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

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FORM 10-K

(Mark One)

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

For the Fiscal Year Ended December 31, 2001

or

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

For the transition period from  to

Commission file number 1-16017

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

Bermuda(State or other jurisdiction of incorporation or organization)

98-0223493(IRS Employer Identification No.)


41 Cedar Avenue, P.O. Box HM 1179
Hamilton HM EX, Bermuda(Address of principal executive offices)

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

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SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each classClass A Common Shares, $0.01 par value each

Name of each exchange on which registeredNew York Stock ExchangePreferred Share Purchase Rights

New York Stock Exchange


SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:None.

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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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the
registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (Not applicable. See Preliminary Notes on page 1.)

As
of March 15, 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 accounted for as owned by subsidiaries of Orient-Express Hotels Ltd. (see Note 9(e) to the Financial Statements (Item 8)) and 16,429,201
Class A shares and 2,459,399 Class B shares owned by Sea Containers Ltd.). The aggregate market value of the Class A common shares held by non-affiliates of the
registrant was approximately $220,000,000.

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DOCUMENTS
INCORPORATED BY REFERENCE:None.

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LOGO

Preliminary Notes:Orient-Express Hotels Ltd. is incorporated in the Islands of Bermuda and is a "foreign private
issuer" as defined in Rule 3b-4 under the Securities Exchange Act of 1934 (the "1934 Act") and in Rule 405 under the Securities Act of 1933. As a result, it is eligible to
file this annual report pursuant to Section 13 of the 1934 Act on Form 20-F (in lieu of Form 10-K) and to file its interim reports on
Form 6-K (in lieu of Forms 10-Q and 8-K). However, Orient-Express Hotels Ltd. elects to file its annual and interim reports on Forms 10-K,
10-Q and 8-K, and does so as those forms apply to foreign private issuers.

Pursuant
to Rule 3a12-3 under the 1934 Act regarding foreign private issuers, the proxy solicitations of Orient-Express Hotels Ltd. are not subject to the
disclosure and procedural requirements of Regulation 14A under the 1934 Act, and transactions in its equity securities by its officers, directors and significant shareholders are exempt from
Section 16 of the 1934 Act.

Forward-looking
statements concerning the operations, performance, financial condition, plans and prospects of Orient-Express Hotels Ltd. and its subsidiaries are based on
management's current expectations and are subject to various risks and uncertainties. Actual results could differ materially from those anticipated in the statements due to a number of factors,
including those described in Item 1Business, Item 7Management's Discussion and Analysis, Item 7AQuantitative and Qualitative Disclosures about Market
Risk, and Item 12Security Ownership of Certain Beneficial Owners and Management below.

PART I

ITEM 1. Business

Orient-Express Hotels Ltd. (the "Company" and, together with its subsidiaries, "OEH") is a hotel and leisure group focused on the luxury end of the leisure
market. It currently owns and/or operates 30 highly individual deluxe hotels worldwide, four restaurants (one of which is a local group of four outlets), six tourist trains, and a river
cruiseship. OEH acquires only very distinctive properties in areas of outstanding cultural, historic or recreational interest in order to provide luxury lifestyle experiences for the elite traveler. The locations of OEH's various properties are shown in the map
above, numbering 37 because the Hotel Cipriani and Palazzo Vendramin are both in Venice and the Hotel Splendido and Splendido Mare are both in Portofino, while Gametrackers in Botswana operates three
separate safari lodges. These seven units bring the total to 41 properties.

Hotels
and restaurants represent the largest segment of OEH's business, contributing 84% of revenue in 2001. Tourist trains and cruises accounted for the remaining 16%. OEH's worldwide
portfolio of hotels currently consists of 2,900 individual guest rooms and multiple-room suites, each known as a key. Those in 2001 achieved an average daily room rate, or ADR, of $276. A
majority of OEH's customers are leisure travelers, with approximately 55% of guests in 2001 originating from the United States, 32% from Europe and the remaining 13% from elsewhere in the world.

Revenue,
operating earnings and identifiable assets of OEH in 1999, 2000 and 2001 for its business segments and geographic areas are presented in Note 13 to the Financial
Statements (Item 8 below).

At
the present time, OEH is a majority-owned subsidiary of Sea Containers Ltd. See "OEH's Relationship with Sea Containers Ltd." below.

Owned HotelsEurope



TheHotel CiprianiandPalazzo Vendramin102
keysin Venice were built for the most part in the 1950s and are located on three acres on Giudecca Island opposite the Piazza San Marco. Most of their rooms have views over the Venetian
lagoon. Features include fine cuisine in three indoor and outdoor restaurants, gardens and terraces encompassing an Olympic-sized swimming pool, a tennis court and a private boat service to the Piazza
San Marco. OEH has added rooms to these properties over the years often by combining smaller rooms into suites. OEH acquired in 2000 a building adjacent to the hotel, which provides banquet and
meeting rooms and frees up space in the main hotel to add eight keys, one of which is currently under construction in 2002.

TheHotel SplendidoandSplendido Mare84 keysoverlook
picturesque Portofino harbor on the Italian Riviera. Set on four acres, the main hotel was built in 1901 and is surrounded by gardens and terraces which include a swimming pool and tennis court. There
are two open-air and enclosed restaurants as
well as banquet/meeting rooms, and a shuttle bus links the two parts of the resort. OEH acquired the Splendido Mare during 2001, having previously operated it under a long-term lease.

TheVilla San Michele45 keysis located in Fiesole, a few minutes drive from Florence. Originally built as a
monastery in the 15th century with a façade attributed to Michelangelo, it has stunning views over the historic center of Florence and the Arno River Valley. OEH has remodelled and
expanded the guest accommodation to luxury standards, including the addition of a swimming pool. A shuttle bus service is provided to the center of Florence. The property occupies ten acres and OEH is
currently adding eight new keys in 2002.

These
Italian properties are seasonal and close for varying periods during the winter.

OEH
owns and is redeveloping theHotel Carusoin Ravello on three hill-top acres overlooking the Amalfi coast near Naples.
Parts of the property date back to the 11th century. OEH has received business grants from the European Union to help with this redevelopment and, assuming all government planning reviews are
completed soon, is targeting to re-open the hotel in 2003.



Reid's Palace Hotel164 keysis the most famous hotel on the island of Madeira and has
been substantially refurbished by OEH in recent years. This resort is situated on ten acres of semitropical gardens on a cliff top above the sea and the bay of Funchal, the main port city. Opened in
1891, the hotel has four restaurants and spacious conference facilities. Leisure and sports amenities include two swimming pools, a third tide-filled pool, tennis courts, ocean water
sports and access to two championship golf courses. It is particularly well known in the United Kingdom and German leisure markets and has year round appeal, serving both winter escapes to the sun and regular summer
holidays. Later in 2002, OEH plans to start development of a new spa and conference center at the hotel.

TheHotel Quinta do Lago141 keysis located near Faro in the Algarve region, an area well known as a premier
European golf destination and also popular for more traditional summer holidays because the Rio Formosa National Park and Atlantic Ocean beaches are within walking distance. Opened in 1988, the hotel
occupies eight acres and features ocean views, two restaurants, a health club, indoor and outdoor swimming pools, tennis courts and extensive gardens as well as access to nearby championship golf
courses. OEH is planning to add a 21-key extension to the property.

OEH
owns theLapa Palace Hotel109 keysin the embassy district of Lisbon, near the city center and overlooking
the Tagus River. The main part of the hotel was originally built in the 1870s as the palace of a Portuguese noble family. It opened as a luxury hotel in 1992 after extensive conversion and expansion,
including the addition of conference facilities and underground car parking. The hotel is set amid gardens with ornamental fountains and both indoor and outdoor swimming pools, occupying a total of
three acres. In 2001, 15 keys were added. OEH owns an adjoining parcel of land suitable for further development and has applied for planning permission to add 50 more keys.



Hôtel de la Cité61 keysis located in Carcassonne, about an
hour's drive from Toulouse. This beautiful walled medieval town attracts three million tourist visitors per year. The hotel is situated on the square of Basilica Saint-Nazaire, the town's main
architectural attraction, and incorporates one of the 50 watch towers in Carcassonne's ancient fortifications. Opened in 1909, it features two restaurants, gardens with a swimming pool and a
conference center, occupying two acres altogether. OEH completed extensive refurbishment work during 2001 to upgrade the property and reposition it in the higher end of the hotel market. The hotel
also owns and operates for guests on day excursions a canal barge in the nearby Canal du Midi.



In February 2002, OEH acquiredLa Residencia63 keyslocated in the charming
village of Deià on the rugged northwest coast of the island of Mallorca in the Mediterranean. The price was approximately $40,000,000 and included purchase of Le Manoir aux Quat'
Saisons described in the next paragraph and a 50% interest in four Le Petit Blanc restaurants in England described under "Restaurants" below. The core of La Residencia was created from two 16th and
17th century country houses set on a hilltop site of 30 acres. The hotel features three restaurants including the gourmet El Olivio, one of the foremost on the island, as well as a large outdoor
swimming pool, two tennis courts and a spa with an indoor pool. Mallorca is a popular tourist destination with over seven million visitors each year.



Also in February 2002, OEH acquiredLe Manoir aux Quat' Saisons32 keysin
Oxfordshire about a hour's drive west of London. The main part of the hotel is a 15th century manor house set in 27 acres of gardens. The property has been developed by Raymond Blanc, one of
Britain's most famous chefs, and the hotel's restaurant has two stars in the current Michelin Guide, placing it among the best in the British Isles. Mr. Blanc has given a long-term
commitment to remain the chef at the hotel.

Owned HotelsNorth America



TheWindsor Court324 keysopened in 1984 and is located in the central business district
of New Orleans near the French Quarter and the Mississippi riverfront. Harrah's operates the only land-based casino in Louisiana across the street from the hotel. Each room has panoramic views over the river or the city. Facilities include three restaurants and lounges, a rooftop
ballroom, several other banquet and meeting rooms, an outdoor swimming pool and a health club. The hotel's interior décor features a collection of historic European art and antique
furniture. In late 2000, a new luxury hotel opened nearby which increased competition, but management believes the Windsor Court will maintain its prominence in the New Orleans market.

In
May 1999, OEH acquiredKeswick Hall48 keys. Originally a private home dating from 1912, the hotel is located in the
rolling countryside of central Virginia, near Charlottesville and Monticello. It is popular for weekend breaks and business meetings because of the surrounding area and the adjacent Keswick Club which
features several tennis courts, an Olympic-sized swimming pool and an Arnold Palmer golf course which OEH operates under lease. OEH has an option to purchase the golf course which it plans to exercise
in 2002. Zoning permits have also been issued to allow building up to 75 new keys. Including the golf course, the total site occupies 600 acres.

In
the Keswick Hall transaction, OEH also acquired in May 1999 theInn at Perry Cabin41 keys which
was built in 1812 as a country inn and is located in St. Michaels, Maryland on the eastern shore of Chesapeake Bay. Set on 25 shoreside acres that include a health club, an indoor swimming pool and
boating and fishing on the Bay, it is an attractive vacation spot, particularly for the Washington, D.C. market. Like Keswick Hall, the Inn at Perry Cabin has extensive grounds for expansion. A major
renovation of the hotel with the addition of 40 keys and a conference facility is currently underway for completion in 2002.



OEH ownsLa Samanna81 keyslocated on the island of St. Martin in the French West Indies.
Built in 1973, the hotel has two restaurants and comprises 16 buildings on ten acres of land along a 4,000-foot
beach. Amenities include a freshwater swimming pool, tennis courts, fitness and conference centers, boating and ocean water sports. The hotel is currently expanding its spa facilities, and owns an
adjacent 45 acres of land available for future development, starting with a planned 40 additional keys. The hotel is open most of the year, seasonally closing during the autumn months. The hotel has
also been closed for short periods due to hurricane damage in the past, and is insured for damage and business interruption relating to this risk.

During
the first quarter of 1999, OEH sold at a $1,300,000 gain the Windermere Island Club in the Bahamas, which its predecessor company had acquired in 1983. The property had been
closed for several years pending sale.



In March 2002, OEH acquired for about $7,500,000 a 75% equity interest inMaroma Resort and
Spa57 keyson Mexico's Caribbean coast 40 miles south of Cancun. OEH will manage the hotel with continuing support from the seller, who will retain a
25% interest over which OEH has a right of first refusal to acquire in certain circumstances. Of the total keys, 21 are under construction for completion in 2002. The resort opened in 1995 and has 25
acres of land, including some for future expansion, along a 750-foot beach with the Cozumel barrier reef offshore where guests may fish, snorkel and scubadive. Important Myan
archaeological sites are also nearby. Rooms are arranged in six low-rise villas and there are extensive spa facilities. Cancun airport provides excellent international flight connections
to the hotel.

Owned HotelsRest of the World



Built in the 1920s on a three-acre site facing Copacabana Beach near the central business district of Rio de Janeiro, Brazil, the Copacabana Palace
Hotel226 keysis one of the most famous in South America and features two gourmet restaurants, several
spacious function and meeting rooms including a 500-seat theater, a large swimming pool, health club and a roof-top tennis court and pool. Future expansion is planned subject to obtaining government planning permission.
In mid-2001, a new luxury hotel opened nearby which increased competition, but management believes the Copacabana Palace will maintain its prominence in the local Rio market.

In
January 2001, OEH acquired theMiraflores Park Plaza81 keysin an exclusive residential district of
Lima, Peru surrounded by parkland and looking out at the Pacific Ocean, yet near the commercial and cultural center of the city. Opened in 1997, the hotel has a business center for guests, a large
ballroom, outdoor pool, and health and beauty facilities, and occupies about one acre of land.



TheMount Nelson Hotel226 keysin Cape Town, South Africa is an historic property opened
in 1899 with beautiful gardens and pools and has long enjoyed a reputation as one of the foremost hotels on the African continent. It stands just below Table Mountain and is within walking distance of
the main business, civic and cultural center of the city. The hotel has a ballroom, two swimming pools, tennis courts and a fitness center, all situated on ten acres of grounds and gardens.

OEH
developed theWestcliff Hotel118 keysin Johannesburg, South Africa as the only garden hotel in the city,
perched on six hillside acres with views over the zoo and park. Its resort amenities include two swimming pools, a tennis court and health club, and the hotel attracts business guests because of its
proximity to the city center. It opened in 1998. Part of the site is available for future development including a banquet and conference center planned to be built during 2002.

OEH
ownsGametrackers39 keys totalcomprising three separate safari lodges in Botswana called Khwai River Lodge,Eagle Island
CampandSavute Elephant
Camp. Established in 1971, OEH leases the lodge sites in the Okavango River delta and nearby game reserves, where some of the best wildlife in Africa can be observed from open
safari vehicles or boats. Each camp has 12 to 15 twin-bedded deluxe tents, and guests travel between the camps by light aircraft. Boating, fishing, hiking and swimming are offered at the
various sites.



In March 2000, OEH acquired theObservatory Hotel96 keysin Sydney, and Lilianfels
Hotel86 keysin the Blue Mountains National Park west of Sydney. OEH managed the Observatory Hotel for many years
and the contract had provisions which helped it acquire the property at an attractive price. Within walking distance of the central business district of Sydney, this hotel opened in 1993 and has two
restaurant and lounge areas, extensive meeting and banquet rooms, a health club with indoor swimming pool, a tennis court and a large parking garage on a site of about one acre.

The
Lilianfels Hotel is named after the original estate house, dating from 1890, which has been refurbished as the hotel's gourmet restaurant. The main hotel, built in 1992, has a second
restaurant and conference facilities. The resort's four acres of grounds encompass an indoor swimming pool, health club and spa, tennis court and extensive gardens with views over the Blue Mountains.
There is expansion land at this property including adjoining plots acquired in 2001.



In April 2001, OEH acquired theBora Bora Lagoon Resort80 keyswhich opened in
1993 and has bungalows situated over the lagoon water plus additional beach and garden bungalows, all built in traditional Tahitian style on a 12-acre site. Guests dine in two restaurants
and enjoy extensive water sports and tennis. A major renovation program at this property is currently underway in 2002. OEH previously managed the resort under contract. In 1999, when the owner was
considering a sale, OEH agreed to sell back to the owner its contractual right to an early termination fee, which generated a $2,500,000 gain that year.

Hotel Management Interests

TheCharleston Place442 keysis located in the heart of historic Charleston, South
Carolina, a popular destination for tourists, groups and business meetings. Opened in 1986, the hotel has two restaurants, extensive banqueting and conference space including a grand ballroom, a
health club with swimming pool and tennis court, and 27 retail shops leased to third parties. The hotel also owns the adjacent historic Riviera Theater recently remodelled as an additional conference
facility and five retail shops. OEH has a 19.9% ownership interest in the hotel, manages the property under a long-term contract, and receives interest on partnership loans which it
assumed in the original transaction.

In
March 1999, OEH formed a 50/50 joint venture with local investors in Peru, one of the most interesting and promising tourist locations in South America. Under exclusive
management of OEH, this joint venture operates the following two hotels under 20-year renewable leases which commenced in 1995.



TheMonasterio Hotel123 keysis located in the ancient Inca capital of Cusco, the most important tourist
destination in Peru. OEH has embarked on a program to upgrade and expand the property substantially and in that connection has a long-term lease on the adjoining Nazarenas convent, a total
site of about three acres. The hotel was originally built as a Spanish monastery in the 16th century and was converted to hotel use in 1995. The deluxe guest rooms and suites and two
restaurants are arranged around open-air cloisters. Because of Cusco's high altitude, special oxygenation has been added to the ventilation system of some of the refurbished rooms.

TheMachu Picchu Sanctuary Lodge31 keysis the only hotel in the vicinity of the famous mountaintop Inca ruins.
OEH has refurbished all of the rooms to a high standard. The joint venture also has a lease on a seven-acre site by the river at the foot of the ruins, close to the town where tourists
arrive by train, which OEH plans to develop as a larger hotel, but this is unlikely to be open for several years given the time required for permits, design and construction.

Restaurants

OEH owns'21' Club, the famous landmark restaurant in New York City. Originally a speakeasy in the 1920s, this
restaurant is open to the public, occupies three brownstone buildings in midtown Manhattan and features gourmet American cuisine. It serves à la carte meals in the bar restaurant and
also has a number of banqueting rooms used for functions. It was during Prohibition that '21's famous secret wine cellar was built, with its two-ton door operated by placing an
18-inch wire into a tiny key hole in a certain brick. During 2002, OEH plans to add a second à la carte restaurant in one of the banquet rooms.

OEH
also has a 49% interest inHarry's Bar, a private dining club in the Mayfair area of London. The majority partner manages the
restaurant with assistance from OEH's Italian hotels. Its menu features gourmet Italian cuisine. OEH has a right of first refusal to acquire the remaining interest in this property under certain
conditions.

OEH
has bought the contents and name of the renownedLa Cabañasteak house in Buenos Aires and a suitable site in the city
to re-establish the restaurant in 2003 after planned refurbishment.

As
noted under "Owned HotelsEurope" above, OEH acquired two hotels in Spain and England in February 2002 that included purchase of a 50% interest in a group of four
restaurants each calledLe Petit Blancin Oxford, Cheltenham, Birmingham and Manchester, England. Developed by Raymond Blanc, the chef at Le
Manoir aux Quat' Saisons who is the other 50% owner, they offer his French cuisine reasonably priced in contemporary brasserie settings. The four sites are leased.

