lease at September 30, 2002 was $896,000 (December 31, 2001$520,000).

4.    Long-term debt

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

|                                                                                                                                                                                                        |  | September 30,
2002 |         | December 31,
2001
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | -----------------
|Loans from banks secured by property, plant and equipment payable over periods of 1 to 12 years, with a weighted average interest rate of 4.33 and 4.72 percent, respectively, primarily based on LIBOR |  | $                  | 433,327 |                  
|Loan secured by a river cruiseship payable over 5 years, with a weighted average interest rate of 3.50 and 3.57 percent, respectively, based on LIBOR                                                   |  |                    | 4,000   |                  
|Obligations under capital lease                                                                                                                                                                         |  |                    | 14,402  |                  
|                                                                                                                                                                                                        |  |                    |         |                  
|                                                                                                                                                                                                        |  |                    | 451,729 |                  
|Less: current portion                                                                                                                                                                                   |  |                    | 38,038  |                  
|                                                                                                                                                                                                        |  |                    |         |                  
|                                                                                                                                                                                                        |  | $                  | 413,691 |                  
|                                                                                                                                                                                                        |  |                    |         |                  

9

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

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

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

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

10

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5.    Income taxes

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

|              |  | Nine months ended September 30, 2002
|------------- |  | ------------------------------------
|
|United States |  | $                                   
|Other foreign |  |                                     
|              |  |                                     
|              |  | $                                   
|              |  |                                     

|              |  | Nine months ended September 30, 2001
|------------- |  | ------------------------------------
|
|United States |  | $                                   
|Other foreign |  |                                     
|              |  |                                     
|              |  | $                                   
|              |  |                                     

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

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

|                             |  | September 30,
2002 |         | December 31,
2001 |  
|---------------------------- |  | ------------------ | ------- | ----------------- | -
|Gross deferred tax assets    |  | $                  | 55,187  |                   | $
|Less: Valuation allowance    |  |                    | (35,473 | )                 |  
|                             |  |                    |         |                   |  
|Net deferred tax assets      |  |                    | 19,714  |                   |  
|Deferred tax liabilities     |  |                    | (25,464 | )                 |  
|                             |  |                    |         |                   |  
|Net deferred tax liabilities |  | $                  | (5,750  | )                 | $
|                             |  |                    |         |                   |  

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

6.    Supplemental cash flow information(dollars in thousands)

|               |  | Nine months ended September 30,
|-------------- |  | -------------------------------
|
|Cash paid for: |  |                                
|Interest       |  | $                              
|Income taxes   |  | $                              

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

11

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Non-cash
investing and financing activities:

|Fair value of assets acquired |  | $ | 59,264  |   | $ | 22,352  |  
|----------------------------- |  | - | ------- | - | - | ------- | -
|Cash paid                     |  |   | (47,500 | ) |   | (19,600 | )
|                              |  |   |         |   |  
|Liabilities assumed           |  | $ | 11,764  |   | $ | 2,752   |  
|                              |  |   |         |   |  

7.    Shareholders' equity

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

8.    Commitments

Outstanding contracts to purchase fixed assets were approximately $14,400,000 at September 30, 2002 (December 31, 2001$6,100,000).

