---

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2003oro
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                             to


Commission file number 1-16017

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

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

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

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 April 30, 2003, 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 11,943,901 Class A shares and 2,459,399 Class B shares owned by Sea Containers Ltd.

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PART IFINANCIAL INFORMATION

Orient-Express Hotels Ltd. and Subsidiaries        Consolidated Balance Sheets

|                                                                                        |                                                                                          | March 31,
2003 |           | December 31,
2002 |  
|--------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------- | --------- | ----------------- | -
|
|
|Assets                                                                                  |                                                                                          |                |           |                   |  
|Cash and cash equivalents                                                               |                                                                                          | $              | 39,670    |                   | $
|Accounts receivable, net of allowances of $628 and $592                                 |                                                                                          |                | 61,982    |                   |  
|Inventories                                                                             |                                                                                          |                | 23,425    |                   |  
|                                                                                        |                                                                                          |                |           |                   |  
|Total current assets                                                                    |                                                                                          |                | 125,077   |                   |  
|Property, plant and equipment, net of accumulated depreciation of $106,515 and $101,238 |                                                                                          |                | 771,378   |                   |  
|Investments                                                                             |                                                                                          |                | 82,196    |                   |  
|Goodwill                                                                                |                                                                                          |                | 29,529    |                   |  
|Other assets                                                                            |                                                                                          |                | 10,086    |                   |  
|                                                                                        |                                                                                          |                |           |                   |  
|                                                                                        |                                                                                          | $              | 1,018,266 |                   | $
|                                                                                        |                                                                                          |                |           |                   |  
|Liabilities and Shareholders' Equity                                                    |                                                                                          |                |           |                   |  
|Working capital facilities                                                              |                                                                                          | $              | 29,749    |                   | $
|Accounts payable                                                                        |                                                                                          |                | 22,382    |                   |  
|Accrued liabilities                                                                     |                                                                                          |                | 47,085    |                   |  
|Deferred revenue                                                                        |                                                                                          |                | 20,512    |                   |  
|Current portion of long-term debt and capital leases                                    |                                                                                          |                | 51,007    |                   |  
|                                                                                        |                                                                                          |                |           |                   |  
|Total current liabilities                                                               |                                                                                          |                | 170,735   |                   |  
|Long-term debt and obligations under capital lease                                      |                                                                                          |                | 418,579   |                   |  
|Deferred income taxes                                                                   |                                                                                          |                | 1,909     |                   |  
|                                                                                        |                                                                                          |                |           |                   |  
|                                                                                        |                                                                                          |                | 591,223   |                   |  
|                                                                                        |                                                                                          |                |           |                   |  
|Minority interest                                                                       |                                                                                          |                | 3,883     |                   |  
|                                                                                        |                                                                                          |                |           |                   |  
|Preferred shares $0.01 par value (30,000,000 shares authorized, issued nil)             |                                                                                          |                |          |                   |  
|                                                                                        |                                                                                          |                |           |                   |  
|Shareholders' equity:                                                                   |                                                                                          |                |           |                   |  
|                                                                                        | Class A common shares $0.01 par value 120,000,000 shares authorized): Issued28,340,601  |                |           | 283               |  
|                                                                                        | Class B common shares $0.01 par value (120,000,000 shares authorized): Issued20,503,877 |                |           | 205               |  
|Additional paid-in capital                                                              |                                                                                          |                | 226,963   |                   |  
|Retained earnings                                                                       |                                                                                          |                | 226,267   |                   |  
|Accumulated other comprehensive loss, net of income taxes                               |                                                                                          |                | (30,377   | )                 |  
|Less: reduction due to Class B common shares owned by a subsidiary18,044,478           |                                                                                          |                | (181      | )                 |  
|                                                                                        |                                                                                          |                |           |                   |  
|Total shareholders' equity                                                              |                                                                                          |                | 423,160   |                   |  
|                                                                                        |                                                                                          |                |           |                   |  
|Commitments and contingencies                                                           |                                                                                          |                |           |                   |  
|                                                                                        |                                                                                          |                |           |                   |  
|                                                                                        |                                                                                          | $              | 1,018,266 |                   | $
|                                                                                        |                                                                                          |                |           |                   |  

