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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the transition period from                             to                              

Commission file number 1-16017

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

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

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

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

        As of April 30, 2005, 36,850,601 Class A common shares and 20,503,877 Class B common shares of Orient-Express Hotels Ltd. were outstanding, including 18,044,478 Class B shares owned by a subsidiary of Orient-Express Hotels Ltd. and 7,443,901 Class A shares and 2,459,399 Class B shares owned by Sea Containers Ltd.

PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements

Orient-Express Hotels Ltd. and Subsidiaries

Consolidated Balance Sheets

See notes to consolidated financial statements.

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Orient-Express Hotels Ltd. and Subsidiaries

Statements of Consolidated Operations (unaudited)

See notes to consolidated financial statements.

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Orient-Express Hotels Ltd. and Subsidiaries

Statements of Consolidated Cash Flows (unaudited)

See notes to consolidated financial statements.

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Orient-Express Hotels Ltd. and Subsidiaries

Statements of Consolidated Shareholders' Equity (unaudited)

See notes to consolidated financial statements.

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

1.     Basis of financial statement presentation

        In this report Orient-Express Hotels Ltd. is referred to as the "Company", and the Company and its subsidiaries are referred to collectively as "OEH". At March 31, 2005, Sea Containers Ltd., a Bermuda company ("SCL"), owned 25% of the equity shares in the Company.

(a) Accounting policies

        For a description of significant accounting policies and basis of presentation, see Notes 1 and 15 to the consolidated financial statements in the Company's 2004 Form 10-K annual report. As of March 31, 2005, these significant accounting policies have not changed from December 31, 2004, except as referred to in Note 1(c) below. "SFAS" means Statement of Financial Accounting Standards and "FIN" means an accounting interpretation, both of the U.S. Financial Accounting Standards Board.

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

        In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the three months ended March 31, 2005 and 2004, which are all of a normal recurring nature, have been reflected in the information provided. Due to the seasonal nature of OEH's business, operating results for the interim period are not necessarily indicative of a full year's operating results.

(b) Net losses per share

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

        For the three months ended March 31, 2005 and 2004, the anti-dilutive effect of stock options on 269,312 and 102,261 class A common shares, respectively, was excluded from the computation of diluted losses per share.

(c) Stock-based compensation

        OEH had previously accounted for stock-based compensation under the guidelines of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and followed the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" as amended by SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure".

        With effect from January 1, 2005, the Company adopted SFAS No. 123R, "Stock-Based Payment", and chose the modified prospective application as its chosen transition method. Prior to January 1, 2005, the Company has historically reflected the pro forma impact to net income had all stock-based compensation been expensed under the provisions of SFAS No. 123. Upon adoption of SFAS No. 123R, all stock-based compensation vesting during the three months ended March 31, 2005 has been reflected in the Company's net loss, as reported for this period. This resulted in an expense in the three months

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ended March 31, 2005 of $261,000. Awards granted in future periods will be valued on the date of grant and expensed using a straight-line basis over the required service period. The following table illustrates the effect on income attributable to common shares and earnings per share for the three months ended March 31, 2004, had the fair-value based provisions of SFAS No. 123R been applied (dollars in thousands except per share amounts):

(d) Dividends

        On January 5, 2005, the Company declared a dividend of $0.025 per common share payable February 4, 2005 to shareholders of record January 20, 2005.

(e) 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 $2,188,000 and $1,929,000 for the three months ended March 31, 2005 and 2004, respectively.

(f) Recent accounting pronouncements

        The Company adopted SFAS No. 123R with effect from January 1, 2005 (see Note 1(c)).

(g) Reclassifications

        Certain items in 2004 have been reclassified to conform to the 2005 presentation.

2.     Acquisitions

        Effective February 8, 2005, OEH purchased 100% of the issued equity of LLC Europe Hotel which owns a 93.5% interest in the property operating as the Grand Hotel Europe, St Petersburg, Russia. The remaining interest in the property is owned by the City of St. Petersburg. In addition, OEH acquired full management and operational control of the hotel and acquired 100% of a Cyprus company which has agreements with the hotel to provide various management services. The total purchase price, including acquisition costs, was $95,000,000 paid in cash of which $57,500,000 was financed by a syndicate of banks led by the International Finance Corporation.

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        The following table summarizes the initial estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. These initial purchase price allocations may be adjusted within one year of the purchase date for changes in estimates of the fair value of assets acquired and liabilities assumed as a result of final appraisals (dollars in thousands):

        The net assets of the Grand Hotel Europe have been fair valued based on the estimated replacement cost of the building. After fair valuing all other assets and liabilities, goodwill of $37,000,000 has been recorded of which $ nil will be deductible as operating expenses for tax purposes.

        The acquisition of the Grand Hotel Europe has been accounted for as a purchase in accordance with SFAS No. 141, "Business Combinations". The results of the operation have been included in the consolidated financial statements of OEH from February 8, 2005.

3.     Investments

        On February 2, 2004, OEH entered into an agreement with the Pansea Hotel group, the owner of six deluxe hotels in Southeast Asia. Under this agreement, OEH is to provide a maximum of $8,000,000 in loans to the hotel holding company which are convertible after three years into approximately 25% of the holding company's shares. As of March 31, 2005, OEH had provided $4,625,000 (December 31, 2004-$4,625,000) in loans in Pansea which are recorded in other assets. The conversion price of the loans is determined at a multiple of EBITDA less existing debt on the exercise date (as defined in the investment agreement). OEH is not managing the hotels but is marketing them along with its other properties.