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

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

12

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|                                                   |                            | Nine months ended September 30, |        
|-------------------------------------------------- | -------------------------- | ------------------------------- | -------
|
|Revenue:                                           |                            |                                 |        
|                                                   | Hotels and restaurants     |                                 | $      
|                                                   | Tourist trains and cruises |                                 |        
|                                                   |                            |                                 |        
|                                                   |                            | $                               | 209,016
|                                                   |                            |                                 |        
|Earnings from unconsolidated companies:            |                            |                                 |        
|                                                   | Hotels and restaurants     |                                 | $      
|                                                   | Tourist trains and cruises |                                 |        
|                                                   |                            |                                 |        
|                                                   |                            | $                               | 6,836  
|                                                   |                            |                                 |        
|Depreciation and amortization:                     |                            |                                 |        
|                                                   | Hotels and restaurants     |                                 | $      
|                                                   | Tourist trains and cruises |                                 |        
|                                                   |                            |                                 |        
|                                                   |                            | $                               | 14,355 
|                                                   |                            |                                 |        
|Earnings from operations before net finance costs: |                            |                                 |        
|                                                   | Hotels and restaurants     |                                 | $      
|                                                   | Tourist trains and cruises |                                 |        
|                                                   |                            |                                 |        
|                                                   |                            |                                 | 47,084 
|Central selling, general and administrative costs  |                            |                                 | (8,057 
|                                                   |                            |                                 |        
|                                                   |                            |                                 | 39,027 
|Net finance costs                                  |                            |                                 | (14,682
|                                                   |                            |                                 |        
|Earnings before income taxes                       |                            |                                 | 24,345 
|Provision for income taxes                         |                            |                                 | 3,228  
|                                                   |                            |                                 |        
|Net earnings                                       |                            | $                               | 21,117 
|                                                   |                            |                                 |        
|Capital expenditure:                               |                            |                                 |        
|                                                   | Hotels and restaurants     |                                 | $      
|                                                   | Tourist trains and cruises |                                 |        
|                                                   |                            |                                 |        
|                                                   |                            | $                               | 45,006 
|                                                   |                            |                                 |        

|                     |                            | September 30,
2002 |         | December 30,
2001
|-------------------- | -------------------------- | ------------------ | ------- | -----------------
|Identifiable assets: |                            |                    |         |                  
|                     | Hotels and restaurants     |                    | $       | 863,321          
|                     | Tourist trains and cruises |                    |         | 103,892          
|                     |                            |                    |         |                  
|                     |                            | $                  | 967,213 |                  
|                     |                            |                    |         |                  

13

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

|         |                   | Nine months ended September 30,
|-------- | ----------------- | -------------------------------
|
|Revenue: |                   |                                
|         | Europe            |                                
|         | North America     |                                
|         | Rest of the world |                                
|         |                   |                                
|         |                   | $                              
|         |                   |                                

|                                 |                   | September 30,
2002 |         | December 31,
2001
|-------------------------------- | ----------------- | ------------------ | ------- | -----------------
|Long-lived assets at book value: |                   |                    |         |                  
|                                 | Europe            |                    | $       | 319,233          
|                                 | North America     |                    |         | 269,637          
|                                 | Rest of the world |                    |         | 241,778          
|                                 |                   |                    |         |                  
|                                 |                   | $                  | 830,648 |                  
|                                 |                   |                    |         |                  

10.  Related party transactions

For the nine months ended September 30, 2002, OEH paid subsidiaries of SCL $4,547,000 (2001$4,254,000) for the provision of various services
under a shared services agreement between OEH and SCL. These amounts have been settled in accordance with the shared services agreement and are included in selling, general and administrative
expenses.

SCL
has guaranteed an aggregate principal amount of $134,985,000 of bank loans to OEH outstanding at September 30, 2002 (December 31, 2001$171,401,000),
including a $2,000,000 bank loan to Eastern & Oriental Express Ltd. in which OEH has a minority shareholder interest. Of these loans, $35,339,000 contain cross-default clauses to SCL
indebtedness that OEH is in the process of removing from the OEH loan agreements.

14

---



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

RESULTS OF OPERATIONS

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

|                                              |                                     | Three months ended September 30,
|--------------------------------------------- | ----------------------------------- | --------------------------------
|
|
|Revenue:                                      |                                     |                                 
|                                              | Hotels and restaurants              |                                 
|                                              | Tourist trains and cruises          |                                 
|                                              |                                     |                                 
|                                              |                                     | 100                             
|Expenses:                                     |                                     |                                 
|                                              | Depreciation and amortization       |                                 
|                                              | Operating                           |                                 
|                                              | Selling, general and administrative |                                 
|Net finance costs                             |                                     | 6                               
|                                              |                                     |                                 
|Earnings before income taxes                  |                                     | 13                              
|Provision of income taxes                     |                                     | 2                               
|                                              |                                     |                                 
|Net earnings as a percentage of total revenue |                                     | 11                              
|                                              |                                     |                                 

