Starwood Hotels Net Income for the 3rd Qtr of 2004 Jumps to $107 million Compared to $48 million in the 3rd Qtr of 2003; REVPAR Worldwide Increased 12.3% / Hotel Operating Statistics / October 2004

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Starwood Hotels Net Income for the 3rd Qtr of 2004
Jumps to $107 million Compared to $48 million
in the 3rd Qtr of 2003;
REVPAR Worldwide Increased 12.3%
Hotel Operating Statistics

WHITE PLAINS, N.Y - Oct. 21, 2004

Third Quarter 2004 Highlights:

EPS from continuing operations for the third quarter of 2004 was $0.49 compared to $0.23 in the third quarter of 2003. Excluding special items, EPS from continuing operations was $0.40 for the third quarter of 2004 compared to $0.24 in the third quarter of 2003.

REVPAR at Same-Store Owned Hotels worldwide and in North America increased 12.3% and 12.1%, respectively, when compared to the third quarter of 2003. ADR increased 8.0% and 8.5% worldwide and in North America, respectively.

Globally, for Same-Store Owned Hotels, Sheraton REVPAR grew (+16.1%), followed by St. Regis/Luxury Collection (+14.2%), Westin (+7.6%), and W Hotels (+6.8%), with each of these brands experiencing both ADR and occupancy gains.

Management and franchise fees in the quarter increased approximately 18.1% when compared to 2003.

Starwood Vacation Ownership revenues, which exclude gains on sales of notes receivable, increased 36% as contract sales, excluding the fractional sales at the St. Regis Aspen, were up 30.6% when compared to 2003.

Net income for the third quarter of 2004 was $107 million compared to $48 million in the third quarter of 2003. Total Company Adjusted EBITDA increased 25% to $291 million when compared to $233 million in 2003.

Margins at Starwood branded Same-Store Owned Hotels in North America improved 312 basis points when compared to the third quarter of 2003.

According to Smith Travel Research total Company system-wide market share increased 160 basis points when compared to 2003.

Starwood Hotels & Resorts Worldwide, Inc. ("Starwood" or the "Company") today reported EPS from continuing operations for the third quarter of 2004 of $0.49 compared to $0.23 in the third quarter of 2003. Excluding special items, which primarily relate to a $37 million (pre-tax) reversal of a reserve as a result of the favorable outcome of a litigation matter, EPS from continuing operations was $0.40 for the third quarter of 2004 compared to $0.24 in the third quarter of 2003. Income from continuing operations was $105 million in the third quarter of 2004 compared to $47 million in 2003. Excluding special items, income from continuing operations was $85 million for the third quarter of 2004 compared to $49 million in 2003. Net income (after discontinued operations) was $107 million and EPS was $0.50 in the third quarter of 2004 compared to $48 million and EPS of $0.23 in the third quarter of 2003. Selling, general, administrative and other in the third quarter of 2004 includes cost of sales from our new Bliss spa and beauty products business (the revenue from this business is included in management fees, franchise fees and other income). The effective tax rate for the third quarter of 2004 was 19.5%.

Barry S. Sternlicht, Executive Chairman, said: "I am pleased with our industry leading results in the quarter, particularly at the property margin level and the 8.5% gain in average rates in North America. For the fourth quarter in a row, we are delighted to be able to raise our EBITDA and earnings guidance for the year once again. The travel markets, both group and transient, remain strong. We remain optimistic. On the strength of our six brands, our global development pipeline is gaining momentum. Starwood Vacation Ownership is producing superior results. Europe and Latin America are beginning to join Asia in the global rebound. Based on our confidence in this year and next, we repurchased significant stock in the quarter bringing total repurchases to $230 million year-to-date and through careful capital spending, were still able to pay down our debt at the same time. Our company's balance sheet is in its best shape ever."

"Entering 2005, our prospects remain bright, particularly given that several material one time costs absorbed in 2004 are unlikely to be repeated. Most importantly, I am excited by the arrival of our new CEO, Steve Heyer, who will take our great company to new places as he builds our team and our brands."

Steven J. Heyer, CEO, said "Clearly our brands, bolstered by our innovation leadership, have captured the imagination and loyalty of travelers around the globe. Two years of uninterrupted share gains are a tribute to Barry's leadership and our associate's dedication to excellence. And after just a short period of time here, I already see an excitement level and a passion for creating even greater shareholder value and marketplace strength. I look forward to working with Barry and the team to take our game to the next level."