Tourist Trains and Cruises

OEH's principal European tourist trains, called theVenice Simplon-Orient-Express, operate in two parts in a
regularly scheduled overnight service between London and Venice and on short excursions in southern England. OEH owns 30 railway cars originally used on the historic "Orient-Express" and other famous
European trains. All have been refurbished in original 1920s/1930s décor and meet modern safety standards. The services offered are a continuation of, and are marketed as, the Orient-
Express trains of pre-World War II years. One train is based in Great Britain composed entirely of Pullman cars with a capacity for up to 250 passengers. The other on the Continent is made
up of Compagnie Internationale des Wagons-Lits et du Tourisme sleeping cars and day coaches with capacity for up to 180 passengers. They operate once or twice weekly principally between
London and Venice from March to November each year via Paris, Zurich and Innsbruck on a scenic route through the Alps. Passengers travel under the English Channel by bus on the Eurotunnel shuttle
train. Occasional trips are also made from time to time to Rome, Prague and Istanbul and other European destinations.

TheBritish Pullmancars of Venice Simplon-Orient-Express operate all year, originating out of London on short excursions to places of
historic or scenic interest in southern England, including some overnight trips when passengers stay at local hotels. Both the British and Continental trains are available for private charter.

In
June 2000, OEH launched a new tourist train,Northern Belle, offering day trips and charter service in the north of Britain. It
builds on the success of OEH's British Pullman business, which focuses on the south of England around London. The train comprises six dining cars elegantly decorated to be reminiscent of old British
"Belle" trains of the 1930s, plus related service cars, and can carry up to 250 passengers. Full course gourmet meals are served on board and passengers stay in local hotels on overnight itineraries.

In
September 1999,PeruRailwas formed as a 50/50 joint venture with Peruvian partners to operate a large part of the
state-owned Peruvian railways under a 30-year franchise agreement with a possible extension for a further 30 years. In return for the franchise, the joint venture pays the Peruvian
government a fee related to traffic levels which can be offset for ten years either fully or partially against investment in track improvements. The 70-mile Cusco-Machu Picchu line serves
mainly tourists visiting the Inca ruins. This is the principal access to the famous Inca ruins because there is no convenient road. A second rail line runs from Cusco to Matarani on the Pacific Ocean
via Puno on Lake Titicaca and Arequipa and principally serves freight traffic at present. The Cusco-Machu Picchu line connects two of OEH's Peruvian hotels allowing creation of inclusive packages.
During 2001, OEH began operating a deluxe daytime tourist train service on the Cusco-Puno route through the High Andes mountains using refurbished PeruRail passenger cars, and a 1930s
steamer included in the franchise on day excursions for tourists on Lake Titicaca.

OEH's
other luxury trains are theEastern & Oriental Expressin Southeast Asia, and theGreat South Pacific
Expressin eastern Australia. Both are operated under exclusive management contracts with OEH having a 25% shareholding in the Eastern & Oriental Express owning company
and a 10% shareholding in the Great South Pacific Express operating company.

The
Eastern & Oriental Express makes one round trip each week between Singapore, Kuala Lumpur and Bangkok. The journey lasts about 48 hours each way and includes two nights
on board and side trips to Penang in Malaysia and the River Kwai in Thailand. Some overnight trips are also made from Bangkok to Chiang Mai in northern Thailand. Originally built in 1970, the 24 cars
were substantially rebuilt to an elegant oriental style of décor and fitted with modern facilities such as air-conditioning and private bathrooms. The train is made up of
sleeping cars with three types of berths, three restaurant cars, a bar car and an open air observation car and can carry 125 passengers. Like the Venice Simplon-Orient-Express, the Eastern &
Oriental Express is available for charter by private groups.

The
Great South Pacific Express which commenced operations in May 1999 comprises 21 sleeping, restaurant, bar and observation cars decorated in a late 19th century style
with capacity for 100 passengers. These are owned by Queensland Rail and leased to the operating company. Like the Eastern & Oriental Express tourist train, the Great South Pacific Express
train is fully air-conditioned and the three types of passenger compartments are well appointed with private bathrooms. Regularly scheduled one or two night itineraries originating out of
Brisbane operate north to Cairns in Queensland and south to Sydney in New South Wales. The northern route includes stopovers for passengers to visit the Great Barrier Reef and the Kurunda rainforest.
The southern route includes stopovers in the Hunter Valley wine region and the Blue Mountains in New South Wales and a visit to Canberra, Australia's capital city.

OEH
owns and operates a deluxe river cruiseship on the Irrawaddy River in central Burma, or Myanmar, called theRoad to Mandalay. The ship
was a Rhine River cruiser built in 1964 which OEH bought and refurbished. It features 66 air-conditioned cabins with private bathrooms, spacious restaurants and lounge areas and a canopied
sun deck with swimming pool. The ship travels between Mandalay and Pagan up to eight times each month and carries 126 passengers who enjoy sightseeing along the river and guided shore excursions to
places of historic interest. Five to eight night itineraries are offered including airfare to and from the ship and hotel accommodation in Rangoon. OEH also operates occasional cruises to different
destinations, such as to Bhamo in the north of the country close to the China border. The ship does not operate in midsummer due to the heat and occasionally when the water level of the Irrawaddy
River falls below normal levels due to lack of rainfall.

Management Strategies

OEH has benefited in recent years from trends and developments favorably impacting the world hotel, travel and leisure market, including strong demand growth
trends in the luxury hotel market in many parts of the world, increased travel and leisure spending by consumers, favorable demographic trends in relevant age and income brackets of U.S. and European
populations, and increased online travel bookings. These trends suffered a setback in 2001 due to a slowing world economy and the shock of terrorist attacks on September 11 followed by the war
in Afghanistan. Management believes that the public's confidence in world travel will return and demand for luxury hotel and tourist products will resume. For the future, OEH plans to grow its
business by increasing prices, occupancy and earnings at its established properties and newer acquisitions, by expanding existing hotel and restaurant properties where land or space is already
available, by increasing the utilization of its tourist trains and cruiseship to add trips, and by acquiring additional distinctive luxury properties throughout the world. Factors in OEH's evaluation
of potential acquisitions include the uniqueness of the property, attractions for guests in the vicinity, acceptability of initial investment returns, visible upside potential such as by pricing,
expansion or improved marketing, limitations on nearby competition, and convenient access.

OEH
plans to continue both owning and operating most of its properties. Ownership encourages OEH to develop the distinctive character of its properties and allows it to benefit from all
of the current cash flow and future capital gains should it sell a property. Self-management has enabled OEH to capture the economic benefits otherwise retained by a third-party operator,
to control the operations, quality and expansion of the hotels, and to use its experience with price changes, expansions and renovations to improve cash flow and enhance asset values.

Many
of OEH's individual properties, such as the Hotel Cipriani and '21' Club, have distinctive local brand identities. OEH links these together under its umbrella "Orient-Express
Hotels" name which originated with the legendary luxury European train in the late 19th and early 20th centuries and which is recognizable worldwide and synonymous with sophisticated travel and
refined elegance.

Marketing, Sales and Public Relations

OEH's sales and marketing function is based upon global and local direct sales, cross-selling to existing customers and public relations. OEH has a global sales
force of over 150 persons in 40 locations. Hotel marketing efforts are coordinated through OEH's regional sales offices mainly in New York and London while the tourist trains and cruiseship are
marketed through sales and reservations offices in Providence (Rhode Island), London, Paris, Cologne, Tokyo, Singapore, Brisbane and Cusco. OEH also has local sales representatives at many of the
hotels. The responsibilities of OEH's sales staff include promoting special events, working with group and corporate account representatives and planning direct mail efforts.

Because
repeat customers appreciate the consistent quality of OEH's hotels, trains and restaurants, a key aspect of its strategy is to promote other OEH properties through various
cross-selling efforts.
These include direct mail to existing customers, in-house brochures and promotions, discounts on travel by frequent guests, and OEH's in-house "Orient-Express Magazine". OEH
also sells to guests luxury souvenir goods branded with the names of its travel products.

Another
key aspect of OEH's marketing strategy is a focus on public relations, which it believes is a highly cost-effective marketing tool for luxury properties. Because of
the unique nature of the properties, guests are more likely to hear about OEH's hotels and tours through word-of-mouth or magazine or newspaper articles rather than direct
advertising. OEH has two in-house public relations offices in London and New York and representatives in 11 countries worldwide, including contracts with third-party public relations
firms, to promote its properties through travel magazines and various local, national and international newspaper travel sections. OEH also belongs to a number of international organizations to
promote its properties in conjunction with other non-branded, luxury operators through such groups as "The Leading Hotels of the World" and "Preferred Hotels and Resorts Worldwide".

Internet Initiatives

Management believes that there is significant potential for the internet to enhance distribution and reduce sales and marketing expenses. Through its website
(www.orient-express.com), OEH offers enhanced direct booking services. The internet also helps lower transaction costs on reservations by saving travel agent commissions and tour operator discounts.
OEH is also developing an Orient-Express Hotels Club site to offer discounted rates to frequent guests, and perhaps the frequent guests of other travel companies whose products are comparable to OEH
but who do not compete directly. This will allow OEH to reward its frequent guests, sell excess room capacity and establish a growing on-line community.

Industry Awards

OEH has gained a worldwide reputation for quality and service in the luxury segment of the leisure and business travel market. Over the years, OEH's properties
have won numerous national and international awards given by trade or consumer publications such as Conde Nast Traveller, Gourmet, Travel & Leisure and Tatler and private subscription
newsletters such as Andrew Harper's Hideaway Report, or industry bodies such as the American Automobile Association. They are based on opinion polls of their readers or the professional opinion of
journalists or panels of experts. The awards are considered to influence consumer choice and are therefore highly prized.

Competition

OEH competes for hotel and restaurant acquisition opportunities with others who have substantially greater financial resources. This competition may have the
effect of increasing OEH's acquisition costs by reducing the number of suitable investment opportunities offered and increasing the bargaining power of property owners seeking to sell or to enter into
management agreements.

Competition
for guests in the hospitality industry is based generally on the convenience of location, the quality of the property, pricing, range and quality of food services and
amenities offered, types of cuisine, and name recognition. Demographic, geographic or other changes in one or more of OEH's markets could impact the convenience or desirability of the sites of OEH's
hotels and restaurants, and so could adversely affect their profitability. Also, new or existing competitors could significantly lower prices or offer greater conveniences, services or amenities or
significantly expand, improve or introduce new facilities in markets in which OEH's hotels and restaurants compete.

OEH's
strategy is to acquire only hotels which have special locations and distinctive character. Many are in areas with unique local history or high entry barriers because of zoning
restrictions. OEH builds further its competitive advantage by offering high quality service and cuisine, often with a local flavor. Typically, therefore, OEH competes by providing a special
combination of location, character, cuisine and service rather than relying on price competition.

OEH's
luxury trains have no direct competitors. Other trains exist on similar routes, but management believes OEH's trains and onboard service are so unique that guests consider OEH's
trains more as a luxury experience and an end in themselves rather than as a means of transport.

Employees

OEH currently employs about 4,400 persons, about 1,850 of whom are represented by labor unions. Approximately 3,600 persons are employed in the hotels and
restaurants, 700 are employed in the trains and cruises business, and the balance are engaged in central administration and sales.

Management
believes that OEH's ongoing labor relations are good but these could deteriorate due to disputes over wage or benefit levels, working conditions or OEH's response to changes
in government regulation of workers and the workplace. OEH's operations rely heavily on employees providing high-quality personal service, and any labor shortage or stoppage caused by poor
relations with employees could adversely affect OEH's ability to provide those services.

Government Regulation

OEH and its properties are subject to numerous laws and government regulations such as those relating to food and beverage preparation and sale, liquor service,
health and safety of premises, employee relations, the environment and handling of hazardous substances. Management believes that OEH is in compliance in all material respects with relevant laws and
regulations with respect to its business. Changes in these and in government tax rates or regimes, however, may adversely affect the results of OEH's various properties.

The
expansion of existing properties may be dependent upon obtaining necessary building permits or zoning variances from local authorities. The failure to obtain these could adversely
affect OEH's strategy of increasing revenues and net income through expansion of existing properties.

Certain Trading Factors

OEH's business prospects, financial condition, results of operations or cash flow could be adversely affected by the following trading factors as well as others
described in this report.

OEH's
operations are subject to factors generally encountered in the hospitality industry, such as cyclical downturns arising from changes in general and local economic conditions,
changes in popular travel patterns, dependence by certain properties on vulnerable geographic market segments, inability to sustain price increases or to reduce costs, periodic local oversupply of
guest accommodation which may adversely affect occupancy rates and actual room rates achieved, and regional and local political and other conditions affecting market demand, including recessions,
energy and water shortages, epidemics, civil disorder, crime and terrorism. Another factor is seasonality in that many of OEH's hotels and tourist trains are located in the northern hemisphere where
they operate at low revenue or close during the winter months. The effect of these factors varies among the hotels and other properties because of their geographic diversity.

In
particular, as a result of terrorist attacks on September 11, 2001 and the subsequent military action in Afghanistan, international, regional and even domestic travel has been
disrupted. Demand for most of OEH's properties declined substantially in the latter part of the year, and the effects of the disruption may continue to be felt, for example, because of reluctance of
leisure travellers to go abroad or through a shortening of booking lead-times by guests, travel agents and tour operators.

Local
extreme weather conditions such as storms and hurricanes, destructive forces like fire or flooding and, in the case of OEH's tourist trains, disruption of the railway networks on
which they operate may adversely affect operations and revenue at individual OEH properties. OEH carries property and loss
of earnings insurance in amounts management deems adequate, but damages may exceed the insurance limits or be outside the scope of coverage.

Management
intends to increase revenues and net income through acquisitions of new properties and expansion of existing ones. Pursuit of these opportunities depends on OEH's ability to
identify suitable properties, to negotiate purchases or construction on satisfactory terms, to obtain the necessary financing and governmental permits, to build on schedule, and to integrate new
properties into OEH's operations. Also, the acquisition of properties in new locations may present operating and marketing challenges that are different from those currently encountered in existing
locations. OEH may develop new properties in the future which are subject to such adverse factors as market or site deterioration after acquisition, inclement weather, construction delays, labor or
materials shortages, work stoppages and the continued availability of construction and permanent financing.

The
acquisition and expansion of leisure properties, as well as the ongoing renovations, refurbishments and improvements required to maintain or upgrade existing properties, are capital
intensive. The availability of future borrowings and access to the capital markets for equity financing to fund these acquisitions and expansions depends on prevailing market conditions and the
acceptability of financing terms offered to OEH. There can be no assurance that future borrowings or equity financing will be available to OEH, or available on acceptable terms, in an amount
sufficient to fund OEH's needs. Future equity financings may be dilutive to existing holders of OEH shares, and future debt financings may involve restrictive covenants limiting OEH's flexibility to operate its business.

Currency
fluctuations may materially affect OEH's financial statements and operating margins because of the geographic diversity of its operations linked to foreign currencies. OEH
financial statements are presented in U.S. dollars and can be impacted by foreign exchange fluctuations through both (i) translation risk, which is the risk that the financial statements for a
particular period or as of a certain date depend on the prevailing exchange rates of the various currencies against the U.S. dollar, and (ii) transaction risk, which is the risk that the
currency of OEH's costs and liabilities fluctuates in relation to the currency of its revenue and assets, which fluctuation may adversely affect operating margins. With respect to translation risk,
even though the fluctuations of currencies against the U.S. dollar can be substantial and therefore significantly impact comparisons with prior periods, the translation impact is a reporting
consideration and does not affect the underlying results of operations, as transaction risk does. OEH tries to match foreign currency revenues and costs and assets and liabilities to provide a natural
hedge against translation risks although this is not a perfect hedge. With respect to transaction risk, OEH may try to mitigate its exposure by entering into forward foreign exchange contracts from
time to time. See Item 7AQuantitative and Qualitative Disclosures about Market Risk below.

OEH
may incur a significant amount of debt from time to time which could require OEH to dedicate much of its cash flow from operations to payments on indebtedness, thus reducing the
availability of cash flow to fund working capital, capital expenditures, product and service development and other general corporate purposes, limiting OEH's ability to obtain additional financing,
increasing OEH's vulnerability to adverse economic and industry conditions and the seasonality of some OEH properties,
or limiting OEH's flexibility in planning for, or reacting to, changes in its business. Also, since most of OEH's long-term debt accrues interest at rates that fluctuate with prevailing
interest rates, any increases in prevailing interest rates may increase interest payment obligations. From time to time OEH enters into hedging transactions in order to manage its floating interest
rate exposure. See Item 7AQuantitative and Qualitative Disclosures about Market Risk below.

OEH's Relationship with Sea Containers Ltd.

Sea Containers Ltd. ("SCL"), a Bermuda company with shares listed on the New York Stock Exchange, engages in three main businesses, namely
(i) service-oriented ferry and rail transport operations primarily in and around Britain and Scandinavia, (ii) worldwide marine cargo container leasing primarily through its GE SeaCo
joint venture with General Electric Capital Corporation and (iii) hotel and leisure operations through OEH. Until the initial public offering of the Company's Class A shares in
August 2000, it was a wholly-owned subsidiary of SCL. SCL currently owns about 58% of the Company's Class A shares and all of the Company's Class B shares including those
Class B shares accounted for as owned by OEH subsidiaries. These shares in total represent about 95% of the combined voting power of the two classes for most matters submitted to a vote of
Company shareholders.

OEH
has entered into agreements with SCL providing for the separation of their business operations, for various ongoing relationships between the companies such as shared services and
offices, tax matters, noncompetition and indemnity, and relating to the shares of the Company and SCL to be owned by their respective subsidiaries. See Item 13Certain Relationships
and Related Transactions below. The last agreement, an Amended and Restated Share Owning Subsidiaries Restructuring Agreement dated as of June 6, 2001 (the "SOS Restructuring Agreement"),
enables four OEH subsidiaries to acquire from SCL a substantial number of the Class B common shares in the Company (representing an approximate 77% voting interest in the Company) either when a
spinoff distribution described in the next paragraph occurs or, by one of those OEH subsidiaries, at any time after July 21, 2002 upon exercise of a call option under the SOS Restructuring
Agreement.

SCL
intends to distribute to its shareholders a substantial number of the Class A and B common shares of the Company that SCL owns if it completes planned public sales of some of
those shares of the Company (subject to stock market conditions) and receives all necessary consents and approvals from its board of directors, lenders and others. SCL is not obligated to make a spinoff distribution
which may not occur soon or at all. Claims by alleged holders of public debt of SCL that a distribution is a default under the indentures governing that debt were dismissed by the court during 2001
but, if reasserted, could delay or even prevent a distribution from occurring. See Item 3Legal Proceedings below. Also, SCL may elect to sell all or substantially all of the shares
of the Company it owns, but subject to the call option rights of an OEH subsidiary under the SOS Restructuring Agreement. See Item 13Certain Relationships and Related Transactions below.

In
August 2001, the Company registered with the Securities and Exchange Commission (Registration Statement No. 333-67268) a public secondary offering by SCL of up to
5,000,000 existing Class A common shares of the Company. SCL has advised OEH that, during the three months ended September 30, 2001, SCL sold 75,200 of the shares realizing net proceeds
of about $1,500,000 and, during the period January 1-March 15, 2002, SCL sold 439,200 of the shares realizing net proceeds of about $8,000,000. SCL has further advised OEH that all of
the shares were sold at market prices prevailing at the time of sale, and that the sales were made in ordinary broker transactions at normal brokerage commissions through Salomon Smith
Barney Inc. SCL is bearing all costs and expenses of this offering, and OEH will receive none of the sale proceeds.