15

---

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

|             |                                               | Three months ended September 30, |     
|------------ | --------------------------------------------- | -------------------------------- | ----
|
|Revenue:     |                                               |                                  |     
|             | Owned Hotels:                                 |                                  |     
|             |                                               | Europe                           |     
|             |                                               | North America                    |     
|             |                                               | Rest of the world                |     
|             | Hotel management interests and part ownership |                                  |     
|             | Restaurants                                   |                                  |     
|             | Tourist trains and cruises                    |                                  |     
|             |                                               |                                  |     
|Total        |                                               | $                                | 83.1
|             |                                               |                                  |     
|EBITDA:      |                                               |                                  |     
|             | Owned Hotels:                                 |                                  |     
|             |                                               | Europe                           |     
|             |                                               | North America                    |     
|             |                                               | Rest of the world                |     
|             | Hotel management interests and part ownership |                                  |     
|             | Restaurants                                   |                                  |     
|             | Tourist trains and cruises                    |                                  |     
|             | Central overheads                             |                                  |     
|             |                                               |                                  |     
|Total EBITDA |                                               | $                                | 20.9
|             |                                               |                                  |     

16

---

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

|                                |                   | Three months ended
September 30, |     |  |     | 
|------------------------------- | ----------------- | -------------------------------- | --- |  | --- | 
|
|Average Daily Rate (in dollars) |                   |                                  |     |  |     | 
|                                | Europe            |                                  | 455 |  | 403 | 
|                                | North America     |                                  | 249 |  | 239 | 
|                                | Rest of the world |                                  | 191 |  | 186 | 
|                                | Worldwide         |                                  | 321 |  | 296 | 
|Rooms Sold (in thousands)       |                   |                                  |     |  |     | 
|                                | Europe            |                                  | 54  |  | 52  | 
|                                | North America     |                                  | 28  |  | 25  | 
|                                | Rest of the world |                                  | 41  |  | 37  | 
|                                |                   |                                  |     |  |     | 
|                                | Worldwide         |                                  | 123 |  | 114 | 
|RevPAR (in dollars)             |                   |                                  |     |  |     | 
|                                | Europe            |                                  | 336 |  | 323 | 
|                                | North America     |                                  | 147 |  | 137 | 
|                                | Rest of the world |                                  | 95  |  | 91  | 
|                                | Worldwide         |                                  | 194 |  | 183 | 

|                               |                   |  |     |  |     | Change %
|------------------------------ | ----------------- |  | --- |  | --- | --------
|
|Same Store RevPAR (in dollars) |                   |  |     |  |     |         
|                               | Europe            |  | 334 |  | 323 |         
|                               | North America     |  | 148 |  | 137 |         
|                               | Rest of the world |  | 97  |  | 91  |         
|                               | Worldwide         |  | 192 |  | 183 |         

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.

17

---

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

|                                              |                                     | Nine months ended
September 30,
|--------------------------------------------- | ----------------------------------- | -------------------------------
|
|
|Revenue:                                      |                                     |                                
|                                              | Hotels and restaurants              |                                
|                                              | Tourist trains and cruises          |                                
|                                              |                                     |                                
|                                              |                                     | 100                            
|Expenses:                                     |                                     |                                
|                                              | Depreciation and amortization       |                                
|                                              | Operating                           |                                
|                                              | Selling, general and administrative |                                
|Net finance costs                             |                                     | 7                              
|                                              |                                     |                                
|Earnings before income taxes                  |                                     | 11                             
|Provision of income taxes                     |                                     | 1                              
|                                              |                                     |                                
|Net earnings as a percentage of total revenue |                                     | 10                             
|                                              |                                     |                                