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 March 31,                                |                                     | 2003 |        | 2002   |  
|----------------------------------------------------------- | ----------------------------------- | ---- | ------ | ------ | -
|
|Revenue                                                     |                                     | $    | 60,409 |        | $
|Earnings from unconsolidated companies                      |                                     |      | 1,145  |        |  
|                                                            |                                     |      |        |        |  
|                                                            |                                     |      | 61,554 |        |  
|                                                            |                                     |      |        |        |  
|Expenses:                                                   |                                     |      |        |        |  
|                                                            | Depreciation and amortization       |      |        | 5,464  |  
|                                                            | Operating                           |      |        | 30,839 |  
|                                                            | Selling, general and administrative |      |        | 23,385 |  
|                                                            |                                     |      |        |        |  
|Total expenses                                              |                                     |      | 59,688 |        |  
|                                                            |                                     |      |        |        |  
|Earnings from operations before net finance costs           |                                     |      | 1,866  |        |  
|Interest expense, net                                       |                                     |      | (4,823 | )      |  
|Interest and related (expense)/income                       |                                     |      | (148   | )      |  
|                                                            |                                     |      |        |        |  
|Net finance costs                                           |                                     |      | (4,971 | )      |  
|                                                            |                                     |      |        |        |  
|(Losses)/earnings before income taxes                       |                                     |      | (3,105 | )      |  
|(Benefit from)/provision for income taxes                   |                                     |      | (497   | )      |  
|                                                            |                                     |      |        |        |  
|Net (losses)/earnings                                       |                                     | $    | (2,608 | )      | $
|                                                            |                                     |      |        |        |  
|Net (losses)/earnings per class A and class B common share: |                                     |      |        |        |  
|                                                            | Basic and diluted                   |      | $      | (0.08  | )
|                                                            |                                     |      |        |        |  

See
notes to consolidated financial statements.

3

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

|Three months ended March 31,                        |                                                                                                        | 2003                                                                              |                                                                        | 2002              |       
|--------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ----------------- | ------
|
|Cash flows from operating activities:               |                                                                                                        |                                                                                   |                                                                        |                   |       
|                                                    | Net (losses)/earnings                                                                                  |                                                                                   | $                                                                      | (2,608            | )     
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       
|                                                    | Adjustments to reconcile net (losses)/earnings to net cash provided by (used in) operating activities: |                                                                                   |                                                                        |                   |       
|                                                    |                                                                                                        | Depreciation and amortization                                                     |                                                                        |                   | 5,464 
|                                                    |                                                                                                        | Undistributed earnings of affiliates                                              |                                                                        |                   | (348  
|                                                    |                                                                                                        | Other non-cash items                                                              |                                                                        |                   | (1,525
|                                                    |                                                                                                        | Change in assets and liabilities net of effects from acquisition of subsidiaries: |                                                                        |                   |       
|                                                    |                                                                                                        |                                                                                   | Decrease in accounts receivable                                        |                   |       
|                                                    |                                                                                                        |                                                                                   | Increase in inventories                                                |                   |       
|                                                    |                                                                                                        |                                                                                   | Decrease in accounts payable, accrued liabilities and deferred revenue |                   |       
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       
|                                                    |                                                                                                        |                                                                                   |                                                                        | Total adjustments |       
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       
|Net cash provided by/(used in) operating activities |                                                                                                        |                                                                                   | 2,061                                                                  |                   |       
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       
|Cash flows from investing activities:               |                                                                                                        |                                                                                   |                                                                        |                   |       
|                                                    | Capital expenditures                                                                                   |                                                                                   |                                                                        | (12,608           | )     
|                                                    | Acquisitions and investments, net of cash acquired                                                     |                                                                                   |                                                                        | (1,202            | )     
|                                                    | Proceeds from sale of fixed assets and other                                                           |                                                                                   |                                                                        | 28                |       
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       
|Net cash used in investing activities               |                                                                                                        |                                                                                   | (13,782                                                                | )                 |       
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       
|Cash flows from financing activities:               |                                                                                                        |                                                                                   |                                                                        |                   |       
|                                                    | Net proceeds from working capital facilities and redrawable loans                                      |                                                                                   |                                                                        | 5,773             |       
|                                                    | Issuance of long-term debt                                                                             |                                                                                   |                                                                        | 15,322            |       
|                                                    | Principal payments under long-term debt                                                                |                                                                                   |                                                                        | (7,912            | )     
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       
|Net cash provided by financing activities           |                                                                                                        |                                                                                   | 13,183                                                                 |                   |       
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       
|Effect of exchange rate changes on cash             |                                                                                                        |                                                                                   | 348                                                                    |                   |       
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       
|Net increase/(decrease) in cash                     |                                                                                                        |                                                                                   | 1,810                                                                  |                   |       
|Cash and cash equivalents at beginning of period    |                                                                                                        |                                                                                   | 37,860                                                                 |                   |       
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       
|Cash and cash equivalents at end of period          |                                                                                                        | $                                                                                 | 39,670                                                                 |                   | $     
|                                                    |                                                                                                        |                                                                                   |                                                                        |                   |       

See
notes to consolidated financial statements.