Before
OEH's separation from SCL and subject to the SOS Restructuring Agreement, SCL will have the power to control OEH as long as it continues to own a substantial number of the
Company's Class B common shares. As a result, until SCL distributes or otherwise disposes of these shares including to OEH subsidiaries under the SOS Restructuring Agreement, SCL will be able
to elect the Company's entire board of directors and, through it, to control any determination with respect to OEH's business direction and policies. Since the initial public offering of the Company's
Class A shares in August 2000, the Company's board of directors and management have conducted OEH's business with the full support of SCL, and OEH believes SCL has no intention of withdrawing that
support. Of the six directors on the Company's board, three are also directors or officers of SCL.

SCL
is the borrower under financing agreements which contain covenants limiting the actions which SCL may take, or permit a material subsidiary such as the Company to take. The Company
will continue to be a material subsidiary for purposes of these covenants so long as it remains majority-owned or controlled by SCL. SCL's financing agreements also impose financial
covenants measured on a consolidated basis with SCL's subsidiaries, including OEH. SCL's decisions with respect to OEH, while it remains an SCL subsidiary, may be
affected by its having to remain in compliance with these covenants and other requirements. OEH may cease to be a material subsidiary of SCL under these agreements if an OEH subsidiary exercises on or
after July 21, 2002 a call option on OEH shares under the SOS Restructuring Agreement as described above. See Item 13Certain Relationships and Related Transactions below.

A
default under SCL's loan agreements or public debt indentures could result in a default under some OEH loan agreements which contain cross-default provisions to debt of
SCL. See Note 5 to the Financial Statements below. Any default under loan agreements of OEH triggered by a default under SCL's debt instruments could also result in
cross-defaults to other loan agreements of OEH. OEH is amending these loan agreements or refinancing them in order to remove these cross-default provisions. OEH has guaranteed no debt of SCL.

ITEM 2. Properties

OEH owns 27 hotels, three European tourist trains, a cruiseship and two restaurants as described in Item 1Business above. OEH owns interests of 50%
or less in three hotels, its Southeast Asian and Australian tourist trains and PeruRail, and two restaurant businesses also as described in Item
1Business above. The small regional sales and marketing offices of the hotels, tourist trains and cruiseship are occupied under lease.

ITEM 3. Legal Proceedings

As previously reported, the Company had been named defendant in two lawsuits in New York state court by investors alleging to be holders of publicly traded notes
and debentures of SCL and claiming, inter alia, certain defaults under the indentures governing those notes and debentures have occurred or would occur because of a proposed spinoff distribution of
the Company's shares by SCL. The first lawsuit 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. Those plaintiffs filed notices of intention to appeal the dismissal with the New York Appellate Division on August 2, 2001, but no appeal has been filed
to date. The second lawsuit was dismissed by the same New York state court on November 28, 2001 on similar grounds, and the plaintiffs in that case have not appealed. See note 11(b) to
the Financial Statements (Item 8 below).

Other
than this public debt litigation, OEH is involved in no material legal proceedings, other than ordinary routine litigation incidental to its business.

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

The Company submitted no matter to a vote of its security holders during the fourth quarter of 2001.



PART II

ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Class A common shares of the Company are traded on the New York Stock Exchange. The Class B common shares of the Company are all owned by Sea
Containers Ltd., and are not listed. The following table presents the quarterly high and low sales prices of the Class A common shares since the Company's initial public offering on
August 10, 2000 as reported for New York Stock Exchange composite transactions:

|               |  | 2001 |       | 2000
|-------------- |  | ---- | ----- | ----
|
|First quarter  |  | $    | 23.60 |     
|Second quarter |  |      | 23.25 |     
|Third quarter  |  |      | 22.45 |     
|Fourth quarter |  |      | 18.40 |     

The
Company has paid no cash dividends on its Class A and B common shares since its initial public offering, the Board of Directors having determined to retain profits to fund
future growth and development of OEH.

The
Islands of Bermuda where the Company is incorporated have no applicable governmental laws, decrees or regulations which restrict the export or import of capital or affect the payment
of dividends or other distributions to nonresident holders of the Class A and B common shares of the Company or which subject United States holders to taxes.

At
March 15, 2002, the number of record holders of the Class A common shares of the Company was approximately 20.

ITEM 6. Selected Financial Data

Orient-Express Hotels Ltd. and Subsidiaries

|                                                                                                              |  | Year ended December 31,
|------------------------------------------------------------------------------------------------------------- |  | -----------------------
|
|
|Revenue and earnings from unconsolidated companies                                                            |  | $                      
|                                                                                                              |  |                        
|Gain on sale of assets and other                                                                              |  |                        
|                                                                                                              |  |                        
|Net earnings on Class A and Class B common shares before cumulative effect of change in accounting principle  |  | $                      
|                                                                                                              |  |                        
|Net earnings per Class A and Class B common share before cumulative effect of change in accounting principle: |  |                        
|Basic and diluted                                                                                             |  | $                      
|                                                                                                              |  |                        
|Total assets                                                                                                  |  | $                      
|                                                                                                              |  |                        
|Long-term obligations                                                                                         |  | $                      
|                                                                                                              |  |                        
|Shareholders' equity                                                                                          |  | $                      
|                                                                                                              |  |                        

See
notes to consolidated financial statements (Item 8).

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

OEH has two business segments: (1) hotels and restaurants and (2) tourist trains and cruises. Hotels currently consist of 30 deluxe hotels,
including La Residencia, Le Manoir aux Quat' Saisons and Maroma Resort and Spa, all acquired in early 2002. Twenty-seven of these are wholly or majority owned and are referred to in this report as
"owned hotels", although the Miraflores Park Plaza was accounted for among "hotel management interests" during 2001 until the end of the year when it became an "owned hotel". See Note 2(a) to
the Financial Statements (Item 8 below). The other three hotels in which OEH has an equity interest and operates under management contracts are referred to in this report as "hotel management
interests". In 2001, revenue from hotel management interests was $10.9 million, or 4% of total revenue, which consisted of $6.4 million from investments accounted for using the equity
method, and $4.5 million from management fees. Of the owned hotels, 12 are located in Europe, five in North America and ten in the rest of the world. One of the hotels in Europethe
Hotel Caruso in Ravellois not currently operational as it is undergoing restoration and refurbishment.

Also,
OEH currently owns and operates the restaurant '21' Club in New York, has a 49% interest in Harry's Bar in London, a 50% interest in four restaurants in Britain, trading as Le
Petit Blanc (operating as one unit), and owns La Cabaña restaurant in Buenos Aires, which is currently closed for restoration and refurbishment (the "restaurants").

OEH's
tourist trains and cruises segment operates six tourist trainsthree of which are owned and operated and three in which OEH has an equity interest and management
contractsand a river cruiseship.

Revenue
per available room, or REVPAR, is a key performance indicator used widely within the hotel industry as it is a function of the average daily rate, or ADR, achieved for the rooms
sold and average occupancy, being the rooms sold as a proportion of the rooms available to be sold. ADR on its own gives no indication of the relative occupancy of the hotel and could be shown as
increasing while the number of rooms sold had fallen resulting in a reduction in rooms revenue over a prior period.

OEH
has been pursuing a growth strategy based on internal growth driven principally by increases in REVPAR, growth from expansion of existing properties and growth from acquisitions. As
a result of this strategy, in recent years prior to the September 11th events referred to below, the revenues of OEH, its earnings before interest, tax, depreciation and amortization, or
EBITDA, its EBITDA margin (EBITDA over revenue) and its net earnings have all increased substantially.

Following
the terrorist attacks in the United States on September 11, 2001, OEH experienced a significant adverse impact on its business in common with other companies in the
travel and hospitality sector. Significant levels of cancellations were received by OEH's hotels from American customers in the immediate aftermath of September 11th including hotels outside
the United States, whose guests are, approximately, one-third American. The subsequent impact upon the economy of the United States and concerns for the world economy generally has meant that whilst
occupancy at the hotels has
recovered from the immediate impact, they have not recovered to the pre-September 11th levels. This has led directly to the decrease in revenue and net earnings of OEH in 2001
compared to 2000, which is discussed in more detail in the following sections.

In
2001, 84% of OEH's revenues were derived from the hotels and restaurants segment and the remainder from the tourist trains and cruises segment. In the hotels and restaurants segment,
87% of revenues was from owned hotels, 8% was from restaurants and 5% was from hotel management interests.

OEH
derives revenue from owned hotel operations primarily from the sale of rooms and the provision of food and beverages. The main factors for analyzing rooms revenue are the number of
room nights sold and the average daily room rate, or ADR, and REVPAR referred to above which is a measure of both these factors.

Revenue
from restaurants is derived from food and beverages sold to customers. Revenue from hotel management interests includes fees received under management contracts, which are based
upon a combination of a percentage of the revenue from operations and operating earnings calculated before specified fixed charges. It also includes OEH's share of the earnings of unconsolidated
companies.

The
revenue from the tourist trains and cruises segment primarily comprises tickets sold for travel and food and beverage sales.

Operating
costs include labor, repairs and maintenance, energy and the costs of food and beverages sold to customers in respect of owned hotel operations, restaurants and tourist trains
and cruises.

Selling,
general and administrative expenses include travel agents' commissions, the salaries and related costs of the sales teams, advertising and public relations costs, and the
salaries and related costs of management. Some of the central general and administrative expenses are provided under agreement with SCL. See Note 14 to the Financial Statements below.

Depreciation
and amortization includes depreciation of owned hotels, restaurants, tourist trains and the cruiseship.

When
OEH looks at results for a period on a "comparable" basis, OEH is considering only the results of hotels owned throughout the period mentioned.



Results of Operations

OEH's operating results for years 2001, 2000, and 1999, expressed as a percentage of total revenue, were as follows:

|                                                                    |                                        | Year ended December 31, |   
|------------------------------------------------------------------- | -------------------------------------- | ----------------------- | --
|
|Revenue:                                                            |                                        |                         |   
|                                                                    | Hotels and restaurants                 |                         | 82
|                                                                    | Tourist trains and cruises             |                         | 15
|                                                                    | Earnings from unconsolidated companies |                         | 3 
|                                                                    | Gains on sale of assets and other      |                         |  
|                                                                    |                                        |                         |   
|                                                                    |                                        | 100                     |   
|Expenses:                                                           |                                        |                         |   
|                                                                    | Depreciation and amortization          |                         | 6 
|                                                                    | Operating                              |                         | 46
|                                                                    | Selling, general and administrative    |                         | 28
|Net finance costs                                                   |                                        | 7                       |   
|                                                                    |                                        |                         |   
|Earnings before income taxes                                        |                                        | 13                      |   
|Provision of income taxes                                           |                                        | 2                       |   
|                                                                    |                                        |                         |   
|Earnings before cumulative effect of change in accounting principle |                                        | 11                      |   
|Cumulative effect of change in accounting principle                 |                                        |                        |   
|                                                                    |                                        |                         |   
|Earnings as a percentage of total revenue                           |                                        | 11                      | % 

The
revenues and earnings before interest, tax, depreciation and amortization (EBITDA) of OEH's operations for the years 2001, 2000, and 1999 are analyzed as follows:

|                           |               | Year ended December 31, |      
|-------------------------- | ------------- | ----------------------- | -----
|
|
|Revenue:                   |               |                         |      
|                           | Owned Hotels: |                         |      
|                           |               | Europe                  |      
|                           |               | North America           |      
|                           |               | Rest of the World       |      
|Hotel management interests |               |                         | 10.9 
|Restaurants                |               |                         | 17.8 
|Tourist trains and cruises |               |                         | 40.9 
|                           |               |                         |      
|Total                      |               | $                       | 261.3
|                           |               |                         |      
|EBITDA:                    |               |                         |      
|                           | Owned Hotels: |                         |      
|                           |               | Europe                  |      
|                           |               | North America           |      
|                           |               | Rest of the world       |      
|Hotel management interests |               |                         | 10.9 
|Restaurants                |               |                         | 4.0  
|Tourist trains and cruises |               |                         | 7.3  
|Gains                      |               |                         |     
|Central overheads          |               |                         | (9.5 
|                           |               |                         |      
|Total EBITDA               |               | $                       | 69.1 
|                           |               |                         |      



Management
believes that EBITDA is a useful measure of operating performance. However, EBITDA does not represent cash flow from operations as defined by U.S. generally accepted
accounting principles, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net earnings under U.S. generally accepted
accounting principles for purposes of evaluating results of operations.

Year Ended December 31, 2001 compared to Year Ended December 31, 2000

Revenue

Total revenue, including earnings from unconsolidated companies, decreased by $15.1 million, or 5%, from $276.4 million in 2000 to
$261.3 million in 2001 (on a comparable basis, excluding acquisitions in 2000 and 2001 revenue decreased by $19.8 million). Hotels and restaurants revenue decreased by
$13.2 million, from $233.6 million in 2000 to $220.4 million in 2001, and the revenue from tourist trains and cruises decreased by $1.9 million, from $42.8 million
to $40.9 million.

The
decrease in hotels and restaurants revenue comprised the following:



The
decrease in owned hotels revenue of $9.6 million is primarily due to events following September 11, 2001 as discussed above, and is analyzed by region as follows:

Europe:Revenue increased by $0.8 million, or 1%, from $79.0 million in 2000 to $79.8 million in 2001.
The revenue is on a comparable basis with all hotels owned in 2001 being owned for all of 2000.

REVPAR
on a comparable basis increased by 3% in U.S. dollars in 2001 over 2000 and 6% in local currencies reflecting the weakening euro.

North America:Revenue decreased by $8.0 million, or 12%, from $67.2 million in 2000 to $59.2 million in
2001.

On
a comparable basis REVPAR declined by 12% in 2001 compared to 2000 from $223 to $195 largely reflecting the impact of the September 11th events.

Rest of the World:Revenue decreased by $2.4 million, or 4%, from $55.1 million in 2000 to $52.7 million
in 2001. Revenue on a comparable basis decreased by $8.0 million, or 18%.

This
was primarily driven through a decline in comparable REVPAR of 16% in local currencies over 2000 and 22% in U.S. dollars. This decrease in revenue on a comparable basis was partly
offset by revenue from the Observatory and Lilianfels Hotels in Australia and the Bora Bora Lagoon Resort, which were acquired during 2000 and 2001 respectively.

Depreciation and Amortization

Depreciation and amortization increased by $1.3 million, or 9%, from $15.1 million in 2000 to $16.4 million in 2001. This increase was
primarily attributable to an increase at OEH's owned hotels and restaurants due to the effect of acquisitions made in 2000 and 2001.

Operating Expenses

Operating expenses reduced by $2.6 million, or 2%, from $122.6 million in 2000 to $120.0 million in 2001. Following the impact of
September 11th referred to above, OEH conducted a review of operating expenses at all of its properties and businesses and a number of cost reduction initiatives were implemented to offset partly the reduction in revenue.

Selling, General and Administration Expenses

Selling, general and administrative expenses increased by $2.5 million, or 4%, from $69.7 million in 2000 to $72.2 million in 2001. This
increase was primarily due to acquisitions made in 2000 and 2001.

Earnings from Operations

Earnings from operations decreased by $16.3 million, or 24%, from $69.0 million in 2000 to $52.7 million in 2001. Earnings from operations
represent total revenue less depreciation and amortization, operating expenses and selling, general and administrative expenses.

Net Finance Costs

Net finance costs decreased by $4.3 million, or 19%, from $23.0 million in 2000 to $18.7 million in 2001. The decrease is mainly attributable
to lower interest rates on floating rate debt during 2001.

Taxes on Income

The provision for income taxes decreased by $1.8 million, or 30%, from $6.0 million in 2000 to $4.2 million in 2001. The Company is
incorporated in Bermuda, which does not impose an income tax. Accordingly, the entire income tax provision was attributable to income tax charges incurred by subsidiaries operating in jurisdictions
that impose an income tax. The decrease of $1.8 million was due to reduced profitability of these subsidiaries.

Net Earnings

In 2001, OEH's net earnings decreased by $10.1 million, or 25%, from $40.0 million in 2000 to $29.9 million in 2001. Net earnings represent
earnings from operations less net finance costs, provision for income taxes and the cumulative effect of change in accounting principle.

Year Ended December 31, 2000 compared to Year Ended December 31, 1999

Revenue

Total revenue, including earnings from unconsolidated companies but excluding gains, increased by $27.3 million, or 11%, from $249.1 million in 1999
to $276.4 million in 2000. Hotels and restaurants revenue increased by $24.7 million, from $208.9 million in 1999 to $233.6 million in 2000, and the revenue from tourist
trains and cruises increased by $2.6 million, from $40.2 million to $42.8 million.

The
revenue increase for hotels and restaurants was comprised of:



The
increase in owned hotels revenue of $23.6 million is analyzed by region as follows:

Europe:Revenue decreased by $1.0 million, or 1%, from $80.0 million in 1999 to $79.0 million in 2000.
The revenue is on a comparable basis with all hotels owned in 2000 being owned for all of 1999.

The
reported revenues were significantly impacted by the weakening of the euro against the U.S. dollar in 2000 as the European hotels revenues are earned in currencies linked with the
euro. In local currency, REVPAR increased by 15% in 2000 over 1999 driven largely by increased room rates, while in U.S. dollars this REVPAR was flat.

North America:Revenue increased by $8.1 million, or 14%, from $59.1 million in 1999 to $67.2 million in
2000.

On
a comparable basis, revenue increased by $2.7 million primarily due to an increase in the number of rooms sold at the Windsor Court, where the REVPAR grew at 11% over 1999. The
remaining increase in revenue was due to the acquisitions of Keswick Hall and the Inn at Perry Cabin in 1999 and the revenue from La Samanna which was closed in late 1999 and early 2000 following
hurricane damage.

Rest of the World:Revenue increased by $16.5 million, or 42%, from $38.6 million in 1999 to
$55.1 million in 2000.

Revenue
on a comparable basis increased by $4.9 million, or 13%. This was primarily driven through a growth in comparable REVPAR of 15% in local currencies over 1999 and 10% in
U.S. dollars. The remaining increase was due to the Observatory and Lilianfels Hotels in Australia, which were acquired during 2000.

Gains

OEH realized gains of $3.8 million in 1999, including a $2.5 million payment in the fourth quarter to OEH relating to the buy-out of its
right to an early termination fee under the management contract for the Bora Bora Lagoon Resort, and a $1.3 million gain on the sale of the Windermere Island Club in the Bahamas in the first
quarter. The buy-out transaction occurred as a result of the owner considering a sale of the property and, in order to facilitate a sale, OEH agreed to sell back to the owner OEH's
contractual right to an early termination fee. OEH continued to manage the property, and acquired it in April 2001.

Depreciation and Amortization

Depreciation and amortization increased by $2.0 million, or 15%, from $13.1 million in 1999 to $15.1 million in 2000. This increase was
primarily attributable to an increase at OEH's owned hotels and restaurants due to the effect of acquisitions made in 1999 and 2000.

Operating Expenses

Operating expenses increased by $7.4 million, or 6%, from $115.2 million in 1999 to $122.6 million in 2000. This increase included a
$9.0 million increase at OEH's owned hotels and restaurants primarily due to the effect of acquisitions made in 1999 and 2000, partly offset by reduced U.S. dollar reported operating costs in
the European hotels following the weakening of the euro against the U.S. dollar in 2000. The majority of operating costs incurred at the European hotels are in currencies linked to the euro.

