Fair value measurements

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Fair value measurements

Fair value measurements

(a)    Financial instruments recorded at fair value

The following tables summarize the valuation of Belmond’s assets and liabilities by the fair value hierarchy at December 31, 2017 and 2016:

	Level 1	Level 2		Level 3	Total
December 31, 2017	$'000	$'000		$'000	$'000
Assets at fair value:
Derivative financial instruments	—	1,348		—	1,348
Total assets	—	1,348		—	1,348
Liabilities at fair value:
Derivative financial instruments	—	(430	)	—	(430	)
Total net assets	—	918		—	918

	Level 1	Level 2		Level 3	Total
December 31, 2016	$'000	$'000		$'000	$'000
Assets at fair value:
Derivative financial instruments	—	—		—	—
Total assets	—	—		—	—
Liabilities at fair value:
Derivative financial instruments	—	(3,364	)	—	(3,364	)
Total net liabilities	—	(3,364	)	—	(3,364	)

During the years ended December 31, 2017 and 2016, there were no transfers between levels of the fair value hierarchy.

(b)    Other financial instruments

Certain methods and assumptions are used to estimate the fair value of each class of financial instruments. The carrying amount of current assets and current liabilities as disclosed on the consolidated balance sheets approximate their fair value due to the short-term nature of those instruments.

The fair value of Belmond's long-term debt, excluding interest rate swaps and caps, is determined using the contractual cash flows and credit-adjusted discount curves. The fair value of the debt is the present value of those contractual cash flows which are discounted at the current market cost of debt and adjusted for the credit spreads. Credit spreads take into consideration general market conditions, maturity and collateral.

The estimated carrying values, fair values, and levels of the fair value hierarchy of Belmond's long-term debt as of December 31, 2017 and 2016 were as follows:

		December 31, 2017		December 31, 2016
		Carrying amounts $’000	Fair value $’000	Carrying amounts $’000	Fair value $’000
Total long-term debt, before deduction of discount on secured term loan and debt issuance costs, excluding obligations under capital leases	Level 3	724,208	728,994	602,083	626,613

See Note 11.

(c)    Non-financial assets measured at fair value on a non-recurring basis

The estimated fair values of Belmond’s non-financial assets measured on a non-recurring basis for the years ended December 31, 2017, 2016 and 2015 were as follows:

		Fair value measurement inputs
	Fair value $’000	Level 1 $’000	Level 2 $’000	Level 3 $’000	Total lossesin yearendedDecember 31,2017 $’000
Property, plant and equipment	5,955	—	—	5,955	(8,216	)

		Fair value measurement inputs
	Fair value $’000	Level 1 $’000	Level 2 $’000	Level 3 $’000	Total lossesin yearendedDecember 31,2016 $’000
Property, plant and equipment	—	—	—	—	(1,007	)

		Fair value measurement inputs
	Fair value $’000	Level 1 $’000	Level 2 $’000	Level 3 $’000	Total lossesin yearendedDecember 31,2017 $’000
Goodwill	—	—	—	—	(5,500	)

		Fair value measurement inputs
	Fair value $’000	Level 1 $’000	Level 2 $’000	Level 3 $’000	Total lossesin yearendedDecember 31,2015 $’000
Goodwill	10,050	—	—	10,050	(9,796	)

Property, plant and equipment

For the year ended December 31, 2017, property, plant and equipment at Belmond Road to Mandalay and Belmond Northern Belle with a combined carrying value of $14,171,000 was written down to fair value of $5,955,000, resulting in a non-cash impairment charge of $8,216,000.

For the year ended December 31, 2016, property, plant and equipment at Belmond Orcaella with a carrying amount of $1,007,000 was written down to fair value of $Nil, resulting in a non-cash impairment charge of $1,007,000.

These impairments are included in earnings from continuing operations in the period incurred. See Note 8.

Goodwill

For the year ended December 31, 2017, goodwill of Belmond Cap Juluca with a carrying value of $5,500,000 was written down to fair value of $Nil, resulting in a non-cash impairment charge of $5,500,000.

For the year ended December 31, 2015, goodwill of Belmond Jimbaran Puri, Belmond La Résidence Phou Vao and Belmond Northern Belle with a combined carrying value of $5,698,000 was written down to fair value of $Nil, resulting in a non-cash impairment charge of $5,698,000. Also, in the year ended December 31, 2015, goodwill of Belmond Grand Hotel Europe with a carrying value of $14,148,000 was written down to fair value of $10,050,000, resulting in a non-cash impairment charge of $4,098,000.

These impairments are included in earnings from continuing operations in the period incurred. See Note 9.