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

|                           |                                               | Nine months ended
September 30, |      
|-------------------------- | --------------------------------------------- | ------------------------------- | -----
|
|Revenue:                   |                                               |                                 |      
|                           | Owned Hotels:                                 |                                 |      
|                           |                                               | Europe                          |      
|                           |                                               | North America                   |      
|                           |                                               | Rest of the world               |      
|                           | Hotel management interests and part ownership |                                 |      
|                           | Restaurants                                   |                                 |      
|Tourist trains and cruises |                                               |                                 | 32.0 
|                           |                                               |                                 |      
|Total                      |                                               | $                               | 215.9
|                           |                                               |                                 |      
|EBITDA:                    |                                               |                                 |      
|                           | Owned Hotels:                                 |                                 |      
|                           |                                               | Europe                          |      
|                           |                                               | North America                   |      
|                           |                                               | Rest of the world               |      
|                           | Hotel management interests and part ownership |                                 |      
|                           | Restaurants                                   |                                 |      
|                           | Tourist trains and cruises                    |                                 |      
|                           | Central overheads                             |                                 |      
|                           |                                               |                                 |      
|Total EBITDA               |                                               | $                               | 53.4 
|                           |                                               |                                 |      

18

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

|                                |                   | Nine months ended
September 30 |     |  |     | 
|------------------------------- | ----------------- | ------------------------------ | --- |  | --- | 
|
|Average Daily Rate (in dollars) |                   |                                |     |  |     | 
|                                | Europe            |                                | 380 |  | 353 | 
|                                | North America     |                                | 310 |  | 317 | 
|                                | Rest of the world |                                | 182 |  | 194 | 
|                                | Worldwide         |                                | 289 |  | 287 | 
|Rooms Sold (in thousands)       |                   |                                |     |  |     | 
|                                | Europe            |                                | 128 |  | 125 | 
|                                | North America     |                                | 88  |  | 92  | 
|                                | Rest of the world |                                | 129 |  | 120 | 
|                                |                   |                                |     |  |     | 
|                                | Worldwide         |                                | 345 |  | 337 | 
|RevPAR (in dollars)             |                   |                                |     |  |     | 
|                                | Europe            |                                | 259 |  | 263 | 
|                                | North America     |                                | 204 |  | 219 | 
|                                | Rest of the world |                                | 93  |  | 104 | 
|                                | Worldwide         |                                | 174 |  | 184 | 

|                               |                   |  |     |  |     | Change %
|------------------------------ | ----------------- |  | --- |  | --- | --------
|
|Same Store RevPAR (in dollars) |                   |  |     |  |     |         
|                               | Europe            |  | 253 |  | 261 |         
|                               | North America     |  | 207 |  | 221 |         
|                               | Rest of the world |  | 92  |  | 99  |         
|                               | Worldwide         |  | 173 |  | 181 |         

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

Revenue

Total revenue, including earnings from unconsolidated companies, increased by $15.1 million, or 22%, from $68.0 million in the three months ended
September 30, 2001 to $83.1 million in the three months
ended September 30, 2002. Hotels and restaurants revenue increased by $13.5 million, or 24%, from $56.3 million in the three months ended September 30, 2001 to
$69.8 million in the three months ended September 30, 2002, and tourist trains and cruises increased by $1.6 million, or 14%, from $11.7 million for the three months ended
September 30, 2001 to $13.3 million for the three months ended September 30, 2002.

The
revenue increase for hotels and restaurants was due to an increase at OEH's owned hotels of $12.7 million, or 24%, from $52.0 million in the three months ended
September 30, 2001 to $64.7 million in the three months ended September 30, 2002. Excluding the effect of acquisitions, the revenue increased by $3.8 million, or 7%, from
$52.0 million in the three months ended September 30, 2001 to $55.8 million in the three months ended September 30, 2002. The revenue increase at the hotels was mainly due
to the recovery in 2002 from the major effect on business of the September 11, 2001 terrorist incidents and their adverse impact on the results for the three months ended September 30,
2001. Overall on a comparable basis, OEH's RevPAR at its owned hotels increased by 5% in U.S. dollars in the three months ended September 30, 2002. This is a substantial improvement over the
17% decline experienced in the three months ended December 31, 2001, 12% decline in the