Selling, General and Administration Expenses

Selling, general and administrative expenses increased by $7.4 million, or 12%, from $62.3 million in 1999 to $69.7 million in 2000, of which
$7.3 million was due to owned hotels and restaurants. Of the increase of $7.3 million at OEH's owned hotels and restaurants, $3.0 million was attributable to the acquisition of
hotels during 2000 and 1999.

Earnings from Operations

Earnings from operations increased by $6.8 million, or 11%, from $62.2 million in 1999 to $69.0 million in 2000. Excluding gains, earnings
from operations before net finance costs increased by $10.6 million, or 18%, from $58.4 million in 1999 to $69.0 million in 2000. 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 $4.0 million, or 21%, from $19.0 million in 1999 to $23.0 million in 2000. The increase includes
$2.1 million attributable to the effect of increases in debt relating to acquisitions and investments financed in 2000 and 1999.

Taxes on Income

The provision for income taxes increased by $0.8 million, or 15%, from $5.2 million in 1999 to $6.0 million in 2000. The Company is
incorporated in Bermuda, which does not impose an income tax. Accordingly, the entire income tax provision was attributable to income tax charges incurred by subsidiaries operating in jurisdictions
that impose an income tax. The increase of $0.8 million was due to increased profitability of these subsidiaries.

Net Earnings

In 2000, OEH's net earnings before the cumulative effect of the change in accounting principle increased by $2.0 million, or 5%, from $38.0 million
in 1999 to $40.0 million in 2000. Excluding gains, net earnings before the cumulative effect of the change in accounting principle increased by $5.8 million, or 17%, from
$34.2 million in 1999 to $40.0 million in 2000. Net earnings represent earnings from operations less net finance costs, provision for income taxes and the cumulative effect of change in
accounting principle.

Change in Accounting Principle

In 1999, OEH adopted Statement of Position No. 98-5, "Reporting on the Costs of Start-Up Activities," of the American Institute of
Certified Public Accountants. This required OEH to write-off $3.0 million, net of tax, in the first quarter of 1999 representing mainly deferred start-up costs of
cruiseship operations which could no longer be carried forward under this statement. Other than the cumulative effect of this change, the impact of the adoption was not material in 1999 results.

Liquidity and Capital Resources

Working Capital

OEH had cash of $57.9 million at December 31, 2001, $42.0 million more than the $15.9 million at December 31, 2000. At
December 31, 2001 and 2000, the undrawn amounts available to OEH under its short-term lines of credit were $30.9 million and $12.3 million, respectively. In addition,
OEH had available to draw under long-term facilities a further $24.0 million bringing its total cash and availability to $112.8 million.

Current
assets less current liabilities, including the current portion of long-term debt, resulted in a working capital deficit of $10.6 million at December 31,
2001, a working capital increase of $25.6 million from a deficit of $36.2 million at December 31, 2000. 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 the most appropriate measure of liquidity.

Cash Flow

Operating Activities:Net cash provided by operating activities decreased by $10.5 million to $40.5 million for
the twelve months ended December 31, 2001, from cash provided by operating activities of $51.0 million for the twelve months ended December 31, 2000. The decrease was primarily
attributable to a decrease in net earnings of $11.0 million after adjustment for certain non-cash items, including depreciation and amortization.

Investing Activities:Cash used in investing activities was $76.8 million for the twelve months ended
December 31, 2001, compared to $81.2 million for the twelve months ended December 31, 2000.

Financing Activities:Cash provided from financing activities for the twelve months ended December 31, 2001 was
$79.1 million as compared to cash provided from financing activities of $35.4 million for the twelve-month period ended December 31, 2000, an increase of $43.7 million.

In
2000, OEH raised $85.5 million from the initial public offering of the Company's Class A shares, which it used to repay debt. Excluding the effect of a movement in the
SCL investment prior to the initial public offering, the net cash provided by financing activities in 2001 increased by $15.4 million from $63.7 million to $79.1 million. This
increase was mainly due to an increase in the proceeds from long-term debt of $44.7 million, partly offset by an increase in principal payments under long-term debt of
$28.6 million (excluding debt repaid in 2000 from the proceeds of the initial public offering of $85.5 million).

Capital Commitments:There were $6.1 million of capital commitments outstanding as of December 31, 2001.

Indebtedness

At December 31, 2001, OEH had $362.9 million of consolidated long-term debt, including the current portion, secured by OEH assets with a
number of commercial bank lenders which is payable over periods of one to 12 years with a weighted average interest rate of 4.6%. These financing agreements contain covenants that include
limits on the ability to raise additional debt secured by these properties, limits on liens on the properties and limits on mergers and asset sales and, in some cases, financial covenants on the
relevant properties such as a minimum interest coverage ratio and debt service coverage ratio. Some of the Company guarantees of these facilities contain financial covenants on OEH covering a minimum
consolidated tangible net worth and a minimum consolidated interest coverage ratio. OEH is in full compliance with these covenants, and management believes they will not substantially limit OEH's
ability to finance future acquisitions or capital expenditure plans. See Note 5 to the Financial Statements regarding the maturity of long-term debt.

Approximately
42% of the outstanding principal was drawn in euros at December 31, 2001, and the balance primarily drawn in U.S. dollars. At December 31, 2001, OEH had the
equivalent of $103.2 million of floating rate euro debt, which had been swapped into fixed rate euro debt, which will convert back to floating rates in September 2002. At
December 31, 2001, all other borrowings of OEH were in floating interest rates.

Certain
of this indebtedness is guaranteed by SCL and/or contains cross-default clauses to SCL bank borrowing agreements and its public debt including $9.5 million of debt of
unconsolidated OEH companies. An additional $46.4 million of non-recourse debt secured by the Charleston Place contains cross-default clauses to SCL indebtedness. See Notes 5 and 14
to the Financial Statements. A default by SCL under its indebtedness could result in a default by OEH on certain of its long-term debt facilities. See Note 11(b) to the Financial
Statements regarding litigation involving SCL's public senior notes. SCL has advised the Company that it is in full compliance with all of its credit and financing agreements. OEH is amending or refinancing its debt agreements that cross-default to SCL indebtedness to eliminate those provisions.

Liquidity

Management plans to increase OEH's capital expenditures over the next few years with the expansion of existing hotel properties consistent with its growth
strategy. Planned expenditure on these expansion projects is up to an aggregate of $150 million over the next three years. In addition, OEH aims to acquire more properties which it expects to
finance with an appropriate level of debt secured on the properties, and the balance through available cash resources. At December 31, 2001, OEH had capital commitments of $6.1 million
overall.

Management
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.

Accounting Policies

The preceding discussion and analysis of OEH's financial condition and results of operations is based on its consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires OEH to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, OEH evaluates these estimates, including those related to the recoverability of long-lived assets
including intangible assets, purchase price allocations and tax valuation allowances. OEH bases its estimates on historical experience and on various other assumptions that it believes are reasonable
under the circumstances, the result of which form the basis for judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

Management
believes the following represent the most significant and subjective estimates used in the preparation of OEH's consolidated financial statements.

OEH
periodically evaluates the recoverability of long-lived assets, including property, plant and equipment, and intangible assets, whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. These evaluations include analyses based on the cash flows generated by the underlying assets, profitability information,
including estimated future operating results, trends or other determinants of fair value. If the value of the asset determined by these evaluations is less than its carrying amount, a loss is
recognized for the difference between the fair value and the carrying value of the asset. Future adverse changes in market conditions or poor operating results of the related business may indicate an
inability to recover the carrying value of the assets, thereby possibly requiring an impairment charge in the future.

OEH
records a preliminary purchase price allocation for acquisitions based on preliminary information received at the date of acquisition and based on OEH's historical acquisitions.
These allocations are subject to adjustments and are finalized once additional information concerning asset and liability valuations is obtained. The final asset and liability fair values may differ
from those currently set forth in the consolidated financial statements. If the final allocations for the acquisitions differ from the preliminary allocations, OEH may need to increase or decrease
depreciation and/or amortization expenses, which could affect OEH's reported operations.

OEH
maintains a valuation allowance to reduce its gross deferred tax assets to reflect the amount, based upon OEH's estimates of income, that would likely be realized. If OEH's future
operations differed from those in the estimates, OEH may need to increase or decrease the valuation allowance which would affect its reported operations.

See
Note 1 to the Financial Statements for a discussion of accounting policies with respect to these and other items.



Recent Accounting Pronouncements

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

ITEM 7A. 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 flow. 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 floating rate borrowings, principally
based on U.S. dollar LIBOR and EURIBOR, and on short-term cash investments. OEH assesses market risk based on changes in interest rates using a sensitivity analysis. In
September 2000, OEH entered into an interest rate swap, which exchanged floating rate euro debt for fixed rate euro debt in respect of the equivalent of euro 117 million
($103.2 million at December 31, 2001). If interest rates increased by ten percent with respect to remaining floating rate debt, with all other variables held constant, annual net finance
costs of OEH would have increased by approximately $1.3 million based on borrowings and the interest rate swap outstanding at December 31, 2001. The interest rates on substantially all
of OEH's long-term debt are adjusted regularly to reflect current market rates. Accordingly, the carrying amounts approximate fair value. The fair value of the interest rate swap at
December 31, 2001 was $1,756,000.

The
market risk relating to foreign currencies arises from buying, selling and financing in currencies other than the U.S. dollar, principally the euro, South African rand, Brazilian
real and Australian dollar. Some non-U.S. subsidiaries of OEH borrow in local currencies, and OEH may in the future enter into forward exchange contracts relating to purchases denominated
in foreign currencies. There are no foreign currency derivative financial instruments currently in effect relating to OEH.

Nine
of OEH's owned hotels in 2001 operated in currencies linked to the European euro, two operated in South African rand, two operated in Australian dollars, one operated in Botswanan
pula, and one operated in Brazilian reais. The Venice- Simplon-Orient-Express, British Pullman and Northern Belle tourist trains operate primarily in British pounds sterling and currencies linked to
the euro. OEH faces exposure arising from the impact of translating its global foreign currency earnings into U.S. dollars, and anticipates this foreign exchange rate risk will remain a market
exposure for the foreseeable future.

OEH
uses a sensitivity analysis to assess the changes in the values of the U.S. dollar on foreign currency denominated monetary assets and liabilities. The primary assumption used in
this model is a hypothetical ten percent weakening or strengthening of the U.S. dollar against OEH's currency exposure. At December 31, 2001, as a result of this analysis, OEH determined that
the impact of a ten percent change in foreign currency exchange rates in relation to the U.S. dollar would not be material.

As
far as it can, OEH matches foreign currency earnings and costs and so provides a natural hedge against currency movements. In addition, a significant proportion of the guests at OEH
hotels located outside of the United States originate from the United States. When a foreign currency in which OEH operates devalues against the U.S. dollar, OEH has considerable flexibility to
increase prices in local currency. Management believes that when these factors are combined, OEH does not face a material exposure to its earnings from currency movements. The gains or losses OEH has
incurred from transactions denominated in foreign currencies have not been material.



ITEM 8. Financial Statements and Supplementary Data

Report of Independent Auditors

Board
of Directors and Shareholders
Orient-Express Hotels Ltd.
Hamilton, Bermuda

We
have audited the accompanying consolidated balance sheets of Orient-Express Hotels Ltd. and subsidiaries (the "Company") as of December 31, 2001 and 2000, and the
related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2001. Our audits also included the financial
statement schedule listed in Item 14. These consolidated financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and the financial statement schedule based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Orient-Express Hotels Ltd. and subsidiaries as of
December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects the information set forth therein.

As
disclosed in Note 1 to the consolidated financial statements, effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137 and 138, and effective January 1, 1999, the Company adopted Statement of Position
No. 98-5, Reporting on the Costs of Start-up Activities.

|/s/ Deloitte & Touche LLP |  | 
|------------------------- |  | 
|New York, New York        |  | 
|March 1, 2002             |  | 



Orient-Express Hotels Ltd. and Subsidiaries  Consolidated Balance Sheets

|                                                                                    |                                                                        | December 31, |        
|----------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------ | -------
|
|
|Assets                                                                              |                                                                        |              |        
|Cash                                                                                |                                                                        | $            | 57,863 
|Accounts receivable, net of allowances of $514 and $422                             |                                                                        |              | 45,420 
|Inventories                                                                         |                                                                        |              | 17,463 
|                                                                                    |                                                                        |              |        
|Total current assets                                                                |                                                                        |              | 120,746
|Property, plant and equipment, less accumulated depreciation of $81,741 and $71,159 |                                                                        |              | 602,763
|Investments                                                                         |                                                                        |              | 79,430 
|Intangible assets                                                                   |                                                                        |              | 29,529 
|Other assets                                                                        |                                                                        |              | 3,783  
|                                                                                    |                                                                        |              |        
|                                                                                    |                                                                        | $            | 836,251
|                                                                                    |                                                                        |              |        
|Liabilities and Shareholders' Equity                                                |                                                                        |              |        
|Working capital facilities                                                          |                                                                        | $            | 7,038  
|Accounts payable                                                                    |                                                                        |              | 19,526 
|Accrued liabilities                                                                 |                                                                        |              | 38,594 
|Deferred revenue                                                                    |                                                                        |              | 10,513 
|Current portion of long-term debt and capital leases                                |                                                                        |              | 55,695 
|                                                                                    |                                                                        |              |        
|Total current liabilities                                                           |                                                                        |              | 131,366
|Long-term debt and obligations under capital leases                                 |                                                                        |              | 307,176
|Deferred income taxes                                                               |                                                                        |              | 3,875  
|                                                                                    |                                                                        |              |        
|                                                                                    |                                                                        |              | 442,417
|                                                                                    |                                                                        |              |        
|Minority interest                                                                   |                                                                        |              | 1,247  
|                                                                                    |                                                                        |              |        
|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 (200028,440,601)                                    |              |        
|                                                                                    | Class B common shares $0.01 par value (120,000,000 shares authorized): |              |        
|                                                                                    | Issued20,503,877 (200020,503,877)                                    |              |        
|Additional paid-in capital                                                          |                                                                        |              | 226,963
|Retained earnings                                                                   |                                                                        |              | 203,581
|Accumulated other comprehensive loss                                                |                                                                        |              | (38,264
|Less: reduction due to Class B common shares owned by subsidiaries18,044,478       |                                                                        |              | (181   
|                                                                                    |                                                                        |              |        
|Total shareholders' equity                                                          |                                                                        |              | 392,587
|                                                                                    |                                                                        |              |        
|Commitments and contingencies                                                       |                                                                        |              |        
|                                                                                    |                                                                        |              |        
|                                                                                    |                                                                        | $            | 836,251
|                                                                                    |                                                                        |              |        

See
notes to consolidated financial statements.



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

|                                                                                     |                                     | Year ended December 31,                                             |        
|------------------------------------------------------------------------------------ | ----------------------------------- | ------------------------------------------------------------------- | -------
|
|
|Revenue                                                                              |                                     | $                                                                   | 252,236
|Earnings from unconsolidated companies                                               |                                     |                                                                     | 9,112  
|Gains on sales of assets and other                                                   |                                     |                                                                     |       
|                                                                                     |                                     |                                                                     |        
|                                                                                     |                                     |                                                                     | 261,348
|                                                                                     |                                     |                                                                     |        
|Expenses:                                                                            |                                     |                                                                     |        
|                                                                                     | Depreciation and amortization       |                                                                     |        
|                                                                                     | Operating                           |                                                                     |        
|                                                                                     | Selling, general and administrative |                                                                     |        
|                                                                                     |                                     |                                                                     |        
|Total expenses                                                                       |                                     |                                                                     | 208,610
|                                                                                     |                                     |                                                                     |        
|Earnings from operations before net finance costs                                    |                                     |                                                                     | 52,738 
|                                                                                     |                                     |                                                                     |        
|Interest expense, net                                                                |                                     |                                                                     | (19,025
|Interest and related income (expense)                                                |                                     |                                                                     | 367    
|                                                                                     |                                     |                                                                     |        
|Net finance costs                                                                    |                                     |                                                                     | (18,658
|                                                                                     |                                     |                                                                     |        
|Earnings before income taxes and cumulative effect of change in accounting principle |                                     |                                                                     | 34,080 
|Provision for income taxes                                                           |                                     |                                                                     | 4,230  
|                                                                                     |                                     |                                                                     |        
|Earnings before cumulative effect of change in accounting principle                  |                                     |                                                                     | 29,850 
|Cumulative effect of change in accounting principle                                  |                                     |                                                                     |       
|                                                                                     |                                     |                                                                     |        
|Net earnings                                                                         |                                     | $                                                                   | 29,850 
|                                                                                     |                                     |                                                                     |        
|Earnings per class A and B common share:                                             |                                     |                                                                     |        
|                                                                                     | Basic and diluted:                  |                                                                     |        
|                                                                                     |                                     | Earnings before cumulative effect of change in accounting principle |        
|                                                                                     |                                     | Cumulative effect of change in accounting principle                 |        
|                                                                                     |                                     |                                                                     |        
|Net earnings                                                                         |                                     | $                                                                   | 0.97   
|                                                                                     |                                     |                                                                     |        

See
notes to consolidated financial statements.



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

|                                          |                                                                                    | Year ended December 31, |        
|----------------------------------------- | ---------------------------------------------------------------------------------- | ----------------------- | -------
|
|
|Cash flows from operating activities:     |                                                                                    |                         |        
|                                          | Net earnings                                                                       |                         | $      
|                                          | Add non-cash effect of change in accounting principle                              |                         |        
|                                          |                                                                                    |                         |        
|                                          |                                                                                    |                         | 29,850 
|                                          |                                                                                    |                         |        
|                                          | Adjustment to reconcile net earnings to net cash provided by operating activities: |                         |        
|                                          | Depreciation and amortization                                                      |                         |        
|                                          | Undistributed (earnings)/losses of affiliates, net and other non-cash items        |                         |        
|                                          | Change in assets and liabilities, net of effects from acquisition of subsidiaries: |                         |        
|                                          | Decrease/(increase) in accounts receivable                                         |                         |        
|                                          | Increase in inventories                                                            |                         |        
|                                          | (Decrease)/increase in accounts payable                                            |                         |        
|                                          |                                                                                    |                         |        
|                                          | Total adjustments                                                                  |                         |        
|                                          |                                                                                    |                         |        
|Net cash provided by operating activities |                                                                                    |                         | 40,543 
|                                          |                                                                                    |                         |        
|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     |                                                                                    |                         | (76,802
|                                          |                                                                                    |                         |        
|Cash flows from financing activities:     |                                                                                    |                         |        
|                                          | Net proceeds from working capital facilities and redrawable loans                  |                         |        
|                                          | Issuance of common shares (net)                                                    |                         |        
|                                          | Proceeds from long-term debt                                                       |                         |        
|                                          | Principal payments under long-term debt                                            |                         |        
|                                          | Purchase and cancellation of common shares                                         |                         |        
|                                          | Movement in SCL investment prior to initial public offering                        |                         |        
|                                          |                                                                                    |                         |        
|Net cash provided by financing activities |                                                                                    |                         | 79,051 
|                                          |                                                                                    |                         |        
|Total cash flows                          |                                                                                    |                         | 42,792 
|Effect of exchange rate changes on cash   |                                                                                    |                         | (818   
|                                          |                                                                                    |                         |        
|Net increase/(decrease) in cash           |                                                                                    |                         | 41,974 
|Cash at beginning of year                 |                                                                                    |                         | 15,889 
|                                          |                                                                                    |                         |        
|Cash at end of year                       |                                                                                    | $                       | 57,863 
|                                          |                                                                                    |                         |        

See
notes to consolidated financial statements.



