WHITE PLAINS, N.Y., Feb. 8, 2001 - Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) (�Starwood� or the �Company�) today reported record results for the fourth quarter and full year 2000.

Fourth Quarter and Full Year Financial Highlights

• Fourth quarter diluted EPS from continuing operations increased 25% to $0.64 when compared to pro forma comparable diluted EPS of $0.51 for the same period of 1999.  Full year diluted EPS from continuing operations increased 27% to $1.96 when compared to pro forma comparable diluted EPS of $1.54 for the same period of 1999.
• Total EBITDA for the fourth quarter increased 10% to $432 million and operating income increased 11% to $290 million.  For the full year, total EBITDA increased 16% to $1.573 billion from $1.359 billion in 1999.
• Fourth quarter REVPAR for Same-Store Owned Hotels in North America increased 8.6%.  Full year REVPAR for Same-Store Owned Hotels in North America increased 11.0%.  Fourth quarter REVPAR for Same-Store Owned Hotels in Europe increased 13.2% excluding the unfavorable effect of foreign currency translation.
• Fourth quarter EBITDA at Comparable Owned Hotels in North America increased 16.8% and EBITDA margins increased 320 basis points to 34.6%.  Full year EBITDA at Comparable Owned Hotels in North America increased 16.5% and EBITDA margins increased 170 basis points to 33.1%.

�2000 was a wonderful year for our company, in large measure the result of numerous initiatives we began several years ago,� said Barry Sternlicht, Chairman and CEO.  �Earnings growth accelerated from a healthy 23% in 1999 to 27% this year, leading the sector, and significantly exceeding beginning of the year Street estimates.  Equally impressive is the industry leading 11.0% increase in same store REVPAR achieved in 2000 in North America.�

�Moving forward, our core strategy remains quite simple; increase shareholder value by growing EPS at least 15% and EBITDA by 8-10% per year.  In 2001, we will focus on increasing our revenues by harvesting our growth investment spending of 2000, continued implementation of our new yield management system, building upon the success of our innovations like W Hotels and Westin�s Heavenly Bed, increasing the effectiveness of the #1 rated loyalty program, Starwood Preferred Guest, as well as the ongoing renovations / repositionings of our major brands and the conversions of independent properties to the W brand.  The conversion of one well-located but under-performing asset to a W hotel generates far more bottom line growth for our shareholders than 50 new franchise agreements.   At the same time, we will continue to improve customer service while reducing costs through the launch of Six Sigma and such initiatives as our energy management venture with Enron.  We will also deploy our substantial free cash flow to high yielding growth investments in the hotel and vacation ownership areas, new management/franchise agreements, strategic acquisitions, innovative technologies that enhance productivity and we will recycle existing invested capital by continuing to sell non-strategic assets, redeploying proceeds into higher yielding ventures, stock repurchase, or debt reduction.�

Concluding, Mr. Sternlicht said, �This year, we met our objective of achieving investment grade and were delighted to learn of our inclusion in the S&P 500 during the fourth quarter.  We are encouraged by the extreme tightness of the lending environment, declining industry supply trends, the recent strength in the Euro and by our financing strategy that will allow us to take advantage of the current lower interest rate environment.  We are encouraged by January�s results and remain cautiously optimistic for the year, as we�ve long recognized the economy could ultimately slow demand.  Given the strength of our balance sheet, with careful expense management in our owned hotels, modulating capital expenditures as necessary, and harvesting the growth investments of the year 2000, we remain confident that we can grow at a faster rate than our competitive set for years to come, even in a softening economic environment.�

Fourth Quarter Ended December 31, 2000

For the fourth quarter of 2000, total revenues increased to $1.105 billion when compared to $1.079 billion in the same period in 1999.  Excluding the impact of foreign exchange fluctuations and sold hotels, revenues increased 6% in the fourth quarter of 2000 when compared to the same period in 1999.  Earnings per diluted share from continuing operations were $0.64 compared to pro forma comparable earnings per diluted share from continuing operations of $0.51 in the corresponding period in 1999.  Income from continuing operations increased 26% to $131 million in the fourth quarter of 2000 compared to pro forma comparable income from continuing operations of $104 million in the same period of 1999.  

Year Ended December 31, 2000

For the year ended December 31, 2000, total revenues increased 13% to $4.345 billion when compared to $3.829 billion in the same period in 1999.  Excluding the impact of foreign exchange fluctuations and sold hotels, revenues increased 17% in the year ended December 31, 2000 when compared to 1999.  Earnings per diluted share from continuing operations were $1.96 compared to pro forma comparable earnings per diluted share from continuing operations of $1.54 in the corresponding period in 1999.  Income from continuing operations was $401 million for the year ended December 31, 2000 compared to pro forma comparable income from continuing operations of $303 million for the same period of 1999.

On a cash EPS basis, 2000 earnings per diluted share were $4.46.

Operating Results

At the Company�s owned, leased and consolidated joint venture hotels, excluding eight hotels sold since September 30, 1999 and two hotels without comparable prior year results (�Comparable Owned Hotels�), revenues for the fourth quarter of 2000 increased to $910 million from $884 million in 1999 and EBITDA increased 10.6% to $320 million from $289 million in 1999.  EBITDA at the Company�s Comparable Owned Hotels in North America increased 16.8% to $242 million in the fourth quarter of 2000 when compared to the same period in 1999.  International results were unfavorably impacted by continued weakness in the Euro through most of the fourth quarter of 2000, economic conditions in Latin America and the closure and partial closure of the Company�s two owned hotels in Fiji.

For the fourth quarter of 2000, revenue per available room (�REVPAR�) at owned hotels in North America, excluding hotels under significant renovation or for which comparable results are not available (�Same-Store Owned Hotels�), increased 8.6% to $111.51 when compared to the same period in 1999 as a result of an increase in average daily rate (�ADR�) of 7.5% to $164.08 and an increase in occupancy rate of 80 basis points to 68.0%.  The Sheraton Same-Store Owned Hotels in North America continued to experience strong occupancy gains, up 110 basis points, resulting in a 7.4% REVPAR increase.  Occupancy rates at the Westin Same-Store Owned Hotels in North America increased 90 basis points, resulting in a 6.1% increase in REVPAR.  REVPAR at the St. Regis/Luxury Collection Same-Store Owned Hotels in North America increased 4.2%; REVPAR at W Same-Store Owned Hotels in North America increased 30.2%, while the Same-Store owned portfolio in North America, operating under independent and other brands, increased 4.4%.  The increase in North America for the Company�s proprietary brands was primarily a result of previous and current investment spending for asset renovations and repositionings, the Starwood Preferred Guest Program and sales force realignment, as well as the bi-coastal concentration of the owned portfolio, particularly in Boston, New York, San Francisco and Los Angeles.  For the fourth quarter of 2000, REVPAR at Same-Store Owned Hotels worldwide increased 5.5% when compared to the same period in 1999 as a result of an increase in ADR of 4.2% and an increase in occupancy rate of 80 basis points.  In Europe, Same-Store Owned Hotel REVPAR increased 13.2% excluding the unfavorable effect of foreign currency translation.

EBITDA margins at Comparable Owned Hotels worldwide increased 250 basis points to 35.2%.  In North America, EBITDA margins at Comparable Owned Hotels increased 320 basis points to 34.6%.  Internationally, despite weak economic, political and/or currency conditions, EBITDA margins increased 40 basis points to 37.0%.

Starwood Vacation Ownership, Inc. is currently selling vacation ownership interest (�VOI�) inventory at 12 resorts. Six new build projects are currently underway at the Harborside Resort at Atlantis on Paradise Island in The Bahamas; Sheraton�s Mountain Vista in Avon, Colorado; Sheraton�s Vistana Villages in Orlando, Florida; Westin Mission Hills Resort Villas in Rancho Mirage, California; Westin Kierland Resort in Scottsdale, Arizona; and Westin Ka�anapali Ocean Resort Villas in Maui, Hawaii.  Additional VOI projects capitalizing on current Starwood owned locations are targeted in markets such as Phoenix, Cancun and Southern Europe.

Dispositions

The Company continues its efforts to sell non-strategic assets around the world. Total proceeds from such sales in 2000 were approximately $350 million.  The Company will continue to review its portfolio for disposition candidates.  Since the acquisition of ITT Corporation, the Company has completed non-core asset dispositions with aggregate proceeds exceeding $7.1 billion.

The Company is in the final stage of selecting a banker for the proposed sale of its CIGA portfolio which includes such world renowned assets as the Gritti Palace and Danieli in Venice, the St. Regis Grand and Westin Excelsior in Rome, the Grand and Excelsior in Florence, the Principe di Savoia in Milan, the Westin Palace in Madrid, and four hotels in Sardinia�s Costa Smeralda (and almost 6,000 acres of surrounding land) including the world famous Cala di Volpe and Pitrizza resorts.