4

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

|(Dollars in thousands)   |                                            | Class A
Common
Shares
at Par
Value |     | Class B
Common
Shares
at Par
Value |   | Additional
Paid-In
Capital |  | Retained
Earnings |         | Accumulated
Other
Comprehensive
Income/(Loss) |   | Common
Shares
Owned by
Subsidiary |        | Total
Comprehensive
Income/(Loss) |        
|------------------------ | ------------------------------------------ | ---------------------------------- | --- | ---------------------------------- | - | -------------------------- |  | ----------------- | ------- | --------------------------------------------- | - | --------------------------------- | ------ | --------------------------------- | -------
|Balance, January 1, 2003 |                                            | $                                  | 283 |                                    | $ | 205                        |  | $                 | 226,963 |                                               | $ | 228,875                           |        | $                                 | (29,663
|Comprehensive income:    |                                            |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                   |        
|                         | Net losses on common shares for the period |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   | (2,608 | )                                 |        
|                         | Other comprehensive income                 |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                   |        
|                         |                                            |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                   |        
|                         |                                            |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                   |        
|                         |                                            |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                   |        
|Balance, March 31, 2003  |                                            | $                                  | 283 |                                    | $ | 205                        |  | $                 | 226,963 |                                               | $ | 226,267                           |        | $                                 | (30,377
|                         |                                            |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                   |        |                                   |        

See
notes to consolidated financial statements.

5

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

1.    Basis of financial statement presentation

(a)    Accounting policies

In this report Orient-Express Hotels Ltd. is referred to as the "Company", and the Company and its subsidiaries are referred to collectively as "OEH". At
March 31, 2003, Sea Containers Ltd., a Bermuda company ("SCL"), owned 47% of the equity shares in the Company.

For
a description of significant accounting policies and basis of presentation, see Notes 1, 4 and 14 to the consolidated financial statements in the 2002 Form 10-K annual
report. "SFAS" means Statement of Financial Accounting Standard and "FIN" means Financial Interpretation, both of the Financial Accounting Standards Board.

In
the opinion of management, all adjustments necessary for a fair statement of the results of operations for the three months ended March 31, 2003 and 2002, which are all of a
normal recurring nature, have been reflected in the information provided.

(b)    Net (losses) earnings per share

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

Three months ended March 31,

2003

2002Basic and diluted

30,800

30,800


For
the three months ended March 31, 2003 and 2002, the anti-dilutive effect of stock options on 279,307 and 34,711 class A common shares, respectively, was excluded from
the computation of diluted earnings per share.

(c)    Derivative financial instruments

As reported in Note 1(s) to the financial statements in the 2002 Form 10-K annual report, 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. For the three months ended March 31, 2003 and 2002, the change in the
fair market value of derivative instruments resulted in a credit of $83,000 and a charge of $844,000, respectively, to other comprehensive income/(loss).

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

Three months ended March 31,

2003

2002Net (losses)/earnings on common shares

$
(2,608
)
$
440Other comprehensive income/(loss):Foreign currency translation adjustments


(631
)

310Changes in fair value of derivatives


(83
)

844Comprehensive (loss)/income

$
(3,322
)
$
1,594


(d)    Stock-based compensation

OEH's compensation cost for share options is measured as the excess, if any, of the quoted market price of the Company's shares at the date of the grant over the
amount an employee must pay to

6

---

acquire
the shares, in accordance with the intrinsic value method under Accounting Principles Board Opinion No. 25. If compensation cost for the Company's stock option plan had been determined
based on fair values as of the date of grant, OEH's net (losses) earnings and (losses) earnings per share would have been reported as follows (dollars in thousands, except in share amounts):

|Three months ended March 31,                                                                                         |  | 2003 |        | 2002 |  
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | -
|                                                                                                                     |  |      |        |      |  
|Net (losses) earnings on common shares:                                                                              |  |      |        |      |  
|As reported                                                                                                          |  | $    | (2,608 | )    | $
|Deduct: Total stock-based employee compensation expense determined under fair value based method, net of related tax |  |      | (150   | )    |  
|                                                                                                                     |  |      |        |      |  
|Pro forma                                                                                                            |  | $    | (2,758 | )    | $
|                                                                                                                     |  |      |        |      |  
|Basic and diluted (losses) earnings per share:                                                                       |  |      |        |      |  
|As reported                                                                                                          |  | $    | (0.08  | )    | $
|                                                                                                                     |  |      |        |      |  
|Pro forma                                                                                                            |  | $    | (0.09  | )    | $
|                                                                                                                     |  |      |        |      |  

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

7

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2.    Significant 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 paid in
March 2003.