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
Loss |   | Common
Shares
Held By
Subsidiaries |        | Total
Comprehensive
Income |        
|---------------------------------------------------- | --------------------------------------------------- | ---------------------------------- | --- | ---------------------------------- | - | -------------------------- |  | ----------------- | ------- | ------------------------------------ | - | ---------------------------------- | ------ | -------------------------- | -------
|
|Balance, January 1, 1999                             |                                                     | $                                  | 234 |                                    | $ | 205                        |  | $                 | 177,232 |                                      | $ | 98,426                             |        | $                          | (9,898 
|Comprehensive income:                                |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     | Net earnings on common shares for the year          |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    | 35,008 |                            |        
|                                                     | Other comprehensive loss                            |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|Movement in SCL investment                           |                                                     |                                    |     |                                    |   |                            |  |                   | (5,146  | )                                    |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|Balance, December 31, 1999                           |                                                     |                                    | 234 |                                    |   | 205                        |  |                   | 172,086 |                                      |   | 133,434                            |        |                            | (13,465
|Issuance of Class A common shares in public offering |                                                     |                                    | 50  |                                    |   |                            |  |                   | 85,477  |                                      |   |                                    |        |                            |        
|Comprehensive income:                                |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     | Net earnings on common shares for the year          |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    | 39,965 |                            |        
|                                                     | Other comprehensive loss                            |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|Movement in SCL investment                           |                                                     |                                    |     |                                    |   |                            |  |                   | (28,701 | )                                    |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|Balance, December 31, 2000                           |                                                     |                                    | 284 |                                    |   | 205                        |  |                   | 228,862 |                                      |   | 173,399                            |        |                            | (23,852
|Purchase and cancellation of Class A common shares   |                                                     |                                    | (1  | )                                  |   |                            |  |                   | (1,899  | )                                    |   | 332                                |        |                            |        
|Comprehensive Income:                                |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     | Net earnings on common shares for the year          |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    | 29,850 |                            |        
|                                                     | Other comprehensive loss                            |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     | Cumulative effect of change in accounting principle |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        
|Balance, December 31, 2001                           |                                                     | $                                  | 283 |                                    | $ | 205                        |  | $                 | 226,963 |                                      | $ | 203,581                            |        | $                          | (38,264
|                                                     |                                                     |                                    |     |                                    |   |                            |  |                   |         |                                      |   |                                    |        |                            |        

See
notes to consolidated financial statements.



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

1.    Summary of significant accounting policies and basis of presentation

(a)  Business

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".

At
December 31, 2001, OEH owned or part-owned and managed 27 deluxe hotels and resorts located in the United States, the Caribbean, Europe, southern Africa, South
America, Australia and the South Pacific, six tourist trains in Europe, Southeast Asia, Australia and Peru, a river cruiseship in Burma, and three restaurants in London, New York and Buenos Aires.

(b)  Basis of presentation

The accompanying consolidated financial statements reflect the results of operations, financial position and cash flows of the Company and all its majority-owned
subsidiaries. The consolidated financial statements have been prepared using the historical basis in the assets and liabilities and the historical results of operations directly attributable to OEH,
and all intercompany accounts and transactions between the Company and its subsidiaries have been eliminated. Unconsolidated companies that are 20% to 50% owned are accounted for on an equity basis.

The
financial statements have been prepared as if the recapitalization and legal entity reorganization prior to the Company's initial public offering on August 10, 2000 had
occurred in the earliest period presented. It is accounted for in a manner similar to a pooling of interests as all of these entities were under common control. The earnings per share have been
retroactively restated using the number of shares outstanding after giving effect to the recapitalization.

The
consolidated financial statements include an allocation of certain general corporate administrative expenses from SCL and its subsidiaries which are provided under a shared services
agreement with SCL. In the opinion of management, general corporate administrative expenses have been allocated to OEH on a reasonable and consistent basis using management's estimate of services
provided by SCL and its subsidiaries. However, such allocations are not necessarily indicative of the level of expenses which might have been incurred had OEH been operating as a separate, stand-alone
entity during the periods presented. Therefore, the financial information included herein may not necessarily reflect the consolidated results of operations, financial position and cash flows of OEH
had OEH been a separate stand-alone entity for the years presented.

Certain
items in 2000 and 1999 have been reclassified to conform with the current year's presentation. The reclassifications have no effect on net earnings as previously reported.

(c)  Foreign currency translation

Foreign subsidiary income and expenses are translated into U.S. dollars, the reporting currency of the Company, at the average rates of exchange prevailing during
the year. The assets and liabilities are translated into U.S. dollars at the rates of exchange on the balance sheet date and the related translation adjustments are included in accumulated other
comprehensive income/(loss). No income taxes are provided on the translation adjustments as management does not expect that such gains or losses will be realized. Foreign currency transaction gains
and losses are recognized in operations as they occur.

(d)  Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

(e)  Stock-based compensation

Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation", of the Financial Accounting Standards Board
("FASB") encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair
value. OEH has chosen to account for stock-based compensation using the intrinsic value method prescribed in Opinion No. 25, "Accounting for Stock Issued to Employees", as amended, of the
Accounting Principles Board ("APB") and related interpretations. Accordingly, compensation cost for share options is measured as the excess, if any, of the quoted market price of the Company's shares
at the date of the grant over the amount an employee must pay to acquire the shares. The amount of compensation cost, if any, is charged to income over the vesting period. See Note 10.

(f)    Revenue recognition

Hotel and restaurant revenues are recognized when the services are performed. Tourist train and cruise revenues are recognized upon completion of the journey.
Deferred revenue consisting of deposits paid in advance are recognized as revenue when the services are performed for hotels and restaurants and upon completion of tourist train and cruise journeys.
Revenues under management contracts are recognized based upon the attainment of certain financial results, primarily revenue and operating earnings, in each contract as defined.

(g)  Earnings from unconsolidated companies

Earnings from unconsolidated companies include OEH's share of the net earnings of its equity investments as well as interest income related to loans and advances
to the equity investees amounting to $6,702,000 in 2001 (2000$5,941,000, 1999$5,790,000).

(h)  Gains on sales of assets and other

In 1999, gains on sales of assets included $2,500,000 from the buy-out of OEH's right to the payment of an early termination fee in respect of a hotel
management contract as well as $1,300,000 relating to the sale of the Windermere Island Club.

(i)    Marketing costs

Marketing costs, including website research and planning costs, are expensed as incurred and are reported in selling, general and administrative expenses.
Marketing costs include costs of advertising and other marketing activities. These costs were $18,300,000 in 2001 (2000$15,873,000, 1999$13,993,000).

(j)    Interest expense, net

OEH capitalizes interest during the construction of assets. Interest expense, net excludes interest which has been capitalized in the amount of $882,000 in 2001
(2000$332,000, 1999$nil).

(k)  Interest and related income (expense)

Interest and related income (expense) includes foreign exchange gains/(losses) of $367,000 in 2001 (2000$(39,000), 1999$nil).

(l)    Income taxes

Deferred income taxes result from temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred taxes are recorded at
enacted statutory rates and are adjusted as enacted rates change. Classification of deferred tax assets and liabilities corresponds with the classification of the underlying assets and liabilities giving rise to the temporary differences or the period of expected reversal, as applicable. A valuation allowance is established, when
necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized based on available evidence.

(m)  Earnings per share

Basic earnings per share exclude dilution and are computed by dividing net income available to common shareholders by the weighted-average number of common shares
outstanding for the period. The number of shares used in computing basic earnings per share was 30,874,000 for the year ended December 31, 2001 (200027,813,000,
199925,900,000). The number of shares used in computing diluted earnings per share was 30,874,000 for the year ended December 31, 2001 (200027,854,000,
199925,900,000). There was no material dilutive effect in each of the three years ended December 31, 2001.

(n)  Inventories

Inventories include wine, food, beverages, certain retail goods and train-related items. Inventories are valued at the lower of cost or market value under the
first-in, first-out method.

(o)  Property, plant and equipment, net

Property, plant and equipment, net are stated at cost less accumulated depreciation and amortization. The cost of significant renewals and betterments is
capitalized and depreciated, while expenditures for normal maintenance and repairs are expensed as incurred.

Depreciation
and amortization are computed using the straight-line method over the following estimated useful lives:

|Description                                              |  | Useful lives                         
|-------------------------------------------------------- |  | -------------------------------------
|Buildings                                                |  | 60 years                             
|Tourist trains                                           |  | Up to 50 years                       
|Furniture, fixtures and equipment                        |  | 525 years                           
|River cruiseship                                         |  | 25 years                             
|Equipment under capital lease and leasehold improvements |  | Lesser of lease term or economic life

The
Company determined that the lives of certain of its hotel machinery and equipment and tourist train components had been extended as a result of a rigorous maintenance program. In
1999, the lives of the hotel machinery and equipment were extended from 20 to 25 years. The Company has adopted a composite type depreciation methodology under which the parts of the tourist
trains that are subject to government-mandated refurbishment programs are depreciated over a shorter life than those other parts of the trains not subject to these programs, which are depreciated over
longer periods based upon their useful lives. As a result, in 1998, the lives of certain components of the tourist trains were extended from 8 years to 15 years. The impact of the change
in estimate resulted in an increase to net income of $1,300,000 in 1999.

(p)  Impairment of long-lived assets

In accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets," of the FASB, management reviews long-lived assets and
certain identifiable intangible assets whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. In the event that an impairment occurs, the
fair value of the related asset is estimated, and OEH records a charge to income calculated by comparing the asset's carrying value to the estimated fair value.

(q)  Investments

Investments include equity interests in and advances to unconsolidated companies.

(r)  Intangible assets

Intangible assets are recorded at cost and are amortized using the straight-line method over appropriate periods not exceeding 40 years. The
Company continually reviews intangible assets to evaluate whether events or changes have occurred that would suggest an impairment of carrying value. An impairment would be recognized when expected
future undiscounted operating cash flows are lower than carrying value. In the event that an impairment occurs, the fair value of the intangible asset is estimated, and OEH records a charge to income
calculated by comparing the asset's carrying value to the estimated fair value. Components of intangible assets are as follows:

|                         |  | December 31, |       
|------------------------ |  | ------------ | ------
|
|
|Goodwill                 |  | $            | 2,918 
|Trademarks               |  |              | 32,504
|                         |  |              |       
|                         |  |              | 35,422
|Accumulated amortization |  |              | (5,893
|                         |  |              |       
|Total                    |  | $            | 29,529
|                         |  |              |       

(s)  Concentration of credit risk

Due to the nature of the leisure industry, concentration of credit risk with respect to trade receivables is limited. OEH's customer base is comprised of numerous
customers across different geographic areas.

(t)    Derivative financial instruments

Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS
No. 137 and 138. SFAS 133 requires OEH to record all derivatives on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value
of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair
value of the derivative are recorded as a component of accumulated other comprehensive income/(loss) in shareholders' equity and are recognized in the statement of consolidated operations when the
hedged item affects earnings. The ineffective portion of a hedging derivative's change in the fair value will be immediately recognized in earnings. If the derivative is not designated as a hedge for
accounting purposes, the change in its fair value is recorded in earnings.

OEH
formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking various hedge
transactions. OEH links all hedges that are designated as fair value hedges to specific assets or liabilities on the balance sheet or to specific firm commitments. OEH links all hedges that are
designated as cash flow hedges to forecasted transactions or to floating rate liabilities on the balance sheet. OEH also assesses, both at the inception of the hedge and on an ongoing basis, whether
the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. Should it be determined that a derivative is not highly
effective as a hedge, OEH will discontinue hedge accounting prospectively.

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 year ended
December 31, 2001, the change in the fair market value of derivative instruments resulted in a charge to other comprehensive income/(loss) of $423,000.

(u)  Recent accounting pronouncements

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which defines an
impairment as the condition that exists when the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The statement also identifies the circumstances that
apply when testing for recoverability, as well as other potential adjustments or revisions relating to recoverability. Specific guidance is provided for recognition and measurement, as well as
reporting and disclosure, for long-lived assets held and used and those disposed of. The statement will be effective for financial statements issued for fiscal years beginning after
December 15, 2001, and is not expected to have a material effect on OEH's consolidated results of operations, financial position or cash flows.

In
July 2001, the FASB issued SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires that the
purchase method be used for all business combinations initiated after June 30, 2001, and prohibits the use of the pooling of interests method. SFAS No. 142 changes the method by which
companies may recognize intangible assets in business combinations and generally requires identifiable intangible assets to be recognized separately from goodwill. Amortization of all existing and
newly acquired goodwill on a prospective basis will cease as of January 1, 2002, and thereafter all goodwill and intangibles with indefinite lives must be tested for impairment at least
annually, based on the fair value of the reporting unit associated with the respective intangible asset. The effect of non-amortization provisions on 2002 operations cannot be forecasted at this time
because acquisitions may occur in 2002. If these statements had been applied to goodwill in prior years, management believes full year net earnings would have increased by $894,000 in 2001
(2000$873,000, 1999$893,000) or $0.03 per share in each year.

In
1999, the Company adopted Statement of Position No. 98-5, "Reporting on the Costs of Start-Up Activities", of the American Institute of Certified Public
Accountants. This required OEH to write-off $2,987,000, net of tax, in the first quarter of 1999 representing mainly deferred start-up costs of cruiseship operations which may
no longer be carried forward under this statement. Other than the cumulative effect of this change, the impact of the adoption was not material to 1999 results.

2.    Acquisitions and investments

(a)  Acquisitions

On April 27, 2001, OEH acquired the Bora Bora Lagoon Resort in French Polynesia, a hotel previously managed by OEH, for a cash price of approximately
$19,600,000. OEH funded most of the purchase price with bank mortgage finance.

On
January 17, 2001, OEH acquired the Miraflores Park Plaza in Lima, Peru. Because OEH's 50/50 hotel joint venture in Peru had an option to purchase the hotel at cost which, if
exercised, would have resulted in OEH becoming the exclusive long-term manager of the hotel, it was accounted for in 2001 as an investment by OEH. Because the option lapsed, the hotel has
been accounted for as an acquisition with effect from December 31, 2001. The purchase price of approximately $17,000,000 was paid largely by the assumption of existing debt, with the balance
paid in cash and the issuance of notes to the seller.

On
March 24, 2000, OEH acquired the Observatory and Lilianfels Hotels in Australia for an aggregate purchase price of approximately $40,000,000. The purchase has been
substantially financed by a bank loan.

On
May 6, 1999, OEH acquired Ashley House Inc., owner of Keswick Hall near Charlottesville, Virginia, and Inn at Perry Cabin in St. Michaels, Maryland. The $25,500,000
purchase price was paid in cash and funded in part by a bank loan.

The
purchase prices paid for these acquisitions approximated the fair value of the net tangible and identifiable intangible assets acquired, and any resulting goodwill was not material.

All
the above acquisitions have been accounted for as purchases and, accordingly, the assets and liabilities of the acquired companies have been recorded at their fair value at the date
of acquisition. The operating results of the acquired companies have been included in OEH's consolidated statements of operations from the effective dates of acquisition. Pro forma data have not been
presented as the revenues and net income resulting from these acquisitions would not have had a material impact in the year of acquisition.

(b)  Investments

Investments represent equity interests of 20% to 50% in any unconsolidated companies. OEH does not have effective control of these unconsolidated companies and,
therefore, accounts for these investments using the equity method.



On September 21, 1999, OEH acquired a 50% interest in a joint venture to which the Peruvian government awarded long-term concessions to operate the Southern and Machu
Picchu lines of the state-owned railway system in Peru. On behalf of the joint venture partners, OEH manages the concessions and rail services which operate under the name PeruRail. No payment was
required to acquire these concessions other than the purchase of spare parts and office equipment of which OEH's share amounted to $1,750,000.

At
March 31, 1999, OEH acquired for $10,000,000 a 50% interest in a joint venture company that bought two hotels in Peru, the Hotel Monasterio and the Machu Picchu Sanctuary
Lodge. OEH is managing these properties on behalf of the joint venture.

OEH's
investments in and advances to unconsolidated companies amounted to $79,430,000 at December 31, 2001 (2000$66,973,000). OEH's earnings from unconsolidated
companies were $9,112,000 in 2001 (2000$8,936,000, 1999$7,008,000) and it received dividends of $nil in 2001 (2000$222,000, 1999$470,000).

Summarized
financial data for unconsolidated companies are as follows:

|                                           |  | December 31,
|------------------------------------------ |  | ------------
|
|
|Current assets                             |  | $           
|Property, plant and equipment, net         |  |             
|Other assets                               |  |             
|                                           |  |             
|Total assets                               |  | $           
|                                           |  |             
|Current liabilities                        |  |             
|Long-term debt                             |  |             
|Other liabilities                          |  |             
|Total shareholders' equity                 |  |             
|                                           |  |             
|Total liabilities and shareholders' equity |  | $           
|                                           |  |             

|                                                  |  | Year ended December 31, |       
|------------------------------------------------- |  | ----------------------- | ------
|
|Revenue                                           |  | $                       | 88,720
|Earnings from operations before net finance costs |  | $                       | 12,644
|Net loss                                          |  | $                       | (2,396

Included
in unconsolidated companies is the Charleston Place Hotel to which OEH has made loans in addition to its equity investment. One of these loans has a conversion feature
exercisable by OEH no sooner than 2020 and in limited circumstances before then, under which OEH may convert its loans into additional capital, thereby giving OEH a majority equity interest in the
hotel.

Also
included in unconsolidated companies are the Peru hotel and PeruRail joint ventures, under which OEH and the other 50% participant must contribute equally additional equity capital
needed for the businesses. If the other participant does not meet this obligation, OEH has the right to dilute the other participant and obtain a majority equity interest in the affected joint venture
company. OEH also has
rights to purchase the other participant's interests, exercisable in limited circumstances such as its bankruptcy.

3.    Property, plant and equipment

The major classes of real estate and other fixed assets are as follows:

|                                        |  | December 31,
|--------------------------------------- |  | ------------
|
|
|Freehold and leased land and buildings  |  | $           
|Machinery and equipment                 |  |             
|Fixtures, fittings and office equipment |  |             
|River cruiseship                        |  |             
|                                        |  |             
|                                        |  |             
|Less: accumulated depreciation          |  |             
|                                        |  |             
|                                        |  | $           
|                                        |  |             

At
December 31, 2001, the balance under capital lease for land and buildings was $8,574,000 (2000$nil), for machinery and equipment $1,675,000
(2000$1,877,000), and for fixtures and fittings $716,000 (2000$247,000). Accumulated depreciation related to assets under capital lease at December 31, 2001 was
$520,000 (2000$441,000).

4.    Working capital facilities

Working capital facilities are comprised of the following, all repayable within one year:

|                                                                                                             |  | December 31,
|------------------------------------------------------------------------------------------------------------ |  | ------------
|
|
|Unsecured working capital facilities, with a weighted average interest rate of 8.52% and 7.87%, respectively |  | $           
|                                                                                                             |  |             

OEH
had approximately $38,000,000 of working capital lines of credit at December 31, 2001 (2000$18,600,000) issued by various financial institutions and having
various expiration dates, of which $30,900,000 was undrawn (2000$12,300,000).