19

---

three months ended March 31, 2002, and 8% decline in the three months ended June 30, 2002. Notwithstanding this encouraging trend RevPAR levels, on a same store basis, were 3% lower in
the three months ended September 30, 2002 compared to the three months ended September 30, 2000, indicating that levels of business have not returned to pre-2001 levels due
to the lingering terrorist threat and weakness in the global economy. The revenue increase for hotel management and part-ownership interests was $0.6 million, or 28%, from
$2.2 million in the three months ended September 30, 2001 to $2.8 million in the three months ended September 30, 2002 which was mainly due to Charleston Place Hotel. The
revenue at OEH's restaurants increased by $0.2 million, or 10%, from $2.0 million in the three months ended September 30, 2001 to $2.2 million in the three months ended
September 30, 2002. The EBITDA of the restaurants declined from a loss of $0.3 million in the three months ended September 30, 2001 to a loss of $0.7 million in the three
months ended September 30, 2002 which was primarily due to losses of the Petit Blanc restaurants in which OEH acquired a 50% interest earlier in the year with the acquisition of La Residencia
and Le Manoir aux Quat'Saisons. This activity is currently being reorganized.

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

Europe.Revenue increased by $8.6 million, or 28%, from $31.0 million for the three months ended
September 30, 2001 to $39.6 million for the three months ended September 30, 2002. The acquisitions of La Residencia in Mallorca, Spain and Le Manoir aux Quat' Saisons in
Oxfordshire, England during the first quarter of 2002 accounted for $7.1 million of this increase. Excluding the effect of these acquisitions, revenue increased by $1.5 million. RevPAR
on a comparable basis decreased by 3% in local currencies in the three months ended September 30, 2002 compared to the three months ended September 30, 2001. However, this was more than
offset by the effect of a stronger Euro which resulted in RevPAR on a comparable basis in U.S. dollars increasing by 3%.

North America.Revenue increased by $2.7 million, or 28%, from $9.5 million in the three months ended
September 30, 2001 to $12.2 million in the three months ended September 30, 2002. The acquisition of a 75% interest in Maroma Resort and Spa in Mexico near Cancun in
March 2002 accounted for $0.8 million. RevPAR on a comparable basis for the North American region improved by 8% in the three months ended September 30, 2002 compared to the three
months ended September 30, 2001.

Rest of the World.Revenue increased by $1.4 million, or 12%, from $11.6 million in the three months ended
September 30, 2001 to $13.0 million in the three months ended September 30, 2002. The Miraflores Park Hotel, which was accounted for as an acquisition at the end of 2001, made up
$1.0 million of the increase in the three months ended September 30, 2002. Excluding the effect of this acquisition, revenue increased by $0.4 million. The RevPAR on a comparable
basis for the rest of the world region increased by 8% in local currencies in the three months ended September 30, 2002 compared to the three months ended September 30, 2001.

Depreciation and Amortization

Depreciation and amortization increased by $0.9 million, or 21%, from $4.2 million in the three months ended September 30, 2001 to
$5.1 million in the three months ended September 30, 2002, primarily due to acquisitions.

Operating Expenses

Operating expenses increased by $7.5 million, or 24%, from $31.4 million in the three months ended September 30, 2001 to $38.9 million
in the three months ended September 30, 2002. Excluding the effect of acquisitions, operating expenses increased by $3.6 million.

20

---

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $4.5 million, or 23%, from $18.8 million in the three months ended September 30,
2001 to $23.3 million in the three months ended September 30, 2002. Excluding the effect of acquisitions, selling, general and administrative expenses were $2.3 million higher
than 2001.

Earnings from Operations

Earnings from operations increased by $2.3 million, or 17%, from $13.5 million in the three months ended September 30, 2001 to
$15.8 million in the three months ended September 30, 2002. Earnings from operations represent total revenue less depreciation and amortization, operating expenses and selling, general
and administrative expenses.

Net Finance Costs

Net finance costs increased by $0.4 million, or 9%, from $4.9 million in the three months ended September 30, 2001 to $5.3 million in
the three months ended September 30, 2002 primarily due to lower interest rates, notwithstanding the increases in debt relating to capital expenditures and acquisitions financed in 2001 and
2002.

Taxes on Income

The provision for income taxes increased by $0.2 million, or 21%, from $1.2 million in the three months ended September 30, 2001 to
$1.4 million in the three months ended September 30, 2002. The Company is incorporated in Bermuda, which does not impose an income tax. Accordingly, the entire income tax provision was
attributable to income tax charges incurred by subsidiaries operating in jurisdictions that impose an income tax.

Net Earnings

Net earnings increased by $1.6 million, or 21%, from $7.5 million in the three months ended September 30, 2001 to $9.1 million in the
three months ended September 30, 2002. Net earnings represent earnings from operations less net finance costs and provision for income taxes.

Nine
Months Ended September 30, 2002 Compared To Nine Months Ended September 30, 2001

Revenue

Total revenue, including earnings from unconsolidated companies, increased by $13.3 million, or 7%, from $202.6 million in the nine months ended
September 30, 2001 to $215.9 million in the nine months
ended September 30, 2002. Hotels and restaurants revenue increased by $12.3 million, or 7%, from $171.6 million in the nine months ended September 30, 2001 to
$183.9 million in the nine months ended September 30, 2002. Tourist trains and cruises revenue increased by $0.9 million, or 3%, from $31.0 million for the nine months
ended September 30, 2001 to $31.9 million for the nine months ended September 30, 2002.

The
revenue increase for hotels and restaurants was due to an increase at OEH's owned hotels of $11.6 million, or 8%, from $151.7 million in the nine months ended
September 30, 2001 to $163.3 million in the nine months ended September 30, 2002. Excluding the effect of acquisitions, the revenue decreased by $8.5 million, or 6%, from
$151.7 million in the nine months ended September 30, 2001 to $143.2 million in the nine months ended September 30, 2002. The revenue decrease at the hotels was mainly due
to the lingering effect on travel and tourism following September 11, 2001 and the impact of the weakened world economy. Overall on a comparable basis, OEH's RevPAR at its owned hotels declined
by 4% in U.S. dollars in the nine months ended September 30, 2002. The

21

---

revenue increase for hotel management interests was $0.8 million, or 10%, from $8.1 million in the nine months ended September 30, 2001 to $8.9 million in the nine months
ended September 30, 2002. The revenue decrease at OEH's restaurants was $0.1 million, or 1%, from $11.8 million in the nine months ended September 30, 2001 to
$11.7 million in the nine months ended September 30, 2002.

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

Europe.Revenue increased by $13.2 million, or 19%, from $67.8 million for the nine months ended
September 30, 2001 to $81.0 million for the nine months ended September 30, 2002. The acquisitions of La Residencia in Mallorca, Spain and Le Manoir aux Quat' Saisons in
Oxfordshire, England during the first quarter of 2002 accounted for $15.4 million of revenue. Excluding the effect of these acquisitions, revenue declined by $2.2 million. RevPAR on a
comparable basis decreased by 6% in local currencies in the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001.

North America.Revenue decreased by $2.2 million, or 5%, from $45.1 million in the nine months ended
September 30, 2001 to $42.9 million in the nine months ended September 30, 2002. The acquisition of Maroma Resort and Spa in Mexico in the second quarter of 2002 accounted for
$1.7 million of revenue. Excluding the effect of this acquisition, revenue decreased by $3.9 million. RevPAR on a comparable basis for the North American region declined by 6% in the
nine months ended September 30, 2002 compared to the nine months ended September 30, 2001.

Rest of the World.Revenue increased by $0.6 million, or 1%, from $38.8 million in the nine months ended
September 30, 2001 to $39.4 million in the nine months ended September 30, 2002. The acquisition of the Miraflores Park Hotel accounted for $2.9 million of the revenue
increase in the nine months ended September 30, 2002. Excluding the effect of this acquisition, revenue decreased by $2.3 million. The RevPAR on a comparable basis for the rest of the
world region decreased by 2% in local currencies in the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001.

Depreciation and Amortization

Depreciation and amortization increased by $2.1 million, or 17%, from $12.2 million in the nine months ended September 30, 2001 to
$14.3 million in the nine months ended September 30, 2002, primarily due to the effect of acquisitions.

Operating Expenses

Operating expenses increased by $8.6 million, or 9%, from $91.7 million in the nine months ended September 30, 2001 to $100.3 million
in the nine months ended September 30, 2002. Excluding the effect of acquisitions, operating expenses reduced by $1.0 million.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $8.5 million, or 16%, from $53.7 million in the nine months ended September 30,
2001 to $62.2 million in the nine months ended September 30, 2002. Excluding the effect of acquisitions, selling, general and administrative expenses increased by $2.1 million.

Earnings from Operations

Earnings from operations decreased by $5.9 million, or 13%, from $44.9 million in the nine months ended September 30, 2001 to
$39.0 million in the nine months ended September 30, 2002.

22

---

Net Finance Costs

Net finance costs remained at $14.7 million in the nine months ended September 30, 2002 and the nine months ended September 30, 2001. The
group has benefited from the effect of lower interest rates, which has been offset by the increases in debt relating to capital expenditures and acquisitions financed in 2001 and 2002.

Taxes on Income

The provision for income taxes decreased by $0.3 million, or 8%, from $3.5 million in the nine months ended September 30, 2001 to
$3.2 million in the nine months ended September 30, 2002. The decrease was mainly due to the reduced profitability of some of OEH's taxpaying subsidiaries.

Net Earnings

Net earnings decreased by $5.7 million, or 21%, from $26.8 million in the nine months ended September 30, 2001 to $21.1 million in the
nine months ended September 30, 2002.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

OEH had cash and cash equivalents of $56.4 million at September 30, 2002, $1.5 million less than the $57.9 million at
December 31, 2001. At September 30, 2002 and December 31, 2001, the undrawn amounts available to OEH under its short-term lines of credit were $25.6 million and
$30.9 million, respectively.
Its total cash and availability at September 30, 2002 was $82.0 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 surplus of $6.6 million at September 30,
2002, an increase in the working capital of $17.2 million from a deficit of $10.6 million at December 31, 2001. The overall increase in working capital was comprised of the
following:



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

Cash Flow

Operating Activities.Net cash provided by operating activities decreased by $10.9 million to a $31.5 million
for the nine months ended September 30, 2002, from cash provided by operating activities of $42.4 million for the nine months ended September 30, 2001. Of the decrease,
$5.7 million was attributable to reduced earnings.

Investing Activities.Cash used in investing activities increased by $41.9 million to $106.7 million for the
nine months ended September 30, 2002, compared to $64.8 million for the nine months ended September 30, 2001. The principal component of this increase was a $22.4 million
increase in expenditure on acquisitions and investments during the current period from $39.3 million to $61.7 million.

23

---

Financing Activities.Cash provided by financing activities for the nine months ended September 30, 2002 was
$72.9 million compared to cash provided by financing activities of $62.5 million for the nine months ended September 30, 2001, an increase of $10.4 million. In the nine
months ended September 30, 2002, OEH had proceeds from borrowings under long-term debt of $86.2 million compared to proceeds of $98.2 million for the nine months ended
September 30, 2001. The proceeds of long-term debt were used to fund acquisitions, investments and capital expenditures during the period.

Capital Commitments.There were $14.4 million of capital commitments outstanding as of September 30, 2002.

Indebtedness

At September 30, 2002, OEH had $451.7 million of long-term debt secured by assets ($395.4 million net of cash), including the
current portion, which is repayable over periods of one to 12 years with a weighted average interest rate of 4.33%. See Note 4 to the Financial Statements regarding the maturity of
long-term debt.

Approximately
40% of the outstanding principal was drawn in European euros and the balance primarily in U.S. dollars. At September 30, 2002, OEH had all its borrowings in floating
rates.

Liquidity

OEH plans to increase its capital expenditures over the next few years by the expansion of existing hotel properties and the acquisition of additional properties
consistent with its growth strategy. At September 30, 2002, OEH had capital commitments of $14.4 million overall relating to a number of projects.

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The
market risk relating to interest rates arises mainly from the financing activities of OEH. Earnings are affected by changes in interest rates on borrowings, principally based on U.S.
dollar LIBOR and EURIBOR, and on short-term cash investments. If interest rates increased by ten percent, with all other variables held constant, annual net finance costs of OEH would have
increased by approximately $1.9 million based on borrowings at September 30, 2002. The interest rates on substantially all of OEH's long-term debt are adjusted regularly to
reflect current market rates. Accordingly, the carrying amounts approximate fair value.