No
goodwill was recognized in these transactions. 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 dates of acquisition, and the assets and liabilities of the acquired companies
have been recorded at their fair value at the dates 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 property, plant and equipment are as follows (dollars in thousands):

March 31,
2003

December 31,
2002Freehold and leased land and buildings

$
638,691

$
630,638Machinery and equipment


118,984


123,716Fixtures, fittings and office equipment


103,970


88,056River cruiseship


16,248


16,230877,893


858,640Less: accumulated depreciation


(106,515
)

(101,238
)$
771,378

$
757,402


At
March 31, 2003, the balance under capital lease for land and buildings was $9,610,000 (December 31, 2002$9,527,000), for machinery and equipment $2,075,000
(December 31, 2002$2,039,000), and for fixtures and fittings $950,000 (December 31, 2002$945,000). Accumulated depreciation related to assets under capital
lease at March 31, 2003 was $1,220,000 (December 31, 2002$1,075,000).

8

---

4.    Long-term debt and obligations under capital lease

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

March 31,
2003

December 31,
2002Loans from banks secured by property, plant and equipment payable over periods of 1 to 12 years, with a weighted average interest rate of 4.23% and 4.30%, respectively, primarily based on LIBOR

$
451,597

$
440,357Loan secured by a river cruiseship payable over 5 years, with a weighted average interest rate of 3.05% and 3.47%, respectively, based on LIBOR


3,500


4,000Obligations under capital lease


14,489


14,659469,586


459,016Less: current portion


51,007


37,243$
418,579

$
421,773


Certain
credit agreements of OEH have restrictive covenants. At March 31, 2003, OEH was in compliance with these covenants. OEH does not currently have any covenants in any of its loan
agreements which limit the payment of dividends.

The
following is a summary of the aggregate maturities of long-term debt, including obligations under capital lease, at March 31, 2003 (dollars in thousands):

Year ending December 31,2004

$
40,1852005


53,5422006


96,5502007


89,8032008 and thereafter


138,499$
418,579


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.

9

---

5.    Income taxes

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

Three months ended March 31, 2003

Current

Deferred

TotalUnited States

$
380

$
127

$
507Other foreign


677


(1,681
)

(1,004
)$
1,057

$
(1,554
)
$
(497
)


Three months ended March 31, 2002

Current

Deferred

TotalUnited States

$
110

$
150

$
260Other foreign


751


(939
)

(188
)$
861

$
(789
)
$
72


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):

March 31,
2003

December 31,
2002Gross deferred tax assets

$
59,699

$
58,145Less: Valuation allowance


(37,198
)

(37,198
)Net deferred tax assets


22,501


20,947Deferred tax liabilities


(24,410
)

(24,277
)Net deferred tax liabilities

$
(1,909
)
$
(3,330
)


The
deferred tax assets consists of tax loss carryforwards and the future tax benefits of accrued pension costs recognized in other comprehensive income. The deferred tax liabilities
consist primarily of differences between the tax basis of depreciable assets and the adjusted basis as reflected in the financial statements.

10

---

6.    Supplemental cash flow information(Dollars in thousands):

Three months ended March 31,

2003

2002Cash paid for:Interest

$
4,721

$
4,576Income taxes

$
859

$
1,487In conjunction with the acquisitions in 2002 (see Note 2), liabilities were assumed relating to non-cash investing and financing activities as follows:Fair value of assets acquired

$


$
58,651Cash paid





(47,500
)Liabilities assumed

$


$
11,151


7.    Commitments

Outstanding contracts to purchase fixed assets were approximately $7,000,000 at March 31, 2003 (December 31, 2002$10,100,000).

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

As
reported in the Company's 2002 Form 10-K annual report, OEH has two reporting segments, (i) hotels and restaurants and (ii) tourist trains and cruises. Financial
information regarding these business segments is as follows, with net finance costs appearing net of capitalized interest and interest and related income (dollars in thousands):

Three months ended March 31,

2003

2002Revenue:Hotels and restaurantsOwned hotelsEurope

$
12,602

$
10,281North America


19,270


16,557Rest of world


17,439


14,544Hotel management/part ownership interests


1,277


1,075Restaurants


3,814


4,53754,402


46,994Tourist trains and cruises


6,007


4,695$
60,409

$
51,689


11

---

Three months ended March 31,

2003

2002Earnings from unconsolidated companies:Hotels and restaurantsHotel management/part ownership interests

$
1,131

$
1,374Restaurants


(76
)

491,055


1,423Tourist trains and cruises


90


558$
1,145

$
1,981Depreciation and amortization:Hotels and restaurantsOwned hotelsEurope

$
1,767

$
1,486North America


1,205


934Rest of world


1,662


1,185Restaurants


146


1454,780


3,750Tourist trains and cruises


684


595$
5,464

$
4,345


Three months ended March 31,

2003

2002Earnings from operations before net finance costs:Hotels and restaurantsOwned hotelsEurope

$
(3,847
)
$
(1,979
)North America


4,189


4,544Rest of world


3,469


3,420Hotel management/part ownership interests


2,408


2,449Restaurants


15


8066,234


9,240Tourist trains and cruises


(1,443
)

(1,326
)4,791


7,914Central selling, general and administrative costs


(2,925
)

(2,579
)1,866


5,335Net finance costs


(4,971
)

(4,823
)(Losses)/earnings before income taxes


(3,105
)

512(Benefit from)/provision for income taxes


(497
)

72Net (losses)/earnings

$
(2,608
)
$
440


12

---

Three months ended March 31,

2003

2002Capital expenditure:Hotels and restaurantsOwned hotelsEurope

$
4,510

$
5,812North America


4,095


1,885Rest of world


3,349


2,450Restaurants


149


237Hotel management/part ownership interests





12,103


10,384Tourist trains and cruises


505


756$
12,608

$
11,140


13

---

March 31,
2003

December 31,
2002Identifiable assets:Hotels and restaurantsOwned hotelsEurope

$
332,524

$
325,566North America


221,524


213,886Rest of world


267,984


259,952Hotel management/part ownership interests


70,468


72,904Restaurants


29,239


29,796921,739


902,104Tourist trains and cruises


96,527


96,428$
1,018,266

$
998,532


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

Three months ended March 31,

2003

2002Revenue:Europe

$
16,444

$
13,132North America


24,124


21,975Rest of world


19,841


16,582$
60,409

$
51,689


14

---

March 31,
2003

December 31,
2002Long-lived assets at book value:Europe

$
341,063

$
334,008North America


285,710


285,772Rest of world


256,330


252,310$
883,103

$
872,090


9.    Related party transactions

For the three months ended March 31, 2003, OEH paid subsidiaries of SCL $1,527,000 (2002$1,500,000) 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 $92,100,000 of bank loans to OEH outstanding at March 31, 2003 (December 31, 2002$112,854,000), including a
$2,000,000 bank loan to Eastern & Oriental Express Ltd. in which OEH has a minority shareholder interest.

OEH
manages under a long-term contract the Charleston Place Hotel (accounted for under the equity method) and has made loans to the hotel-owning company. For the three months ended
March 31, 2003, OEH earned $892,000 (2002$902,000) in management fees and $1,661,000 (2002$1,627,000) in interest income on partnership and other loans. For the three
months ended March 31, 2003, OEH charged the Le Petit Blanc group of restaurants $29,000 (2002$16,000) for services provided.

OEH
manages under long-term contracts the Hotel Monasterio and the Machu Picchu Sanctuary Lodge owned by its 50/50 joint venture with local Peruvian interests, as well as the 50/50-owned
PeruRail operation, and provides loans to these joint ventures. In the three months ended March 31, 2003, OEH earned management fees of $226,000 (2002$205,000) and loan interest of
$60,000 (2002$63,000) from the joint ventures. At March 31, 2003, loans to the hotels aggregated $5,000,000, bear interest at a spread over LIBOR and come due in 2003 and 2005. At
the same date, OEH had a $750,000 subordinated loan to the PeruRail operation with an indefinite maturity date and interest also at a spread over LIBOR.

10.    Subsequent event

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

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

RESULTS OF OPERATIONS

OEH's operating results for the three months ended March 31, 2003 and March 31, 2002, expressed as a percentage of revenue and earnings from
unconsolidated companies, were as follows:

|                                                       |                                     | Three months ended
March 31
|------------------------------------------------------ | ----------------------------------- | ---------------------------
|
|                                                       |                                     | %                          
|Revenue and earnings from unconsolidated companies:    |                                     |                            
|                                                       | Hotels and restaurants              |                            
|                                                       | Tourist trains and cruises          |                            
|                                                       |                                     |                            
|                                                       |                                     | 100                        
|Expenses:                                              |                                     |                            
|                                                       | Depreciation and amortization       |                            
|                                                       | Operating                           |                            
|                                                       | Selling, general and administrative |                            
|Net finance costs                                      |                                     | 8                          
|                                                       |                                     |                            
|Earnings before income taxes                           |                                     | (5                         
|(Benefit) Provision of income taxes                    |                                     | (1                         
|                                                       |                                     |                            
|Net (losses) earnings as a percentage of total revenue |                                     | (4                         
|                                                       |                                     |                            

The
earnings before interest, tax, depreciation and amortization ("EBITDA") of OEH's operations for the three months ended March 31, 2003 and March 31, 2002 are analyzed as
follows, including a reconciliation to earnings from operations before net finance costs (dollars in millions):

|                                                  |                               | Three months ended
March 31 |    
|------------------------------------------------- | ----------------------------- | --------------------------- | ---
|
|EBITDA:                                           |                               |                             |    
|                                                  | Hotels and restaurants        |                             |    
|                                                  |                               | Owned hotelsEurope         |    
|                                                  |                               | North America              |    
|                                                  |                               | Rest of world              |    
|                                                  |                               | Hotel management interests  |    
|                                                  |                               | Restaurants                 |    
|                                                  | Tourist trains and cruises    |                             |    
|                                                  | Central overheads             |                             |    
|                                                  |                               |                             |    
|Total EBITDA                                      |                               |                             | 7.3
|                                                  | Depreciation and amortization |                             |    
|                                                  |                               |                             |    
|Earnings from operations before net finance costs |                               | $                           | 1.9
|                                                  |                               |                             |    

Management
believes that EBITDA is a useful measure of operating performance, used by management and investors to help determine the ability of a company or property to service or incur
indebtedness, because it is not affected by non-operating factors such as leverage and the historic cost of assets. EBITDA is also a financial measure commonly used in the hotel and leisure industry.
However, EBITDA does not represent cash flow from operations as defined by U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund all cash flow needs
and

16

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should
not be considered as an alternative to earnings from operations under U.S. generally accepted accounting principles for purposes of evaluating results of operations.

Operating
information for OEH's owned hotels for the three months ended March 31, 2003 and March 31, 2002 is as follows:

|                                |                   | Three months
ended
March 31 |     |  |     |         |   
|------------------------------- | ----------------- | --------------------------- | --- |  | --- | ------- | --
|
|Average Daily Rate (in dollars) |                   |                             |     |  |     |         |   
|                                | Europe            |                             | 287 |  | 216 |         |   
|                                | North America     |                             | 378 |  | 381 |         |   
|                                | Rest of the world |                             | 237 |  | 181 |         |   
|                                | Worldwide         |                             | 295 |  | 247 |         |   
|Rooms Sold (in thousands)       |                   |                             |     |  |     |         |   
|                                | Europe            |                             | 23  |  | 26  |         |   
|                                | North America     |                             | 35  |  | 30  |         |   
|                                | Rest of the world |                             | 47  |  | 50  |         |   
|                                | Worldwide         |                             | 105 |  | 106 |         |   
|RevPAR (in dollars)             |                   |                             |     |  |     |         |   
|                                | Europe            |                             | 127 |  | 123 |         |   
|                                | North America     |                             | 260 |  | 280 |         |   
|                                | Rest of the world |                             | 126 |  | 105 |         |   
|                                | Worldwide         |                             | 162 |  | 152 |         |   
|
|                                |                   |                             |     |  |     | Dollars |   
|Same Store RevPAR (in dollars)  |                   |                             |     |  |     |         |   
|                                | Europe            |                             | 108 |  | 112 |         | (4
|                                | North America     |                             | 265 |  | 280 |         | (5
|                                | Rest of the world |                             | 126 |  | 105 |         | 20
|                                | Worldwide         |                             | 155 |  | 150 |         | 4 

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.

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Three Months Ended March 31, 2003 Compared To Three Months Ended March 31, 2002

Revenue

Total revenue, including earnings from unconsolidated companies, increased by $7.9 million, or 15%, from $53.7 million in the three months ended March 31,
2002 to $61.6 million in the three months ended March 31, 2003. Hotels and restaurants revenue increased by $7.1 million, or 15%, from $48.4 million in the three months ended March 31,
2002 to $55.5 million in the three months ended March 31, 2003, and tourist trains and cruises increased by $0.8 million, or 15%, from $5.3 million for the three months ended March 31,
2002 to $6.1 million for the three months ended March 31, 2003.

The
revenue increase for hotels and restaurants was mainly due to an increase at OEH's owned hotels of $8.0 million, or 19%, from $41.4 million in the three months ended March 31, 2002
to $49.4 million in the three months ended March 31, 2003. Excluding the effect of acquisitions, the revenue increased by $3.4 million, or 7%, from $51.5 million in the three months ended
March 31, 2002 to $54.9 million in the three months ended March 31, 2003. The revenue from hotel management and part ownership interests remained the same for the comparable period of
2002 at $2.4 million. The revenue from restaurants decreased by $0.9 million, or 20%, from $4.6 million in the three months ended March 31, 2002 to $3.7 million in the three months ended
March 31, 2003 which was mainly due to the '21' Club which was affected by adverse weather conditions in New York City during this period.

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

Europe.Revenue increased by $2.3 million, or 22%, from $10.3 million for the three months ended March 31, 2002 to
$12.6 million for the three months ended March 31, 2003. 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 $1.8 million. Excluding the effect of these acquisitions, revenue increased by $0.5 million. RevPAR on a comparable basis decreased by 21% in local currencies in the three months ended
March 31, 2003 compared to the three months ended March 31, 2002. Expressed in U.S. dollars this translated to a decrease of only 4% as the Euro was substantially stronger against the
U.S. dollar in the three months ended March 31, 2003 compared to the three months ended March 31, 2002.

North America.Revenue increased by $2.7 million, or 16%, from $16.6 million in the three months ended March 31, 2002
to $19.3 million in the three months ended March 31, 2003. The acquisition of a 75% interest in Maroma Resort and Spa in Mexico near Cancun in March 2002 accounted for $2.6 million. Excluding the
effect of this acquisition, revenue increased by $0.1 million. RevPAR on a comparable basis for the North American region declined by 5% in the three months ended March 31, 2003 compared to the
three months ended March 31, 2002. The comparable revenue increase was due to food and beverage and other non-rooms revenue.

Rest of the World.Revenue increased by $3.0 million, or 21%, from $14.5 million in the three months ended March 31,
2002 to $17.5 million in the three months ended March 31, 2003. The RevPAR on a comparable basis for the rest of the world region increased by 5% in local currencies in the three months ended
March 31, 2003 compared to the three months ended March 31, 2002. This translated to a 20% increase when expressed in U.S. dollars primarily as the South African Rand was significantly
stronger against the U.S. dollar in the period over the comparable period of 2002.

Depreciation and Amortization

Depreciation and amortization increased by $1.1 million, or 25%, from $4.4 million in the three months ended March 31, 2002 to $5.5 million in the three
months ended March 31, 2003, primarily due to the effect of acquisitions and capital expenditures in 2002 as well as the effect of the weakness of the U.S. dollar against currencies in which
OEH records some of its assets.

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Operating Expenses

Operating expenses increased by $6.0 million, or 24%, from $24.8 million in the three months ended March 31, 2002 to $30.8 million in the three months
ended March 31, 2003. Excluding the effect of acquisitions, operating expenses increased by $3.9 million primarily due to the effect of the weakness of the U.S. dollar against currencies in
which OEH incurs operating expenses such as the Euro, South African Rand and Brazilian Reis.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $4.2 million, or 22%, from $19.2 million in the three months ended March 31, 2002 to $23.4
million in the three months ended March 31, 2003. Excluding the effect of acquisitions, selling, general and administrative expenses increased by $3.0 million mainly due to the effect of the
weakness of the U.S. dollar against currencies in which OEH incurs expenses.

Earnings from Operations before Net Finance Costs

Earnings from operations decreased by $3.4 million, or 64%, from $5.3 million in the three months ended March 31, 2002 to $1.9 million in the three months
ended March 31, 2003, mainly due to the events taking place in the world during the period which had a negative impact on the travel and lodging industry. These included significant uncertainty
arising out of the anticipation of war in Iraq in the early part of the period, the commencement of the war in March and the much publicized health concerns over travel arising out of the SARS
epidemic. The Easter holiday period falling in the second quarter of 2003 also contributed to this decrease. 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 $0.2 million, or 4%, from $4.8 million in the three months ended March 31, 2002 to $5.0 million in the three months ended
March 31, 2003. OEH has benefited from the effect of lower interest rates, which has been offset by the increases in debt relating to capital expenditures and acquisitions in 2002 and 2003.

Taxes on Income

The provision for income taxes decreased by $0.6 million, from a provision of $0.1 million in the three months ended March 31, 2002 to a benefit of $0.5
million in the three months ended March 31, 2003. The Company is incorporated in Bermuda, which does not impose an income tax. Accordingly, the entire income tax benefit was attributable to
income tax credits incurred by subsidiaries operating in jurisdictions that impose an income tax. The decrease of $0.6 million was mainly due to the reduced profitability of some of these
subsidiaries.

Net Earnings

Net earnings decreased by $3.0 million from a profit of $0.4 million in the three months ended March 31, 2002 to a loss of $2.6 million in the three months ended
March 31, 2003. Net earnings represent earnings from operations less net finance costs and provision for income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

OEH had cash and cash equivalents of $39.7 million at March 31, 2003, $1.8 million more than the $37.9 million at December 31, 2002. At March 31,
2003 and December 31, 2002, the undrawn amounts

19

---

available
to OEH under its short-term lines of credit were $29.0 million and $22.8 million, respectively. Its total cash and availability at March 31, 2003 was $68.7 million including the undrawn
short-term lines.

Current
assets less current liabilities, including the current portion of long-term debt, resulted in a working capital deficit of $45.7 million at March 31, 2003, a decrease in
the working capital of $18.5 million from a deficit of $27.2 million at December 31, 2002. The overall decrease in working capital was comprised of the following:



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

Cash Flow

Operating Activities.Net cash provided by operating activities increased by $3.7 million to a $2.1 million cash surplus for
the three months ended March 31, 2003, from cash provided by operating activities of a deficit of $1.6 million for the three months ended March 31, 2002. Of the increase, $6.7 million
was attributable to non-cash adjustments of $6.7 million partly offset by reduced earnings of $3.0 million.