5.    Long-term debt and obligations under capital leases

(a)  Long-term debt

Long-term debt consists of the following:

|                                                                                                                                                                                                  |  | December 31,
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------
|
|
|Loans from banks secured by property, plant and equipment payable over periods of 1 to 12 years, with a weighted average interest rate of 4.72% and 6.94%, respectively, primarily based on LIBOR |  | $           
|Loan secured by river cruiseship payable over 5 years, with a weighted average interest rate of 3.57% and 8.50%, based on LIBOR                                                                   |  |             
|Obligations under capital lease (see Note 5(b))                                                                                                                                                   |  |             
|                                                                                                                                                                                                  |  |             
|                                                                                                                                                                                                  |  |             
|Less: current portion                                                                                                                                                                             |  |             
|                                                                                                                                                                                                  |  |             
|                                                                                                                                                                                                  |  | $           
|                                                                                                                                                                                                  |  |             



Certain
credit agreements of OEH have restrictive covenants. At December 31, 2001, 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.

Certain
OEH credit agreements aggregating $103,141,000 of its consolidated long-term debt and $54,000,000 of unconsolidated long-term debt of unconsolidated
companies (of which $46,400,000 was non-recourse to OEH and SCL) at December 31, 2001 have cross-default provisions to debt of SCL. OEH is amending these agreements or refinancing
them in order to eliminate these provisions.

The
following is a summary of the aggregate maturities of consolidated long-term debt excluding obligations under capital leases at December 31, 2001:

|Year ending December 31, |  | (Dollars in thousands)
|------------------------ |  | ----------------------
|2002                     |  | $                     
|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.

OEH
has also guaranteed $6,622,000 of the debt obligations of PeruRail, an unconsolidated company in which OEH has a 50% investment, and $5,140,000 of PeruRail contingent obligations
relating to the performance of its governmental rail concessions.

(b)  Obligations under capital leases

The following is a schedule of future minimum lease payments under capital leases together with the present value of the minimum lease payments at
December 31, 2001:

|Year ending December 31,                             |  | (Dollars in thousands)
|---------------------------------------------------- |  | ----------------------
|2002                                                 |  | $                     
|2003                                                 |  |                       
|2004                                                 |  |                       
|2005                                                 |  |                       
|2006                                                 |  |                       
|2007 and thereafter                                  |  |                       
|                                                     |  |                       
|Minimum lease payments                               |  |                       
|Less: amount of interest contained in above payments |  |                       
|                                                     |  |                       
|Present value of minimum lease payments              |  |                       
|Less: current portion                                |  |                       
|                                                     |  |                       
|                                                     |  | $                     
|                                                     |  |                       

The
amount of interest deducted from minimum lease payments to arrive at the present value is the interest contained in each of the leases.

6.    Pension plan

A number of OEH employees participate in a pension plan of a subsidiary of SCL. This plan is a defined benefit plan in which the benefits are based primarily on
years of service and employee compensation near retirement. It is OEH's policy to fund this plan in accordance with applicable laws and income tax regulations. Plan assets consist primarily of common stocks, mutual funds,
government securities and corporate debt securities held through separate trustee-administered funds.

The
significant weighted-average assumptions for this plan were the following:

|                                                 |  | Year ended December 31, |  
|------------------------------------------------ |  | ----------------------- | -
|
|Discount rate                                    |  | 6.0                     | %
|Assumed rates of compensation increases          |  | 3.5                     | %
|Expected long-term rate of return on plan assets |  | 6.5                     | %

The
discount rate essentially represents the rate of return on high quality corporate bonds at the end of the year in the country in which the assets are held.

The
changes in the benefit obligation, the plan assets and the funded status for the OEH employees' portion of the plan were as follows:

|                                               |  | Year ended
December 31, |       
|---------------------------------------------- |  | ----------------------- | ------
|
|
|Change in benefit obligation:                  |  |                         |       
|Benefit obligation at beginning of year        |  | $                       | 4,582 
|Service cost                                   |  |                         | 373   
|Interest cost                                  |  |                         | 255   
|Plan participants' contributions               |  |                         | 199   
|Actuarial gain                                 |  |                         | (225  
|Benefits paid                                  |  |                         | (609  
|Foreign currency translation                   |  |                         | (1    
|                                               |  |                         |       
|Benefit obligation at end of year              |  |                         | 4,574 
|                                               |  |                         |       
|Change in plan assets:                         |  |                         |       
|Fair value of plan assets at beginning of year |  |                         | 4,556 
|Actual return on plan assets                   |  |                         | (1,104
|Employer contributions                         |  |                         | 901   
|Plan participants' contributions               |  |                         | 199   
|Benefits paid                                  |  |                         | (609  
|Foreign currency translation                   |  |                         | (21   
|                                               |  |                         |       
|Fair value of plan assets at end of year       |  |                         | 3,922 
|                                               |  |                         |       
|Funded status                                  |  |                         | (652  
|Unrecognized net actuarial gain                |  |                         | 1,547 
|Unrecognized prior service cost                |  |                         | 22    
|                                               |  |                         |       
|Prepaid benefit cost                           |  | $                       | 917   
|                                               |  |                         |       



The
components of net periodic benefit cost for the OEH employees covered under the plan consisted of the following:

|                                              |  | Year ended December 31, |     
|--------------------------------------------- |  | ----------------------- | ----
|
|
|Service cost                                  |  | $                       | 373 
|Interest cost on projected benefit obligation |  |                         | 255 
|Expected return on assets                     |  |                         | (291
|Net amortization and deferrals                |  |                         | 13  
|                                              |  |                         |     
|Net periodic benefit cost                     |  | $                       | 350 
|                                              |  |                         |     



7.    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
consisted of the following:

|              |  | Year ended December 31, 2001
|------------- |  | ----------------------------
|
|
|United States |  | $                           
|Other         |  |                             
|              |  |                             
|              |  | $                           
|              |  |                             

|              |  | Year ended December 31, 2000
|------------- |  | ----------------------------
|
|
|United States |  | $                           
|Other         |  |                             
|              |  |                             
|              |  | $                           
|              |  |                             

|              |  | Year ended December 31, 1999
|------------- |  | ----------------------------
|
|
|United States |  | $                           
|Other         |  |                             
|              |  |                             
|              |  | $                           
|              |  |                             

The
Company is incorporated in Bermuda, which does not impose an income tax. OEH's effective tax rate is entirely due to 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:

|                                                         |  | December 31, |        
|-------------------------------------------------------- |  | ------------ | -------
|
|
|Gross deferred tax assets (operating loss carryforwards) |  | $            | 55,351 
|Less: valuation allowance                                |  |              | (35,128
|                                                         |  |              |        
|Net deferred tax assets                                  |  |              | 20,223 
|Deferred tax liabilities                                 |  |              | (24,098
|                                                         |  |              |        
|Net deferred tax liabilities                             |  | $            | (3,875 
|                                                         |  |              |        

The
deferred tax assets consist primarily of tax 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.

OEH
has prepared these financial statements pursuant to a tax sharing agreement with SCL and its subsidiaries. In accordance with this agreement, prior to August 10, 2000, OEH
utilized/relinquished losses with certain SCL subsidiaries. After that date, OEH may no longer utilize/relinquish losses with SCL and its subsidiaries. The following represents the net liability that exists from OEH to SCL and its subsidiaries:

|                      |  | Year ended December 31, |       
|--------------------- |  | ----------------------- | ------
|
|
|Tax sharing agreement |  | $                       | (1,973
|                      |  |                         |       

8.    Supplemental cash flow information

|               |  | Year ended December 31,
|-------------- |  | -----------------------
|
|
|Cash paid for: |  |                        
|Interest       |  | $                      
|Income taxes   |  | $                      

Non-cash
investing and financing activities:

In
conjunction with the acquisitions in 2001, 2000 and 1999 (see Note 2(a)), liabilities were assumed as follows:

|                              |  | Year ended December 31, |        
|----------------------------- |  | ----------------------- | -------
|
|
|Fair value of assets acquired |  | $                       | 51,769 
|Cash paid                     |  |                         | (36,600
|                              |  |                         |        
|Liabilities assumed           |  | $                       | 15,169 
|                              |  |                         |        

9.    Shareholders' equity

(a)  Recapitalization and legal entity reorganization

Prior to the Company's initial public offering, which occurred on August 10, 2000, OEH completed a recapitalization and legal entity reorganization. The
Company's common shares were recapitalized into class A and class B common shares (see Note 9(b) below). Investments by SCL that had been reflected in additional capital and as
such were non-interest bearing, were converted to additional paid-in capital prior to the offering. In addition, ownership of some hotel and leisure business subsidiaries of
SCL outside of the OEH group was reorganized so that all hotel and leisure business subsidiaries became subsidiaries of the Company. The transaction has been accounted for in a manner similar to a
pooling of interests as all of these entities were under common control. The financial statements have been prepared as if the recapitalization and legal entity reorganization had occurred in the
earliest year presented.

The
financial statements have also taken into account the effects of the agreement referred to in Note 9(d). See also Note 9(e).

(b)  Dual common share capitalization

The Company has been capitalized with class A common shares, of which there are 120,000,000 authorized, and class B common shares, of which there
are 120,000,000 authorized, each convertible at any time into one class A common share. In general, holders of class A and class B common shares vote together as a single class,
with holders of class B shares having one vote per share and holders of class A shares having one-tenth of one vote per share. In all other substantial respects, the
class A and class B common shares are the same.

(c)  Shareholder rights agreement

The Company has in place a shareholder rights agreement which will be implemented not earlier than the tenth day following the first to occur of (i) the
public announcement of the acquisition by a person (other than a subsidiary of the Company, SCL or a subsidiary of SCL) of shares carrying 20% or more of the total voting rights which may be cast at
any general meeting of the Company and (ii) the commencement or announcement of a tender offer or exchange offer by a person for shares carrying 30% or more of the total voting rights that may
be cast at any general meeting of the Company. At that time, the rights will detach from the class A and class B common shares, and the holders of the rights will be entitled to
purchase, for each right held, one one-hundredth of a series A junior participating preferred share of the Company at an exercise price of $142 (the "Purchase Price") for each one
one-hundredth of such junior preferred share, subject to adjustment in certain events. From and after the date on which any person acquires beneficial ownership of shares carrying 20% or
more of the total voting rights which may be cast at any general meeting of the Company, each holder of a right (other than the acquiring person) will be entitled upon exercise to receive, at the then
current Purchase Price and in lieu of the junior preferred shares, that number of class A or class B common shares (depending on whether the right was previously attached to a
class A or B share) having a market value of twice the Purchase Price. If the Company is acquired or 50% or more of its consolidated assets or earning power is sold, each holder of a right will
be entitled to receive, upon exercise at the then current Purchase Price, that amount of common equity of the acquiring company which at the time of such transaction would have a market value of two
times the Purchase Price. Also, the Company's board of directors may exchange all or some of the rights for class A and class B common shares (depending on whether the right was
previously attached to a class A or B share) if any person acquires 20% beneficial ownership as described above, but less than 50% beneficial ownership. The rights will expire on June 1,
2010 but may be redeemed at a price of $0.05 per right at any time prior to the tenth day following the date on which a person acquires beneficial ownership of shares carrying 20% or more of the total
voting rights which may be cast at any general meeting of the Company.

(d)  Share owning subsidiaries restructuring agreement

At December 31, 2001, SCL owned 16,865,401 of the Company's class A common shares and 20,503,877 of the Company's class B common shares. The
Company, SCL and certain subsidiaries of SCL have entered into an Amended and Restated Share Owning Subsidiaries Restructuring Agreement which provides that (i) upon consummation of a possible
dividend by SCL of the Company's shares (a "spinoff"), four subsidiaries of the Company will receive 18,044,478 of the Company's class B common shares in a spinoff, and (ii) if a spinoff
is not consummated prior to July 21, 2002, then at any time on or prior to July 21, 2005, one of those four subsidiaries has the right to purchase 18,044,478 class B common shares
of the Company from SCL for $180,445, and if it has not previously done so, such subsidiary is required to exercise the option on that date.

As
a result of this agreement, OEH, through its four subsidiaries, has become the beneficial owner of 12,900,000 class B common shares of SCL. The agreement provides that
(i) upon consummation of a spinoff, a subsidiary of SCL will purchase such 12,900,000 SCL class B common shares from the four subsidiaries for $129,000, and (ii) if a spinoff is
not consummated prior to July 21, 2002, then at any time on or prior to July 21, 2005, the SCL subsidiary has the right to purchase such 12,900,000 SCL class B common shares from
the four subsidiaries for $129,000, and if it has not previously done so, such subsidiary of SCL is required to exercise the options on that date. As part of the agreement, the four subsidiaries have
waived the right to receive dividends on the class B common shares of SCL held by them, other than the spinoff dividend or other distributions of Company shares by SCL, and will vote those
shares as directed by the SCL subsidiary.

(e)  Acquired shares

Included in shareholders' equity is a reduction for the 18,044,478 class B common shares of the Company that the Company's four subsidiaries will acquire
under the Amended and Restated Share Owning Subsidiaries Restructuring Agreement referred to in Note 9(d) above. Consistent with the overall presentation of the capital structure in the financial statements, the Company has given
effect to the terms and conditions of that agreement as if the agreement had been consummated from the earliest year presented. As a result, a total of 18,044,478 class B common shares are
deemed to be owned by the Company subsidiaries at December 31, 2001 and 2000. Under applicable Bermuda law, these shares are outstanding and may be voted by the subsidiaries although in
computing earnings per share these shares are treated as a reduction to outstanding shares.

(f)    Preferred shares

The Company has 30,000,000 authorized preferred shares, par value $0.01 each, 500,000 of which have been reserved for issuance as series A junior
participating preferred shares upon exercise of preferred share purchase rights held by class A and B common shareholders in connection with the shareholder rights agreement. See
Note 9(c) above.

10.  Employee stock option plan

Under the Company's 2000 stock option plan, options to purchase up to 750,000 class A and B common shares may be awarded to employees of OEH at fair market
value at the date of grant. Options are exercisable three years after award and must be exercised ten years from the date of grant. At December 31, 2001, 546,500 class A common shares
were reserved for issuance pursuant to options awarded to 36 persons.

No
charges or credits are made to income with respect to options awarded or exercised under the plan since all options to employees are awarded at market value at date of grant.

Transactions
under the plan have been as follows:

|                                   |  | Year ended
December 31, 2001
|---------------------------------- |  | ----------------------------
|
|Outstanding at beginning of period |  | 547,000                     
|Granted                            |  | 23,000                      
|Terminated                         |  | (23,500                     
|Exercised                          |  |                            
|                                   |  |                             
|Outstanding at end of period       |  | 546,500                     
|                                   |  |                             
|Exercisable at end of period       |  |                            
|                                   |  |                             

|                                   |  | Year ended
December 31, 2000
|---------------------------------- |  | ----------------------------
|
|Outstanding at beginning of period |  |                            
|Granted                            |  | 547,000                     
|Terminated                         |  |                            
|Exercised                          |  |                            
|                                   |  |                             
|Outstanding at end of period       |  | 547,000                     
|                                   |  |                             
|Exercisable at end of period       |  |                            
|                                   |  |                             



The
options outstanding at December 31, 2001, none of which were exercisable, were as follows:

|Dates of Grant                    |  | Dates of
Expiration              |  | Number of
Shares |  | Average Option
Price |       | Life
(Years)
|--------------------------------- |  | -------------------------------- |  | ---------------- |  | -------------------- | ----- | ------------
|August 10, 2000
to
March 26, 2001 |  | August 9, 2010
to
March 25, 2011 |  | 546,500          |  | $                    | 19.00 |             

As
discussed in Note 1(e), OEH accounts for its stock-based compensation plan under APB Opinion No. 25. Accordingly, no compensation cost has been recognized for the stock
options with exercise prices equal to the market price of the stock on the date of grant. Estimates of fair values of stock options on the grant dates in the Black-Scholes option pricing model are
based on the following assumptions:

|                                |  | Year ended
December 31, |  
|------------------------------- |  | ----------------------- | -
|
|Expected price volatility range |  | 53.129                  | %
|Risk-free interest rate range   |  | 4.62                    | %
|Expected dividends              |  | none                    |  
|Expected life of stock options  |  | 5 years                 |  

Had
compensation cost for OEH's plan been determined based on fair values as of the dates of grant, OEH's net income and earnings per share would have been reported as follows:

|                                      |             | Year ended
December 31,
|------------------------------------- | ----------- | -----------------------
|
|
|Net income:                           |             |                        
|                                      | As reported |                        
|                                      | Pro forma   |                        
|Basic and diluted earnings per share: |             |                        
|                                      | As reported |                        
|                                      | Pro forma   |                        

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



11.  Commitments and contingencies

(a)  Commitments

Outstanding contracts to purchase fixed assets were approximately $6,100,000 at December 31, 2001 (2000$32,000,000).

Future
rental payments under operating leases in respect of equipment rentals and leased premises are payable as follows:

|                    |  | Year ending
December 31,
|------------------- |  | ------------------------
|
|2002                |  | $                       
|2003                |  |                         
|2004                |  |                         
|2005                |  |                         
|2006 and thereafter |  |                         
|                    |  |                         
|                    |  | $                       
|                    |  |                         

Rental
expense for the year ended December 31, 2001 amounted to $1,208,000 (2000$1,009,000, 1999$1,157,000).

(b)  Contingencies

The Company, SCL and James Sherwood, Chairman of the Company and President of SCL, have been named defendants in a lawsuit commenced August 4, 2000 in New
York state court by purported holders of $158,000,000 (out of an aggregate of $424,250,000) of SCL's publicly-traded senior notes challenging a proposed spinoff distribution of Company
shares owned by SCL to SCL's shareholders, inter alia, as not complying with the indenture terms of those notes and therefore constituting a default under the indentures and resulting
in acceleration of payment of the notes. This lawsuit 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 to the Appellate Division of the New York court on August 2, 2001, but no appeal has been filed.

SCL
intends to effect any spinoff distribution in a manner that will not result in violation of the indentures or applicable law. While OEH believes an adverse outcome is remote, in the
unlikely event the plaintiffs in the lawsuit prevail, the consequence of that outcome could cause an acceleration of certain long-term debt of OEH containing cross- default provisions to
SCL debt. In order to protect OEH, SCL has agreed to indemnify the Company with respect to possible losses arising from this lawsuit.

A
second lawsuit in the same New York state court by purported holders of publicly-traded debt of SCL seeking similar relief was dismissed by the court on November 28, 2001, and
the time to appeal by the plaintiffs has lapsed.

12.  Derivative financial instruments

(a)  Interest rate risk management

OEH is exposed to interest rate risk on its floating rate debt and tries to manage the impact of interest rate changes on earnings and cash flows. The Company's
policy is to enter into interest rate swap agreements from time to time to hedge the variability in interest rate cash flows due to interest rate risk on floating rate debt. These swaps convert the
floating rate interest payments on a portion of the outstanding debt into fixed payments. OEH had one interest rate swap agreement outstanding at December 31, 2001 for the equivalent of euro
117,000,000 which expires in September 2002. At December 31, 2001, the fair value of the derivative was $1,756,000. This swap has been designated as a cash flow hedge for accounting purposes.

During
the year ended December 31, 2001, OEH recognized $1,756,000 in other comprehensive income/(loss) representing the effective portion of this hedge and no ineffectiveness was
recognised during 2001. Of this amount, OEH expects to reclassify $1,756,000 out of other comprehensive income/(loss) and into earnings over the next 12 months. Amounts accumulated in other
comprehensive income/(loss) will be reclassified into earnings as the hedged interest cash flows are accrued. This hedge was not discontinued during the year ended December 31, 2001.

(b)  Components of other comprehensive income

The components of other comprehensive income/(loss) are as follows:

|                                                                |  | Year ended December 31, |        
|--------------------------------------------------------------- |  | ----------------------- | -------
|
|
|Net earnings on common shares                                   |  | $                       | 29,850 
|Foreign currency translation adjustments                        |  |                         | (12,656
|Cumulative effect of change in accounting principles (SFAS 133) |  |                         | (1,333 
|Change in fair value of derivatives                             |  |                         | (423   
|                                                                |  |                         |        
|Comprehensive income/(loss)                                     |  | $                       | 15,438 
|                                                                |  |                         |        

(c)  Foreign exchange risk management

From time to time, OEH utilizes foreign currency forward contracts to reduce exposure to exchange rate risks primarily associated with OEH's international
transactions. These contracts establish the exchange rates at which OEH will purchase or sell at a future date the contracted amount of currencies for specified foreign currencies. OEH utilizes
forward contracts which are short-term in nature and receives or pays the difference between the contracted forward rate and the exchange rate at the settlement date. No contracts were
outstanding at December 31, 2001.

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

OEH's segment information has been prepared in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." OEH's
operations are organized along service lines as two segments, (i) hotels and restaurants and (ii) tourist trains and cruises, and are grouped into various geographical segments. Hotels
at December 31, 2001 are located in the United States, the Caribbean, Europe, southern Africa, South America, Australia and South Pacific, tourist trains operate in Europe, Southeast Asia,
Australia and Peru, restaurants are located in London, New York and Buenos Aires, and a river cruiseship operates in Burma. Segment performance is evaluated based upon net earnings from operations
before net finance costs, taxes and depreciation and amortization excluding the effects of changes in accounting principles and gains on sale of assets. Segment information is presented in accordance
with the accounting policies described in Note 1.

Financial
information regarding these business segments is as follows, with net finance costs being net of capitalized interest and interest and related income:

|                                                                                     |                            | Year ended December 31, |        
|------------------------------------------------------------------------------------ | -------------------------- | ----------------------- | -------
|
|
|Revenue:                                                                             |                            |                         |        
|                                                                                     | Hotels and restaurants     |                         | $      
|                                                                                     | Tourist trains and cruises |                         |        
|                                                                                     |                            |                         |        
|                                                                                     |                            | $                       | 252,236
|                                                                                     |                            |                         |        
|Earnings from unconsolidated companies:                                              |                            |                         |        
|                                                                                     | Hotels and restaurants     |                         | $      
|                                                                                     | Tourist trains and cruises |                         |        
|                                                                                     |                            |                         |        
|                                                                                     |                            | $                       | 9,112  
|                                                                                     |                            |                         |        
|Gains on sale of assets and other:                                                   |                            |                         |        
|                                                                                     | Hotels and restaurants     |                         | $      
|                                                                                     | Tourist trains and cruises |                         |        
|                                                                                     |                            |                         |        
|                                                                                     |                            | $                       |       
|                                                                                     |                            |                         |        
|Depreciation and amortization:                                                       |                            |                         |        
|                                                                                     | Hotels and restaurants     |                         | $      
|                                                                                     | Tourist trains and cruises |                         |        
|                                                                                     |                            |                         |        
|                                                                                     |                            | $                       | 16,356 
|                                                                                     |                            |                         |        
|Earnings from operations before net finance costs:                                   |                            |                         |        
|                                                                                     | Hotels and restaurants     |                         | $      
|                                                                                     | Tourist trains and cruises |                         |        
|                                                                                     |                            |                         |        
|                                                                                     |                            |                         | 62,213 
|Central selling, general and administrative costs                                    |                            |                         | (9,475 
|                                                                                     |                            |                         |        
|                                                                                     |                            |                         | 52,738 
|Net finance costs                                                                    |                            |                         | (18,658
|                                                                                     |                            |                         |        
|Earnings before income taxes and cumulative effect of change in accounting principle |                            |                         | 34,080 
|Provision for income taxes                                                           |                            |                         | 4,230  
|                                                                                     |                            |                         |        
|Earnings before cumulative effect of change in accounting principle                  |                            | $                       | 29,850 
|                                                                                     |                            |                         |        
|Capital expenditure:                                                                 |                            |                         |        
|                                                                                     | Hotels and restaurants     |                         | $      
|                                                                                     | Tourist trains and cruises |                         |        
|                                                                                     |                            |                         |        
|                                                                                     |                            | $                       | 37,630 
|                                                                                     |                            |                         |        

|                     |                            | December 31,
|-------------------- | -------------------------- | ------------
|
|
|Identifiable assets: |                            |             
|                     | Hotels and restaurants     |             
|                     | Tourist trains and cruises |             
|                     |                            |             
|                     |                            | $           
|                     |                            |             



Financial
information regarding geographic areas based on the location of properties is as follows:

|         |                   | Year ended December 31,
|-------- | ----------------- | -----------------------
|
|
|Revenue: |                   |                        
|         | Europe            |                        
|         | North America     |                        
|         | Rest of the world |                        
|         |                   |                        
|         |                   | $                      
|         |                   |                        

|                                 |                   | December 31,
|-------------------------------- | ----------------- | ------------
|
|
|Long-lived assets at book value: |                   |             
|                                 | Europe            |             
|                                 | North America     |             
|                                 | Rest of the world |             
|                                 |                   |             
|                                 |                   | $           
|                                 |                   |             

14.  Related party transactions

For the year ended December 31, 2001, OEH incurred net amounts of $5,508,000 (2000$5,419,000, 1999$5,573,000) to SCL and its
subsidiaries for the provision of various services, including financial, legal, accounting, corporate executive, public company, human resources administration, insurance, pension benefits, office
facilities and system and computer services. These were provided under a shared services agreement between OEH and SCL on the basis of a fee plus reimbursements equivalent to the direct and indirect
costs of providing the services. The agreement has an initial term of one year and is automatically renewed annually unless terminated by SCL or OEH. These amounts have been included in selling,
general and administrative expenses, and the unpaid net amount of $6,608,000 at December 31, 2001 (2000$2,894,000) is included in accounts payable.

SCL
has guaranteed an aggregate principal amount of $171,401,000 of bank loans to OEH outstanding at December 31, 2001 (2000$236,812,000) including $7,500,000
relating to Charleston Center LLC, owner of Charleston Place Hotel, and $2,000,000 relating to Eastern & Oriental Express Ltd., in both of which OEH has a minority shareholder interest.

OEH
has granted since 1989 to James Sherwood, Chairman and a director of the Company, a right of first refusal to purchase the Hotel Cipriani in Venice, Italy in the event OEH proposes
to sell it. The purchase price would be the offered sale price in the case of a cash sale or the fair market value of the hotel, as determined by an independent valuer, in the case of a non-cash sale.

15.  Subsequent events

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. Most of the price was paid in cash, with the $1,000,000
balance due in March 2003.

In
August 2001, the Company registered with the Securities and Exchange Commission a secondary public offering by SCL of up to 5,000,000 existing class A common shares of OEH owned by SCL. During the period January 1-March 15, 2002, SCL sold 439,200 of these shares in ordinary broker transactions at market prices, realizing net proceeds of approximately $8,000,000 to
SCL.

Summary of quarterly earnings (unaudited)

|                                             |  |   |         | Quarter ended |  
|-------------------------------------------- |  | - | ------- | ------------- | -
|
|
|2001                                         |  |   |         |               |  
|Revenue                                      |  | $ | 252,236 |               | $
|Earnings from unconsolidated companies       |  |   | 9,112   |               |  
|                                             |  |   |         |               |  
|                                             |  | $ | 261,348 |               | $
|                                             |  |   |         |               |  
|Earnings before net finance costs            |  | $ | 52,738  |               | $
|Net finance costs                            |  |   | (18,658 | )             |  
|                                             |  |   |         |               |  
|Earnings before income taxes                 |  |   | 34,080  |               |  
|Provision for income taxes                   |  |   | 4,230   |               |  
|                                             |  |   |         |               |  
|Net earnings on Class A and B common shares  |  | $ | 29,850  |               | $
|                                             |  |   |         |               |  
|Net earnings per Class A and B common share: |  |   |         |               |  
|Basic and diluted                            |  | $ | 0.97    |               | $
|                                             |  |   |         |               |  
|2000                                         |  |   |         |               |  
|Revenue                                      |  | $ | 267,459 |               | $
|Earnings from unconsolidated companies       |  |   | 8,936   |               |  
|                                             |  |   |         |               |  
|                                             |  | $ | 276,395 |               | $
|                                             |  |   |         |               |  
|Earnings before net finance costs            |  | $ | 68,970  |               | $
|Net finance costs                            |  |   | (23,005 | )             |  
|                                             |  |   |         |               |  
|Earnings before income taxes                 |  |   | 45,965  |               |  
|Provision for income taxes.                  |  |   | 6,000   |               |  
|                                             |  |   |         |               |  
|Net earnings on Class A and B common shares  |  | $ | 39,965  |               | $
|                                             |  |   |         |               |  
|Net earnings per Class A and B common share: |  |   |         |               |  
|Basic and diluted                            |  | $ | 1.43    |               | $
|                                             |  |   |         |               |  

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.





PART III

ITEM 10. Directors and Executive Officers of the Registrant

Directors

The directors of the Company are as follows:

|Name, Age                |  | Principal Occupation and Other Major Affiliations                                      |  | Year First Became Director
|------------------------ |  | -------------------------------------------------------------------------------------- |  | --------------------------
|John D. Campbell, 59     |  | Vice President of the Company; Senior Counsel of Appleby Spurling & Kempe (attorneys)  |  | 1994                      
|James B. Hurlock, 68     |  | Partner (retired) of White & Case (attorneys)                                          |  | 2000                      
|J. Robert Lovejoy, 57    |  | Senior Managing Director of Ripplewood Holdings LLC (a private equity investment firm) |  | 2000                      
|Daniel J. O'Sullivan, 63 |  | Senior Vice PresidentFinance and Chief Financial Officer of SCL                       |  | 1997                      
|James B. Sherwood, 68    |  | Chairman of the Company                                                                |  | 1994                      
|Simon M.C. Sherwood, 41  |  | President of the Company                                                               |  | 1994                      

The
principal occupation of each director during the last five years is that shown in the table except as follows.

Mr. Campbell
was a member of Appleby Spurling & Kempe until March 1999 and is also a director and Vice President of SCL.

Mr. Hurlock
was also Chairman of the Management Committee of White & Case (19802000) overseeing the firm's worldwide operations.

Mr. Lovejoy,
prior to joining Ripplewood in 2000, was a Managing Director of Lazard Freres & Co. LLC and a General Partner of the predecessor partnership for over
15 years.

Mr. James
Sherwood has also been a director and the President of SCL since 1974.

Mr. Simon
Sherwood was Senior Vice PresidentLeisure of SCL (19972000) and was originally appointed Vice President of SCL in 1991, prior to which he was
Manager, Strategic Consulting of Boston Consulting Group (19861990). He is the stepson of Mr. James Sherwood.

Executive Officers

The executive officers of the Company are as follows:

|Name, Age                 |  | Position                                                             
|------------------------- |  | ---------------------------------------------------------------------
|James B. Sherwood, 68     |  | Chairman since 1994                                                  
|Simon M.C. Sherwood, 41   |  | President since 1994                                                 
|Dean P. Andrews, 49       |  | Vice PresidentHotels, North America since 1997                      
|John D. Campbell, 59      |  | Vice PresidentBermuda since 1994                                    
|Roger V. Collins, 55      |  | Vice PresidentTechnical Services since 2001                         
|Adrian D. Constant, 41    |  | Vice PresidentHotels, Europe since 2001                             
|Pippa Isbell, 48          |  | Vice PresidentPublic Relations since 2000                           
|James G. Struthers, 38    |  | Vice PresidentFinance and Chief Financial Officer since 2000        
|Nicholas R. Varian, 47    |  | Vice PresidentTourist Trains and Cruises since 1994                 
|Paul White, 37            |  | Vice PresidentHotels, Africa, Australia and South America since 2000
|Edwin S. Hetherington, 52 |  | Secretary since 1994                                                 

The
principal occupation of each person during the last five years is shown in the table except as follows.

The
previous experience of Messrs. James Sherwood, Simon Sherwood and Campbell is reported under the heading "Directors" above.

Mr. Andrews
was with Omni Hotels (19811997) working in new hotel development and financial and asset management.

Mr. Collins,
an engineer, has worked in the hotel industry since 1979 with Grand Metropolitan Hotels, Courage Inns and Taverns, and Trusthouse Forte Hotels, joining the Company's
predecessor, Orient-Express Hotels Inc., in 1991.

Mr. Constant
began his career in the hotel industry in 1983, including Intercontinental and Forte Hotels, and worked for Le Meridien Hotels (19932001) ending as
Regional Manager for Brazil.

Ms. Isbell
was appointed a Manager of the Company in 1998 after selling the public relations consultancy she founded in 1987. Her work in the hospitality industry included
Intercontinental Hotels, Forte, Hilton International, Jarvis Hotels, and Millennium and Copthorne.

Mr. Struthers
is also Vice PresidentController of SCL having joined originally in 1991 as Group Financial Controller and worked briefly (19971999) as
Finance Director of Eurostar (UK) Ltd.

Mr. Varian
joined Orient-Express Hotels Inc. in 1985 from P&O Steam Navigation Company and has worked extensively on various cruise and tourist train projects, becoming a
Vice President in 1989.

Mr. White
was previously a Manager of the Company working on hotel financial and operational matters, having joined from Forte Hotels in 1991.

Mr. Hetherington
is also Vice President, General Counsel and Secretary of SCL having joined Orient-Express Hotels Inc. in 1980.

A
12th officer, Mr. Peter Parrott, retired during 2001.

ITEM 11. Executive Compensation

The following table shows the salary and bonus of Mr. Simon Sherwood paid in cash during 2001, and of all executive officers as a group, for services to
OEH in all capacities:

|Name of Individual or Group                    |  | Principal Capacities in Which Served |  | Cash Compensation
|---------------------------------------------- |  | ------------------------------------ |  | -----------------
|Simon M.C. Sherwood                            |  | President and Director               |  | $                
|All executive officers as a group (12 persons) |  |                                      |  | $                

The
group data in the table include the salary and bonus of Mr. James Sherwood paid by OEH ($300,000). Under the shared services agreement between OEH and SCL described under
Item 13Certain Relationships and Related Transactions below, part of Mr. Hetherington's salary and bonus is included in the corporate and administrative charges of SCL to
OEH and is excluded from the table, and part of Mr. Struthers' salary and bonus not included in the table is charged to SCL. See also Note 14 to the Financial Statements (Item 8
above).

Each
of Messrs. Hurlock and Lovejoy receives a fee of $2,500 for each meeting of the Board of Directors or a committee thereof which he attends in person, and $1,250 for each
meeting attended by conference telephone call. They and Mr. Campbell are also paid director retainer fees at the annual rate of $15,000 each. Aggregate attendance and retainer fees amounted to
$67,500 in 2001.

Pensions

Also under the OEH-SCL shared services agreement referred to above, executive officers of the Company participate in SCL pension plans at
SCL's cost charged to OEH.

Most
executive officers located in the United Kingdom participate in a contributory defined benefit pension plan maintained by SCL for British employees. The amount of contribution to
the plan in respect of a specific person cannot readily be separated or individually calculated. Participants in the plan are eligible to receive at their normal retirement date an annual pension
based on the number of years of permanent employment and their final pensionable compensation, up to a maximum pension of two-thirds of the final pensionable compensation for service of up
to 20 years, reduced by pension benefits paid by the British government. A participant's pensionable compensation upon which benefits are based is the greater of (i) the average of the
participant's highest three consecutive pensionable salaries during the ten years preceding retirement or (ii) the participant's pensionable salary for the year immediately preceding
retirement.

Prior
to 1997, SCL maintained a non-contributory defined benefit pension plan for United States employees, including U.S. officers. Participants in the plan are
eligible to receive at their normal retirement date an annual pension based on the number of years of permanent employment, up to 21 credited years of service, and 44% of their average annual
compensation (i.e., compensation averaged over the five highest consecutive years), plus 13% of the excess of average annual compensation over the amount of Social Security covered compensation. In
1997, SCL froze this defined benefit plan, so that the benefit payable to employees at their normal retirement date will be equal to the benefit that they had earned under the plan as of
December 31, 1996. For 1997 and later years, SCL established a defined contribution pension plan for U.S. employees, including officers. This plan has a non-contributory feature
under which the amount that SCL contributes to the plan, for each year, is allocated among participating employees in proportion to the amount of their compensation for that year. The amount of the
annual contribution is determined by SCL in its discretion. The defined contribution plan also includes a feature that permits employees to contribute amounts out of their compensation (up to $10,500
per employee in 2001).

Under
the defined benefit plans in the U.K. and U.S., currently estimated accrued annual benefits payable to executive officers of the Company amounted to approximately $150,400 at
December 31, 2001, and under the defined contribution plan in the U.S., their account balances totalled $144,600 at the same date. See Note 6 to the Financial Statements regarding the U.K. Plan.

2000 Stock Option Plan

Options to purchase Class A common shares of the Company have been granted to selected directors, executive officers and employees under the Company's 2000
Stock Option Plan, which is administered by the Board of Directors. The plan provides for the award of options to purchase up to 750,000 Class A and B common shares at market value at the time
of the award. In general, options become exercisable three years after the date of grant and expire ten years from date of grant. In certain circumstances constituting a change in control of the
Company, outstanding options become immediately exercisable, and optionees may thereafter surrender their options instead of exercising them and receive directly from the Company in cash the
difference between the option exercise price and the value of the underlying shares determined according to the plan.





During 2001, options to purchase an aggregate of 23,000 Class A shares were granted to executive officers of the Company and no options were exercised. At December 31,
2001, options on an aggregate of 395,000 Class A shares were held by directors and executive officers. See Note 10 to the Financial Statements.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management

Five Percent Shareholders

The following table contains information concerning the beneficial ownership of the Company's Class A common shares and Class B common shares by the
only persons known to OEH to own beneficially more than 5% of the outstanding shares of either class.

|Name and Address                                                                                                         |  | No. of
Class A
and
Class B
Shares |  | Percent
of
Class A
Shares |     | Percent
of
Class B
Shares
|------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------- |  | ------------------------- | --- | -------------------------
|Sea Containers Ltd.(1)
41 Cedar Avenue, Hamilton HM EX, Bermuda                                                          |  | 36,933,078                        |  | 75.6%                     | (2) | 100.0%                   
|Putnam Investments LLC(3)
One Post Office Square, Boston, Massachusetts 02109                                            |  | 3,128,352                         |  | 9.3%                      |     |                         
|Capital Research and Management Co. and
SMALLCAP World Fund Inc.(4)
333 South Hope Street, Los Angeles, California 90071 |  | 1,663,000                         |  | 5.9%                      |     |                         

---



Directors and Executive Officers

The following table contains information concerning the beneficial ownership of Class A common shares of the Company by each director and executive officer
of the Company and by all directors and executive officers of the Company as a group. Each person has sole voting and investment power with respect to his or her shares. Each holding and the total are
less than 1% of the Class A shares outstanding.

|Name                                                         |  | No. of
Class A
Shares
|------------------------------------------------------------ |  | ---------------------
|D.P. Andrews                                                 |  | 1,000                
|J.D. Campbell                                                |  | 1,000                
|R.V. Collins                                                 |  |                     
|A.D. Constant                                                |  |                     
|E.S. Hetherington                                            |  | 1,000                
|J.B. Hurlock                                                 |  | 1,000                
|P. Isbell                                                    |  | 650                  
|J.R. Lovejoy                                                 |  | 5,000                
|D.J. O'Sullivan                                              |  |                     
|J.B. Sherwood                                                |  | 182,300              
|S.M.C. Sherwood                                              |  | 14,400               
|J.G. Struthers                                               |  | 300                  
|N.R. Varian                                                  |  | 600                  
|P. White                                                     |  | 1,000                
|                                                             |  |                      
|All directors and executive officers as a group (14 persons) |  | 208,250              
|                                                             |  |                      

Voting Control of the Company

The following table lists the voting power held by the known beneficial owners of more than 5% of the outstanding Class A shares or Class B common
shares of the Company and all directors and executive officers as a group.

|Name                                                         |  | No. of
Class A
Shares |  | No. of
Class B
Shares |  | Combined
Voting Power |  
|------------------------------------------------------------ |  | --------------------- |  | --------------------- |  | --------------------- | -
|SCL                                                          |  | 16,429,201            |  | 20,503,877            |  | 94.9                  | %
|Putnam Investments                                           |  | 3,128,352             |  |                      |  | 1.3                   | %
|Capital Research                                             |  | 1,663,000             |  |                      |  | (1                    | )
|All directors and executive officers as a group (14 persons) |  | 208,250               |  |                      |  | (1                    | )

---

In
general the holders of Class A and B common shares of the Company vote together as a single class on most matters submitted to general meetings of shareholders, with holders of
Class B shares having one vote per share and holders of Class A shares having one-tenth of a vote per share. Each Class B share is convertible at any time into one
Class A share. In all other material respects, the Class A and B shares are identical and are treated as a single class of common shares.

