• Exit of Sherwoods suggests Orient-Express could sell

Orient Express, the luxury owner and operator, is being tipped for a sale following the resignation of its CEO Simon Sherwood.

With his dad and company founder Jim Sherwood announcing in December that he would be retiring this June, the company will no longer be both run and owned by the Sherwoods.

The official statement said that Simon Sherwood was leaving to pursue other interest. He is to remain in his current post until August to enable his orderly replacement.

While the Sherwoods may not be running the company by the summer, they will be deciding who does as they control more than 80% of the voting shares.

An exit from the stock market is being touted because, as with most property heavy groups, the value locked-up in the property holding is not being recognised by investors.

In addition, property development is becoming a significant part of the business. The company estimates that this year, between $15m and $20m of its EBITDA will come from developments at its hotel sites (mostly apartments and villas). This is set to rise to over $25m by 2009, making it the second most important generator of EBITDA after hotel ownership.

Total EBITDA during 2006 was $132m, up from $108m in 2005. The bulk of these profits – $105m – come from owned hotels. Just $20m is from management with similarly small amounts from other interests such as restaurants, trains and cruises.

To all intense and purposes then, Orient Express is a property company that has a hotel operating wing. Its 39 luxury hotels are irreplaceable assets that would command a hefty premium in the current heady property market. Analysts at Citigroup put a $2.35bn valuation on the group.

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