1115836--2/26/2010--ORIENT_EXPRESS_HOTELS

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{stock, price, share}

{acquisition, growth, future}

{loss, insurance, financial}

{competitive, industry, competition}

{condition, economic, financial}

{regulation, change, law}

{financial, litigation, operation}

{operation, natural, condition}

{cost, contract, operation}

{operation, international, foreign}

{loan, real, estate}

{cost, operation, labor}

{interest, director, officer}

{stock, price, operating}

{property, intellectual, protect}

{provision, law, control}

OEH s operations are subject to adverse factors generally encountered in the lodging, hospitality and travel industries. If revenue decreases at OEH s properties, its expenses may not decrease at the same rate, thereby adversely affecting OEH s profitability and cash flow. The hospitality industry is highly competitive, both for customers and for acquisitions of new properties. The hospitality industry is heavily regulated, including with respect to food and beverage sales, employee relations, development and construction, and environmental matters, and compliance with these laws could reduce profitability of properties that OEH owns or manages. OEH s acquisition, expansion and development strategy may be less successful than expected and, therefore, its growth may be limited. OEH may be unable to obtain the necessary additional capital to finance the growth of its business. OEH s operations may be adversely affected by extreme weather conditions and the impact of natural disasters, and insurance may not fully cover these and other risks. If the relationships between OEH and its employees were to deteriorate, OEH may be faced with labor shortages or stoppages, which would adversely affect the ability to operate its facilities. OEH s plans to expand existing properties, develop new ones and build residential units for sale at some properties are subject to project cost, completion and resale risks. OEH s owned hotels and restaurants are subject to risks generally incidental to the ownership of commercial real estate and often beyond its control. Loss or infringement of OEH s brand names could adversely affect its business. Some OEH properties are geographically concentrated in countries where national economic downturns, political events or other changing local conditions beyond OEH s control could disproportionately affect OEH s business. OEH may be unable to manage effectively the risks associated with its joint venture investments, which may adversely impact the operations of those joint ventures. Risks Relating to OEH s Financial Condition The current uncertainty in financial markets and the sustained weakening of the economies of many countries has adversely affected OEH s financial condition and results of operations and could do so in the future. The financial uncertainty and economic weakening identified in the previous Risk Factor could adversely impact OEH s liquidity and financial condition, in particular OEH s ability to raise additional funds for its cash requirements for working capital, commitments and debt service. Covenants in OEH s financing agreements could be breached or could limit management s discretion in operating OEH s businesses, causing OEH to make less advantageous business decisions; OEH s indebtedness is collateralized by substantially all of its properties. OEH s substantial indebtedness could adversely affect its financial health. Increases in prevailing interest rates may increase OEH s interest payment obligations. Fluctuations in foreign currency exchange rates may have a material adverse effect on OEH s financial statements and/or operating margins. OEH s ability to pay dividends on the class A common shares is limited. OEH is subject to accounting regulations and uses certain accounting estimates and judgments that may differ significantly from actual results. Risks of Investing in Class A Common Shares The Company is not restricted from issuing additional class A or B common shares, and any sales could negatively affect the trading price and book value of the class A common shares outstanding. The price of the class A common shares may fluctuate significantly, which may make it difficult for shareholders to sell the class A common shares when they want or at desired prices. Investors in an offering of class A common shares by the Company may pay a much higher price than the book value of the outstanding class A common shares. OEH may have broad discretion over the use of the net proceeds from any offering of class A common shares. A subsidiary of the Company, which has two Company directors on its board of directors, may control the outcome of most matters submitted to a vote of the Company s shareholders. Provisions in the Company s charter documents, and the preferred share purchase rights currently attached to the class A and B common shares, may discourage a potential acquisition of OEH, even one that the holders of a majority of the class A common shares might favor. A judgment of a United States court for liabilities under U.S. securities laws might not be enforceable in Bermuda, or an original action might not be brought in Bermuda against the Company for liabilities under U.S. securities laws.

Full 10-K form ▸

1115836--2/26/2010--ORIENT_EXPRESS_HOTELS_LTD