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

RECENT ACCOUNTING PRONOUNCEMENTS

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

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ACCOUNTING POLICIES AND ESTIMATES

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

CONTROLS AND PROCEDURES

The Company's chief executive and financial officers have evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within
90 days of the filing date of this report and found no material deficiencies or weaknesses. There were no significant changes in the Company's internal controls or in other factors that could
affect those controls subsequent to the evaluation date.

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PART II

ITEM 1.    Legal Proceedings

As previously reported, the Company had been named defendant in a lawsuit in New York State Supreme Court, New York County by investors alleging to be holders of
publicly traded senior notes of Sea Containers Ltd. and claiming, inter alia, certain defaults under the indentures governing those notes have occurred or would occur because of a possible
spinoff distribution of the Company's shares by Sea Containers. The suit was dismissed by the court on June 15, 2001 primarily because the plaintiffs failed to comply with the
pre-suit requirements in the indentures and lacked standing to sue. The plaintiffs filed notices of intention to appeal the dismissal with the Appellate Division, First Department of the
New York court on August 2, 2001, and filed their initial brief in the appeal on May 1, 2002. Sea Containers filed its brief on October 2, 2002, and the plaintiffs filed their
reply brief on October 11, 2002. The decision of the Appellate Division is now awaited. The Company understands that Sea Containers continues to believe the allegations of the plaintiffs are
without merit. Sea Containers is indemnifying OEH with respect to possible losses arising from this lawsuit.

Other
than the foregoing litigation, the Company is involved in no material legal proceedings, other than ordinary routine litigation incidental to its business.

ITEM 5.    Other Information

In August 2001, the Company registered with the Commission (Registration Statement No. 333-67268) a public secondary offering by Sea
Containers Ltd. of up to 5,000,000 existing class A common shares of the Company. Sea Containers has advised the Company that, during the nine months ended September 30, 2002, it
sold 1,483,100 of the shares at market prices prevailing at the times of sale, realizing net proceeds of about $25,739,000, and that the sales were made in ordinary broker transactions at normal
brokerage commissions through Salomon Smith Barney Inc. Sea Containers is bearing all costs and expenses of this offering, and the Company will receive none of the sale proceeds.

On
November 12, 2002, the Company issued a news-release announcing its consolidated earnings for the three months and nine months ended September 30, 2002 covered by this
Form 10-Q report, that contained the statement, "Management's current view is that EBITDA for 2002 will be ahead of 2001 although net earnings are now unlikely to surpass those of 2001."

On
November 13, 2002, Sea Containers announced that, given its circumstances, it no longer intended to proceed with a previously proposed spinoff of Company shares to Sea
Containers' shareholders, and that it planned to sell additional Company shares to reduce Sea Containers' equity interest in OEH to slightly less than 50% in order to deconsolidate OEH from Sea
Containers' balance sheet and to sell more Company shares when market conditions improve.

ITEM 6.    Exhibits and Reports on Form 8-K

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SIGNATURES

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

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

Dated:
November 13, 2002

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ORIENT-EXPRESS HOTELS LTD.
Sarbanes-Oxley Act Section 302 Certification

I, James B. Sherwood, Chairman of Orient-Express Hotels Ltd., certify that:





|Dated: November 13, 2002 |  | 
|------------------------ |  | 
|                         |  | 
|                         |  | 

28

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ORIENT-EXPRESS HOTELS LTD.
Sarbanes-Oxley Act Section 302 Certification

I, Simon M.C. Sherwood, President of Orient-Express Hotels Ltd., certify that:





|Dated: November 13, 2002 |  | 
|------------------------ |  | 
|                         |  | 
|                         |  | 

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ORIENT-EXPRESS HOTELS LTD.
Sarbanes-Oxley Act Section 302 Certification

I, James G. Struthers, Vice PresidentFinance and Chief Financial Officer of Orient-Express Hotels Ltd., certify that:





|Dated: November 13, 2002 |  | 
|------------------------ |  | 
|                         |  | 
|                         |  | 

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EXHIBIT INDEX

|Exhibit Number |  | Description                                                                                                                                                                                                                              
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.                                                  
|99.1           |  | Certification under Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), being filed with this report.                                                                                                                    

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