Capital

During the fourth quarter of 2000, the Company invested approximately $236 million for capital improvements primarily at owned hotel assets, continuing the renovation program on its largest brand, Sheraton and vacation ownership construction.  In addition, these capital expenditures included significant new growth investment for the acquisition of land for vacation ownership project construction adjacent to the Westin Kierland Resort in Scottsdale, Arizona and 14 acres on the island of Maui as well as the acquisition of a second fully-entitled site adjacent to the San Francisco Museum of Modern Art.  Other major expenditures in the quarter included ongoing development of the W Times Square, repositioning of the W Midland and conversion to the W Lakeshore of the Days Inn Chicago.  The Company also expanded the Westin Mission Hills Resort and completed significant renovation work at the Sheraton Bal Harbour and Westin Maui.  Internationally, the 100 room expansion of the Westin Turnberry Resort in Scotland, including the addition of a second golf course and the Colin Montgomerie links golf academy was completed.

During the fourth quarter, the Company purchased 1,056,600 shares at a total cost of approximately $30 million.  The Company repurchased 2,525,600 shares at a total cost of approximately $70 million during the year ended December 31, 2000.  At December 31, 2000, Starwood had approximately 202 million shares outstanding (including partnership units and exchangeable preferred shares).

Financing

On December 31, 2000, the Company had total debt of $5.542 billion and cash of $189 million.  In the fourth quarter of 2000, the Company was upgraded by Fitch to investment grade, consistent with Standard & Poors� upgrade in the third quarter of 2000.  During the fourth quarter of 2000, the Company paid off $700 million of maturing bonds.  On December 15, 2000, the Company completed a $172.5 million add-on financing to its credit facility and, in January 2001, an additional $150 million was added to the credit facility.  At the end of the fourth quarter of 2000, the Company�s debt was approximately 59% fixed and 41% floating and its weighted average maturity exceeded five years.  As of January 31, 2001, the Company had availability under its revolving credit facility in excess of $550 million and total Company debt had an average interest rate of 7.1%.

During the fourth quarter of 2000, the Company declared a quarterly dividend of $0.1725 per share, representing a 15.0% increase over the prior year.  Consistent with the Company�s earlier announcements relating to its dividend policy, the Company expects to increase its annual dividend by 15.9% for 2001 to $0.80 per share.

Future Performance

All comments in the following paragraphs and the comments from Mr.  Sternlicht above are deemed to be forward-looking statements.  These statements reflect expectations of the Company�s performance given its current base of assets and its current understanding of external economic and political environments.  Actual results may differ materially.

• Full year 2001 North American Same-Store REVPAR growth is expected to be in excess of 6%.  Worldwide Same-Store REVPAR growth is expected to be in excess of 5%.
• January 2001 REVPAR growth for Same-Store North American Owned Hotels was approximately 10%.
• Should the FASB�s proposed change in accounting for the amortization of goodwill be implemented, the Company estimates that diluted EPS could increase at least $0.24 on an annual basis.
• Full year 2001 EBITDA is expected to be approximately $1.7 billion.
• Owned hotel EBITDA margins are expected to improve at or above the Company�s 100 basis point annual target.
• The Company is currently comfortable with the total year 2001 diluted EPS estimate  increasing to $2.26 which represents a 15% growth in diluted EPS over the Company�s 2000 diluted EPS.  The increase in the 2001 diluted EPS estimate from the prior estimate of $2.22 is due primarily to the reduction in the estimated effective tax rate to approximately 33% for 2001, consistent with the actual effective tax rate in 2000. Given the timing of the rollout of Six Sigma, which was announced February 5, and the intensive renovation cycle and ongoing changes in the portfolio, the Company currently expects first quarter 2001 diluted EPS of $0.30, representing an increase of 15% over the same period in 2000.  Further, the Company expects quarterly diluted EPS for all subsequent quarters in 2001 to also achieve approximately 15% growth.
• The Company produces substantial free cash flow.  The Company has completed a multi-year capital plan and divided these expenditures into growth and maintenance expenditures.  The Company considers the growth expenditures as discretionary. After interest expense, maintenance capital expenditures, dividends and cash taxes, discretionary cash flow is expected to be approximately $750 million in 2001.  The Company�s 2001 earnings estimates assume EBITDA generating investment spending for timeshare inventory (approximately $200 million), the completion of the W Times Square and the two W Hotels in Chicago (approximately $100 million) and sliver equity investments (approximately $100 million).  The balance of expected discretionary cash flow is available for other EBITDA generating projects, share repurchase or debt paydown.  In general, the Company targets 15% after-tax internal rate of return on invested capital. Vacation ownership projects, on average, are expected to achieve better than 20% after-tax internal rate of return on invested capital.

This release contains certain statements that may be deemed �forward-looking statements� within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.