Investing Activities.Cash used in investing activities decreased by $44.6 million to $13.8 million for the three months
ended March 31, 2003, compared to $58.4 million for the three months ended March 31, 2002. The principal component of this decrease was a $46.1 million decrease in expenditure on
acquisitions and investments during the current period from $47.3 million to $1.2 million.

Financing Activities.Cash provided by financing activities for the three months ended March 31, 2003 was $13.2 million
compared to cash provided by financing activities of $24.7 million for the three months ended March 31, 2002, a reduction of $11.5 million. In the three months ended March 31, 2003, OEH had proceeds
from borrowings under long-term debt of $15.3 million compared to proceeds of $26.4 million for the three months ended March 31, 2002. The proceeds of long-term debt were used to fund
acquisitions, investments and capital expenditures during the period.

Capital Commitments.There were $7.0 million of capital commitments outstanding as of March 31, 2003.

Indebtedness

At March 31, 2003, OEH had $469.6 million of long-term debt secured by assets ($429.9 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 4.29%. 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 March 31, 2003, OEH had all its borrowings in floating
rates.

20

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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 March 31, 2003, OEH had capital commitments of $7.0 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 expenditures, 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 OEH's
overall risk management program, which recognizes the unpredictability of financial markets and seeks to mitigate material adverse effects on consolidated earnings and cash flows. OEH does not hold
market rate sensitive financial instruments for trading purposes.

The
market risk relating to interest rates arises mainly from the financing activities of OEH. Earnings are affected by changes in interest rates on borrowings, principally based on U.S.
dollar LIBOR and EURIBOR, and on short-term cash investments. If interest rates increased by 10%, with all other variables held constant, annual net finance costs of OEH would have increased by
approximately $1.9 million based on borrowings at March 31, 2003. 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 first quarter of 2003 from those described in the Company's 2002 Form 10-K annual
report.

RECENT ACCOUNTING PRONOUNCEMENTS

As of March 31, 2003, the Company's significant accounting policies and estimates, which are described in Notes 1, 4 and 14 to the financial statements in the
Company's 2002 Form 10-K annual report, have not changed from December 31, 2002, except for the adoption of the following pronouncements referred to in that report. On January 1, 2003, the
Company adopted the recognition provisions of FIN No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, and SFAS No. 146,
Accounting for Costs associated with Exit or Disposal Activtities. The adoption of the provisions of FIN No. 45 and SFAS No. 146 did not have a material effect on OEH's consolidated financial
statements.

In
addition, on April 30, 2003, the Financial Accounting Standards Board issued SFAS No. 149, Amendment of Statement No. 133 on Derivatives Instruments and Hedging
Activities. The statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS
No. 133. This statement is effective for contracts entered into or modified after June 30, 2003, except as stated below, and for hedging relationships designated after June 30,
2003. The guidance should be applied prospectively. The provisions of this statement that relate to "Statement No. 133 Implementation Issues" that have been effective for fiscal quarters
beginning prior to June 15, 2003, should continue to be applied in accordance with the respective effective dates. In addition, certain provisions relating to forward purchases or sales of
when-issued securities that do not yet exist, should be applied to existing contracts as well as new contracts entered into after June 30, 2003. The Company is presently evaluating this new statement
but does not expect its adoption to have a material effect on OEH's financial condition or results of operations.

21

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CRITICAL ACCOUNTING POLICIES

For a discussion of these, see under the heading "Critical Accounting Policies" in Item 7Management's Discussion and Analysis in the Company's
2002 Form 10-K annual report.

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.

22

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PART IIOTHER INFORMATION

ITEM 6.    Exhibits and Reports on Form 8-K



23

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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:  May 15, 2003 |  |                           

24

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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:  May 15, 2003 | /s/J.B. SHERWOODJames B. Sherwood Chairman
(Co-Chief Executive Officer)

25

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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:  May 15, 2003 | /s/S.M.C. SHERWOODSimon M.C. Sherwood President
(Co-Chief Executive Officer)

26

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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:  May 15, 2003 | /s/J.G. STRUTHERSJames G. Struthers Vice
PresidentFinance
and Chief Financial Officer

27

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EXHIBIT INDEX

|3.1  |  |  | Memorandum of Association and Certificate of Incorporation of the Company, filed as Exhibit 3.1 to Amendment No. 2 to the Company's Registration Statement on Form S-1 (Registration No. 333-12030) and
incorporated herein by reference.
|---- | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.2  |  |  | Bye-Laws of the Company, filed as Exhibit 3.2 to Amendment No. 4 to the Company's Registration Statement on Form S-1 (Registration No. 333-12030) and incorporated herein by reference.                                                  
|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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