Operating Results:

Third Quarter Ended September 30, 2004

Cash flow from operations was $195 million compared to $289 million in 2003. The decrease primarily relates to the increase in restricted cash from pre-sales of vacation ownership interests. Total Company Adjusted EBITDA was $291 million compared to $233 million in 2003.

Owned, Leased and Consolidated Joint Venture Hotels

REVPAR for Same-Store Owned Hotels worldwide and in North America increased 12.3% and 12.1%, respectively, when compared to 2003. REVPAR at Same-Store Owned Hotels in North America increased 17.3% at Sheraton, 10.2% at St. Regis/Luxury Collection, 6.8% at W, and 6.7% at Westin. REVPAR growth was particularly strong at the Company's owned hotels in New York, Boston and Toronto. REVPAR was weaker at owned hotels in New Orleans and Indianapolis. Revenue from transient travel was up 10.5% in North America when compared to 2003. Internationally, Same-Store Owned Hotel REVPAR increased 12.8%, with Latin America up 16.8%, Asia Pacific up 15.2%, and Europe up 11.5%. Excluding the favorable effects of foreign exchange, REVPAR increased 5.4% internationally.

Total revenues at Same-Store Owned Hotels worldwide increased 10.6% to $792 million when compared to $716 million in 2003 while costs and expenses at these hotels increased 7.1% to $603 million in 2004 compared to $563 million in 2003. Total revenues at Same-Store Owned Hotels in North America increased 10.4% to $567 million in 2004 when compared to $513 million in 2003 while costs and expenses at these hotels increased 6.1% to $436 million when compared to $411 million in 2003, resulting in significantly increased margins of approximately 312 basis points.

System-wide REVPAR; Management/Franchise Fees

System-wide (owned, managed and franchised) branded REVPAR for Same-Store Hotels in North America increased 10.5%: Westin 12.0%, Sheraton 11.3%, W Hotels 6.4%, St. Regis/Luxury Collection 5.2%, and Four Points by Sheraton 5.1%. For the eighth quarter in a row, total Company market share in North America increased for the Company's owned and managed hotels as well as for system-wide hotels. Total management and franchise fees were $82 million, up $13 million, or 18%, from last year. Base management fees (including license fees) increased approximately 19% due to the strong top-line growth.

Starwood Vacation Ownership

Vacation ownership revenue, which excludes gains on sales of notes receivable, was up $46 million, or 36% to $175 million in the third quarter of 2004 when compared to 2003 primarily due to sales at our resorts in Aspen, Maui, Orlando and Scottsdale. Contract sales, excluding fractional sales at the St. Regis Aspen, were up 30.6%. The average price per timeshare unit sold increased approximately 7.9% to $20,049, and the number of contracts signed increased approximately 21.0% in the third quarter of 2004 when compared to 2003. In May 2004, the Company began selling fractional units at the St. Regis in Aspen, Colorado. The Company is in the process of converting 98 guest rooms at this hotel into 25 fractional units, which will be sold in four week intervals, and 20 new hotel rooms. The fractional project is expected to be completed towards the end of 2004. During the third quarter of 2004, the Company sold $25 million of notes receivable and recognized a gain on sale of $3 million. During the third quarter of 2003, the Company did not have any sales of vacation ownership receivables. New development planning continues for the owned Sheraton Kauai, the owned land at the Princeville resort in Kauai, the owned Sheraton Cancun, as well as other Mexico properties, and a second phase at the Westin Mission Hills Resort.

Brand Development/Unit Growth

During the third quarter, the Company signed 17 full service hotel management and franchise contracts (representing approximately 4,900 rooms), including W Hong Kong (383 rooms), Sheraton Phoenix Convention Center (1,000 rooms), Sheraton Sharonville (256 rooms), the Westin Lombard (500 rooms), Sheraton Changsha (330 rooms), and opened 5 new hotels and resorts, including W Seoul Walkerhill (Seoul, South Korea, 253 rooms), and the Aladdin Resort & Casino (Las Vegas, Nevada, 2,567 rooms). The Company had approximately 150 full service hotels and approximately 38,000 rooms in its active global development pipeline at September 30, 2004, with roughly one half of that number in international locations. Additionally, plans are underway to develop eight new Bliss spas in W hotels, with the first new Bliss spa opening at the W New York (20,000 square feet) in December 2004 and our first Remede spa at the St. Regis in Aspen.