As
described in Note 9(d) to the Financial Statements above and Item 13Certain Relationships and Related Transactions below, OEH and SCL are parties to an amended and
restated share owning subsidiaries restructuring agreement pursuant to which four SCL subsidiaries owning Class B common shares of SCL have become subsidiaries of the Company. If a spinoff
distribution of shares of the Company to SCL shareholders occurs, these four subsidiaries would acquire approximately 18,044,478 Class B shares of the Company representing about 77% of the combined voting power of
Class A and B shares of the Company. Also under that agreement, one of these subsidiaries has the right, becoming exercisable on or after July 21, 2002, to acquire that number of
Class B shares from SCL at an aggregate price of about $180,000. Under Bermuda law, the shares to be owned by these subsidiaries will be outstanding and may be voted by the subsidiaries.

With
respect to a number of matters which would tend to change control of the Company, its memorandum of association and bye-laws contain provisions that could make it harder
for a third party to acquire OEH without the consent of the Company's board of directors. These provisions include supermajority shareholder voting provisions for the removal of directors and for
"business combination" transactions with beneficial owners of shares carrying 15% or more of the votes which may be cast at any general meeting of shareholders, and limitations on the voting rights of
such 15% beneficial owners. Also, the Company's board of directors has the right under Bermuda law to issue preferred shares without shareholder approval, which could be done to dilute the share
ownership of a potential hostile acquirer. Also, the rights to purchase series A junior preferred shares, one of which is attached to each Class A and Class B common share of the
Company, may have antitakeover effects. See Note 9(c) to the Financial Statements. Although OEH management believes these provisions provide for an opportunity to receive a higher bid by
requiring potential acquirers to negotiate with the Company's board of directors, these provisions apply even if the offer may be considered beneficial by many shareholders.

ITEM 13. Certain Relationships and Related Transactions

Mr. James Sherwood owns a private residential apartment in the Hotel Cipriani in Venice, Italy, a hotel owned by a subsidiary of the Company. OEH has
granted Mr. Sherwood a right of first refusal to purchase the hotel in the event OEH proposes to sell it. The purchase price would be the offered sale
price in the case of a cash sale or the fair market value of the hotel, as determined by an independent valuer, in the case of a non-cash sale. Similarly, if Mr. Sherwood proposes
to sell his apartment, he has granted OEH a right of first refusal to purchase it at fair market value or, at Mr. Sherwood's option in the case of a proposed cash sale, the offered sale price.
In addition, SCL has granted an option to Mr. Sherwood to purchase the hotel at fair market value if a change in control of SCL occurs. SCL and OEH plan to amend this option if a spinoff
distribution of the Company's shares to SCL shareholders occurs, to apply thereafter to a change in control of the Company.

Mr. James
Sherwood and the subsidiary of the Company which owns the Hotel Cipriani have entered into an agreement under which he may rent his apartment to the hotel in return for
50% of the rates paid by hotel guests for use of the apartment. In 2001, the hotel paid Mr. Sherwood $113,000 for the use of his apartment. Also, in any calendar year when the apartment is made
available to the hotel for 90 days or more when the hotel is open to guests, the hotel is obligated to clean, repair and insure the apartment at its expense and provide Mr. Sherwood and
his guests with all hotel services other than food and drink free of charge, including electricity, air conditioning, telephone rental, water and room services for the apartment. To the extent that
the apartment is made available to the hotel for less than 90 days per year, Mr. Sherwood must pay a proportionate share of those expenses.

The
law firm of Appleby Spurling & Kempe, to which Mr. Campbell is Senior Counsel, and the law firm of White & Case, of which Mr. Hurlock is a retired
Partner, render legal services to OEH.

Agreements with Sea Containers Ltd.

In connection with the initial public offering of the Company's Class A common shares in August 2000 and in anticipation of the separation of the
two companies including by a spinoff distribution by SCL of the Company's shares to SCL shareholders, OEH and SCL entered into the following agreements:



SCL and OEH have entered into a shared services agreement covering the provision to OEH of various services, including financial, legal, accounting, corporate
executive, public company, human resources administration, insurance, pension benefits and information technology. OEH also occupies space in offices leased by various SCL subsidiaries in London and
overseas. For these services, SCL charges OEH on the basis of a monthly fee plus reimbursements approximating the costs of SCL in providing the services. During 2001, the parties amended the agreement
to reduce the fixed charge element and to modify part of the shared cost allocation to one agreed annually when SCL and OEH budgets are prepared. OEH may terminate these arrangements on one year's
notice and has the right
to verify the charges made by SCL. In 2001, SCL charged OEH $5,508,000 under this agreement. See Note 13 to the Financial Statements (Item 8 above).



OEH has entered into a tax sharing agreement with SCL that allocates responsibilities for tax matters between the two companies for periods prior to the
separation of OEH and SCL. In general, OEH will continue to be responsible for taxes of itself and its subsidiaries after the separation from SCL, and SCL has agreed to indemnify OEH for all taxes
attributable to the separation itself.

The
tax sharing agreement assigns primary responsibility to SCL for OEH tax returns on a combined or unitary basis with SCL. OEH is required to pay the amount of tax that would be owed
if it filed separately from SCL. In the United States, some SCL subsidiaries are included in consolidated federal income tax returns filed by OEH subsidiaries. The tax sharing agreement provides that
OEH retains primary responsibility for these returns and that SCL's share of the taxes due on these returns is the amount that would be payable if it filed separately from OEH.

In
the United Kingdom, losses of one company may be transferred to another company under common control. The tax sharing agreement provides that one company may, until the separation of
OEH from SCL, require the other to surrender losses to it, in return for a payment equal to the amount of taxes thereby avoided by it.

In
the event of a redetermination of taxes, a recomputation is made of payments due under the tax sharing agreement, and further payment or reimbursement is required. Each member of a
consolidated group is jointly liable for the group's federal income tax liability. Accordingly, OEH could be required to pay a deficiency in the group's federal income tax liability even if the tax
sharing agreement allocates that liability to SCL. Similarly, if a tax loss surrendered by SCL to OEH is subsequently disallowed, OEH will be liable to the tax authorities for the tax deficiency. In
both cases, OEH will merely have a claim for reimbursement against SCL under the tax sharing agreement.

The
tax sharing agreement also assigns responsibility for administrative matters such as the filing of returns, retention of records and conduct of audits, examinations and similar
proceedings.



SCL and OEH have entered into an amended and restated share owning subsidiaries restructuring agreement pursuant to which four subsidiaries of the Company, at the
earlier of July 21, 2005 or the time when a spinoff distribution of shares of the Company to shareholders of SCL occurs, will become the owners of approximately 18,044,478 Class B common
shares of the Company, thereby providing OEH with a share owning subsidiaries ownership structure very similar to that of SCL. The four subsidiaries currently own 12,900,000 Class B common
shares of SCL. In a takeover of OEH, this structure may assist in maximizing the value shareholders of the Company receive in the takeover transaction. Also, this agreement will operate to eliminate any cross-shareholdings in the Company and
SCL by their respective subsidiaries that might otherwise arise because of a spinoff distribution.

Under
this agreement, SCL has transferred to the Company the shares of the four subsidiaries which own Class B common shares of SCL, and SCL continues to hold all of the
Class B common shares of the Company. This agreement also provides that if a spinoff distribution of the shares of the Company does not occur prior to July 21, 2002, then a share owning
subsidiary of the Company has the right, commencing that date and continuing to July 21, 2005, to buy from SCL for a price of $.01 per share up to approximately 18,044,478 Class B common
shares of the Company. The agreement also grants to an SCL subsidiary for the same period the right to buy from the four share owning subsidiaries of the Company, for a price of $.01 per share, all of
the Class B common shares of SCL owned by those subsidiaries. These rights must be exercised immediately upon a spinoff distribution or, at the latest, on July 21, 2005.

Pending
the exercise of the rights, the four share owning subsidiaries of the Company agree to waive any dividends or distributions, other than a spinoff distribution or other
distributions of the Company's shares, on Class B common shares of SCL, and they must vote their Class B common shares of SCL as an SCL subsidiary directs. See also Note 9(d) to
the Financial Statements.





The effect of the exercise of these rights will be to place 88% of the Company's Class B common shares, or about 77% of the combined voting power of the Class A and
Class B common shares of the Company, in the hands of subsidiaries of the Company. Under Bermuda law, common shares of the Company owned by its subsidiaries will be outstanding and may be voted
by those subsidiaries.

This
agreement was amended and restated in limited respects on June 6, 2001 (i) to permit SCL to sell additional Class A or B common shares in the Company owned by
SCL prior to a spinoff distribution, (ii) to permit SCL to convert some of its Class B shares in the Company into Class A shares in order to equalize the spinoff ratio of shares
in a spinoff distribution, (iii) to allow SCL to make other distributions of Company shares and (iv) to enable SCL to contribute some of its Class A or B shares in the Company to
the four share owning subsidiaries of the Company so that OEH can otherwise achieve a share owning subsidiaries ownership structure like that of SCL. The agreement as so amended and restated was
approved by SCL shareholders at their annual general meeting on June 6, 2001 and was executed that day by the parties to the original agreement.



SCL has undertaken to OEH not to own an interest in or manage any luxury hotel or luxury restaurant, other than any luxury hotel or luxury restaurant operated in
conjunction with SCL's passenger ferry and rail services, until August 2005.



SCL has agreed to indemnify and hold harmless OEH, its directors and officers and its subsidiaries from and against any losses, claims, damages or liabilities
relating to any declaration of default, legal proceedings or other claim by or on behalf of the holders of SCL's public notes arising from the initial public offering of shares of the
Company in August 2000 or any spinoff distribution of shares of the Company to shareholders of SCL. This indemnity does not extend to third parties such as shareholders of the Company, and
applies only to claims made prior to August 2001. It does apply to the litigation described in Item 3Legal Proceedings above and in Note 11(b) to the Financial Statements.

PART IV

ITEM 14. Exhibits,  Financial Statement Schedules, and Reports on Form 8-K

| |  |                                                                                |  | Page Number
| |  | ------------------------------------------------------------------------------ |  | -----------
| |  | Independent auditors' report                                                   |  |           
| |  | Consolidated financial statementsyears ended December 31, 2001, 2000 and 1999 |  |            
| |  | Balance sheets (December 31, 2001 and 2000)                                    |  |           
| |  | Operations                                                                     |  |           
| |  | Cash flows                                                                     |  |           
| |  | Shareholders' equity                                                           |  |           
| |  | Notes                                                                          |  |           

Schedule IIValuation
and qualifying accounts (years ended December 31, 2001, 2000 and 1999).

3.    Exhibits

|Exhibit No. |  | Incorporated by Reference to                                                                              |  | Description                                                                                                                                                                                                                                                                                         
|----------- |  | --------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Exhibit 3.1 to Form S-1 Registration Statement No. 333-12030.                                             |  | Memorandum of Association and Certificate of Incorporation of Orient-Express Hotels Ltd.                                                                                                                                                                                                            
|3.2         |  | Exhibit 3.2 to Form S-1 Registration Statement No. 333-12030.                                             |  | Bye-Laws of Orient-Express Hotels Ltd.                                                                                                                                                                                                                                                              
|4.1         |  | Exhibit 3.2 to Form S-1 Registration Statement No. 333-12030.                                             |  | Schedule 1 to Bye-Laws of Orient-Express Hotels Ltd. (included in Exhibit 3.2).                                                                                                                                                                                                                     
|4.2         |  | Exhibit 4.2 to Form S-1 Registration Statement No. 333-12030                                              |  | Rights Agreement between Orient-Express Hotels Ltd. and Fleet National Bank, as Rights Agent, dated June 1, 2000.                                                                                                                                                                                   
|10.1        |  | Exhibit 10.1 to Form S-1 Registration Statement No. 333-12030.                                            |  | Orient-Express Hotels Ltd. 2000 Stock Option Plan.                                                                                                                                                                                                                                                  
|10.2        |  | Exhibit 28(b) to Form 8-K Report dated February 10, 1989 of Orient-Express Hotels Inc. (File No. 1-6066). |  | Agreement Regarding Hotel Cipriani Interests dated January 27, 1989 among James B. Sherwood, Orient-Express Hotels Inc. and Hotel Cipriani S.p.A.                                                                                                                                                   
|10.3        |  | Exhibit 10(e) to 1989 Form 10-K Report of Sea Containers Ltd. (File No. 1-7560).                          |  | Right of First Refusal and Option Agreement Regarding Indirectly Held Hotel Cipriani Interests dated August 22, 1989 among James B. Sherwood, Orient-Express Hotels Inc. and Sea Containers America
Inc.                                                                                            
|10.4        |  | Exhibit 10.4 to Form S-1 Registration Statement No. 333-12030.                                            |  | Agreement dated February 18, 1982 between James B. Sherwood and Hotel Cipriani S.p.A.                                                                                                                                                                                                               
|10.5        |  | Exhibit 2.1 to Form S-1 Registration Statement No. 333-12030.                                             |  | Services Agreement dated August 1, 2000 among Sea Containers Ltd., Sea Containers Services Ltd. and Orient-Express Hotels Ltd.                                                                                                                                                                      
|10.6        |  |                                                                                                           |  | Amendment to Services Agreement dated January 1, 2001 (Exhibit 10.5 above)                                                                                                                                                                                                                          
|10.7        |  | Exhibit 2.1 to June 30, 2001 Form 10-Q Report (File No. 1-16017).                                         |  | Amended and Restated Share Owning Subsidiaries Restructuring Agreement dated June 6, 2001 among Sea Containers Ltd., Orient-Express Hotels Ltd., Orient-Express Holdings 1 Ltd., Orient-Express
Holdings 2 Ltd., Orient-Express Holdings 3 Ltd., Orient-Express Holdings 4 ltd. and Contender 2 Ltd.
|10.8        |  | Exhibit 2.3 to Form S-1 Registration Statement No. 333-12030.                                             |  | Tax Sharing Agreement dated August 1, 2000 between Sea Containers Ltd. and Orient-Express Hotels Ltd.                                                                                                                                                                                               

|10.9  |  | Exhibit 2.5 to Form S-1 Registration Statement No. 333-12030. |  | Noncompete Agreement dated August 1, 2000 between Sea Containers Ltd. and Orient-Express Hotels Ltd.                                          
|----- |  | ------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|10.10 |  | Exhibit 2.6 to Form S-1 Registration Statement No. 333-12030. |  | Indemnity Agreement dated August 1, 2000 between Orient-Express Hotels Ltd. and Sea Containers Ltd.                                           
|11    |  |                                                               |  | Statement re computation of per share earnings.                                                                                               
|21    |  |                                                               |  | Subsidiaries of Orient-Express Hotels Ltd.                                                                                                    
|23    |  |                                                               |  | Consents of Deloitte & Touche LLP relating to Form S-8 Registration Statement No. 333-58298 and Form S-3 Registration Statement No. 333-67268.

OEH
did not enter into any agreement in 2001 for long-term debt under which an amount of securities exceeding 10% of the total assets of OEH was issued. The Company agrees to
furnish to the Commission upon request a copy of each instrument with respect to long-term debt not filed as an exhibit to this report.

The
Company filed a report on Form 8-K dated October 4, 2001 under Item 5Other Events reporting the Company's announcement on
September 25, 2001 that it intended to purchase up to 1,000,000 of its Class A common shares in open market transactions, and the Company's actual purchase of 100,000 shares which were
subsequently cancelled. The report also noted recent open market purchases of Class A common shares by the Company's Chairman and President.

No
other report on Form 8-K was filed during the fourth quarter of 2001.

Orient-Express Hotels Ltd. and Subsidiaries

Schedule IIValuation and Qualifying Accounts

|Column A                        |  | Column B |         | Column C |   | Column D |  | Column E
|------------------------------- |  | -------- | ------- | -------- | - | -------- |  | --------
|
|
|Year ended December 31, 2001:   |  |          |         |          |   |          |  |         
|Allowance for doubtful accounts |  | $        | 422,000 |          | $ | 81,000   |  | $       
|                                |  |          |         |          |   |          |  |         
|                                |  |          |         |          |   |          |  | $       
|Year ended December 31, 2000:   |  |          |         |          |   |          |  |         
|Allowance for doubtful accounts |  | $        | 372,000 |          | $ | 128,000  |  | $       
|                                |  |          |         |          |   |          |  |         
|Year ended December 31, 1999:   |  |          |         |          |   |          |  |         
|Allowance for doubtful accounts |  | $        | 397,000 |          | $ | 15,000   |  | $       
|                                |  |          |         |          |   |          |  |         
|                                |  |          |         |          |   |          |  | $       

---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated:
March 27, 2002

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

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the date indicated.

Dated:
March 27, 2002

|Name                                   |  | Title   
|-------------------------------------- |  | --------
|                                       |  |         
|/s/J.D. CAMPBELLJohn D. Campbell       |  | Director
|/s/J.B. HURLOCKJames B. Hurlock        |  | Director
|/s/J.R. LOVEJOYJ. Robert Lovejoy       |  | Director
|/s/D.J. O'SULLIVANDaniel J. O'Sullivan |  | Director
|/s/J.B. SHERWOODJames B. Sherwood      |  | Director
|/s/S.M.C. SHERWOODSimon M.C. Sherwood  |  | Director

EXHIBIT INDEX

|Exhibit No. |  | Description                                                                                                                                  
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|10.6        |  | Amendment to Services Agreement dated January 1, 2001 among Sea Containers Ltd., Sea Containers Services Ltd. and Orient-Express Hotels Ltd. 
|11          |  | Statement re computation of per share earnings                                                                                               
|21          |  | Subsidiaries of Orient-Express Hotels Ltd.                                                                                                   
|23          |  | Consents of Deloitte & Touche LLP relating to Form S-8 Registration Statement No. 333-58298 and Form S-3 Registration Statement No. 333-67268



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