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

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4.     Property, plant and equipment

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

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

5.     Goodwill

        OEH's goodwill consists of $788,000 related to the trains and cruises reporting segment and $64,204,000 related to the hotels and restaurants reporting segment, of which $37,000,000 relates to the acquisition of the Grand Hotel Europe effective February 8, 2005 (see Note 2).

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6.     Long-term debt and obligations under capital lease

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

        Certain credit agreements of OEH have restrictive covenants. At March 31, 2005, OEH was in compliance with these covenants, including a minimum consolidated net worth test and a minimum consolidated interest coverage test as defined under a bank-syndicated $179,000,000 loan facility borrowed during 2003 and secured by three of OEH's Italian hotels. OEH does not currently have any covenants in its loan agreements which limit the payment of dividends.

        The following is a summary of the aggregate maturities of long-term debt, including obligations under capital lease, at March 31, 2005 (dollars in thousands):

        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.

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7.     Income taxes

        The benefit from income taxes consists of the following (dollars in thousands):

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

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

        The deferred tax assets consist of tax loss carry forwards. 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. The deferred tax liabilities at March 31, 2005 include a liability of $12,500,000 arising from the investment in the Grand Hotel Europe (see Note 2). The liability is caused by the difference between the tax basis and the fair value of the depreciable assets at the acquisition date.

8.     Pensions

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

        As reported in Note 7 to the financial statements in the Company's 2004 Form 10-K annual report, OEH expected to contribute $833,000 to its pension plans in 2005. As of March 31, 2005, $248,000 of

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contributions were made. OEH anticipates contributing an additional $585,000 to fund its pension plans in 2005 for a total of $833,000.

9.     Supplemental cash flow information

        (Dollars in thousands):

        In conjunction with acquisitions (see Note 2) liabilities were assumed as follows (dollars in thousands):

10.   Accumulated other comprehensive loss

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

        For the three months ended March 31, 2005 and 2004, the change in the fair market value of derivative instruments resulted in a charge of $50,000 and $260,000, respectively, to comprehensive loss.

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

11.   Commitments

        Outstanding contracts to purchase fixed assets were approximately $26,900,000 at March 31, 2005 (December 31, 2004—$27,200,000).

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

        As reported in the Company's 2004 Form 10-K annual report, OEH has two reporting segments, (i) hotels and restaurants and (ii) tourist trains and cruises. Segment performance is evaluated based upon segment net earnings before interest, tax (including tax on earnings from unconsolidated

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companies), depreciation and amortisation ("segment EBITDA"). Financial information regarding these business segments is as follows, with net finance costs appearing net of capitalized interest and interest and related income (dollars in thousands):

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

13.   Related party transactions

        For the three months ended March 31, 2005, OEH paid subsidiaries of SCL $1,523,000 (2004—$1,369,000) for the provision of various services under a services agreement between OEH and SCL. These amounts have been settled in accordance with the services agreement and are included in selling, general and administrative expenses.

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

        OEH manages under a long-term contract the Charleston Place Hotel (accounted for under the equity method) and has made loans to the hotel-owning company. For the three months ended March 31, 2005, OEH earned $936,000 (2004—$860,000) in management fees which are recorded in revenue, and $2,188,000 (2004—$1,929,000) in interest income on partnership and other loans, which are recorded in earnings from unconsolidated companies.

        OEH manages under long-term contracts the Hotel Monasterio and the Machu Picchu Sanctuary Lodge owned by its 50/50 joint venture with local Peruvian interests, as well as the 50/50-owned PeruRail operation, and provides loans, guarantees and other credit accommodation to these joint ventures. In the three months ended March 31, 2005, OEH earned management and guarantee fees of $894,000 (2004—$451,000) and loan interest of $29,000 (2004—$24,000) which are recorded in earnings from unconsolidated companies. At March 31, 2005, loans to the hotels aggregated $2,000,000, bear interest at a spread over LIBOR and come due in 2005. At the same date, OEH had a $750,000 subordinated loan to the PeruRail operation with an indefinite maturity date and interest also at a spread over LIBOR. All of the guarantees relating to the Company's investments in Peru were in place prior to December 31, 2002.

        OEH manages under a long-term contract the Hotel Ritz in Madrid, Spain, in which OEH owns a 50% interest and is accounted for under the equity method. For the three months ended March 31, 2005, OEH earned $241,000 (2004—$178,000) in management fees, which are included in revenue.

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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

        OEH's operating results for the three months ended March 31, 2005 and 2004, expressed as a percentage of revenue, were as follows:

        Segment net earnings before interest, tax (including tax on unconsolidated companies), depreciation and amortization ("segment EBITDA") of OEH's operations for the three months ended March 31, 2005 and 2004 are analyzed as follows (dollars in millions):

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

        Management evaluates the operating performance of OEH's segments on the basis of segment EBITDA and believes that segment EBITDA is a useful measure of operating performance because segment EBITDA is not affected by non-operating factors such as leverage and the historic cost of assets. EBITDA is a financial measure commonly used in OEH's industry. OEH's segment EBITDA, however, may not be comparable in all instances to EBITDA as disclosed by other companies. Segment EBITDA should not be considered as an alternative to earnings from operations or net earnings (as determined in accordance with U.S. generally accepted accounting principles) as a measure of OEH's operating performance, or as an alternative to net cash provided by operating, investing and financing activities (as determined in accordance with U.S. generally accepted accounting principles) as a measure of OEH's ability to meet cash needs.

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        Operating information for OEH's owned hotels for the three months ended March 31, 2005 and 2004 is as follows: