REUTERS - Bermuda based Orient-Express Hotels Ltd., which owns luxury hotels throughout the world, warned that it is unlikely to meet its annual net income targets due to the sudden downturn in the leisure industry following the attacks on New York and the Pentagon.

The company also said it will buy back one million of its shares. Chairman James Sherwood said the market was overreacting to the attacks, and softness in the United States tourism industry was not affecting most of Orient's overseas hotels. However, he said, business at Orient's upscale New York City restaurant, '21' Club, was hurt as a result of the attacks.

The company said it had expected net income this year to exceed the $40 million generated in 2000 but has since ruled out that possibility due to the drop-off in the last few weeks of the third quarter and with the fourth quarter traditionally weak.

Orient-Express said Chairman James B. Sherwood and President Simon M.C. Sherwood will also be making purchases of the company's stock for their individual accounts, as Orient joins dozens of US companies initiating or increasing buybacks in the aftermath of the air attacks.

Orient has 11,575,000 shares outstanding, excluding those owned by Sea Containers Ltd. , which spun off the company in June.