Results for the Nine Months Ended September 30, 2004:

EPS from continuing operations for the nine months ended September 30, 2004 was $1.21 compared to $0.08 in the same period of 2003. Excluding special items, EPS from continuing operations was $1.05 in 2004 compared to $0.43 in 2003. Income from continuing operations was $258 million in 2004 compared to $17 million in 2003. Excluding special items, income from the continuing operations was $225 million in 2004 compared to $89 million in 2003. Net income (after discontinued operations) was $295 million and EPS was $1.38 in 2004 compared to $222 million and $1.08 in 2003.

Cash flow from operations for the nine months ended September 30, 2004 was $377 million compared to $511 million in the same period of 2003. The decrease primarily relates to the increase in restricted cash from pre-sales of vacation ownership interests. Total Company Adjusted EBITDA for the nine months ended September 30, 2004 was $823 million compared to $667 million in the same period in 2003.

Capital:

Gross capital spending during the quarter included approximately $54 million in renovations of hotel assets including construction capital at the St. Regis in Aspen, Colorado, the Boston Park Plaza, and the Sheraton Hotel and Towers in New York. Investment spending on VOI capital assets (primarily inventory build) was $48 million, including VOI construction at Westin Ka'anapali Ocean Resort Villas in Maui, Hawaii and at Westin Mission Hills Resort in Rancho Mirage, California and construction of fractional units at The St. Regis in Aspen, Colorado. Additionally during the quarter, further investment spending of $55 million included the ongoing development of the St. Regis Museum Tower in San Francisco (260 hotel rooms and 102 condominium units) and the investment in the Aladdin Resort & Casino (2,500 rooms, to be converted to the Planet Hollywood Resort & Casino, a Sheraton hotel). To date, the Company has invested $200 million in the St. Regis Museum Tower Project, which is expected to open in mid-2005. The Company expects to realize gross proceeds of approximately $200 million from the sale of the project's condominiums. The Company began taking reservations for the condominiums in September 2004 and expects to close on these sales in the fourth quarter of 2004.

Share Repurchase:

For the quarter ended September 30, 2004, the Company repurchased 3,382,100 shares at a total cost of approximately $146.0 million (an average cost of $43.14 per share). In the nine months ended September 30, 2004, the Company repurchased 5,543,683 shares at a total cost of approximately $232.0 million (an average cost of $41.82 per share). At September 30, 2004, approximately $374 million remained available under the Company's Board authorized share repurchase program, and Starwood had approximately 208 million shares outstanding (including partnership units and exchangeable preferred shares).

Balance Sheet:

At September 30, 2004, the Company had total debt of $4.501 billion and cash and cash equivalents (including total restricted cash) of $528 million, or net debt of $3.973 billion, compared to net debt of $4.037 billion at the end of the second quarter of 2004. In addition, the Company has an approximate $200 million investment in the senior debt of Le Meridien hotels.

At September 30, 2004, debt was approximately 76% fixed rate and 24% floating rate and its weighted average maturity was 5.1 years with a weighted average interest rate of 5.67%. The Company had cash (including total restricted cash) and availability under domestic and international revolving credit facilities of approximately $1.482 billion.

In August 2004, the Company completed a $300 million addition to the term loan under its existing Senior Credit Facility. The facility now consists of a $1.0 billion revolving loan and a $600 million term loan, each maturing in 2006 with a one year extension option and a current interest rate of LIBOR plus 1.25%. The proceeds were used to repay a portion of the existing revolving credit facility and for general corporate purposes. Over the next twelve months the Company has approximately $243 million of debt maturing.

Outlook:

All comments in the following paragraphs and certain comments in this release 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 geo-political environments. Actual results may differ materially.

For the fourth quarter of 2004, if REVPAR at Same-Store Owned Hotels in North America is up 8% - 10% versus the same period a year ago:

Adjusted EBITDA would be expected to be approximately $307 million.
Net income would be expected to be approximately $92 million.
EPS would be expected to be approximately $0.43.

For the full year 2004, if REVPAR at Same-Store Owned Hotels in North America increases approximately 11% - 12% versus the full year 2003:

Full year revenues, including other revenues from managed and franchised properties, would be expected to be approximately $5.3 billion.
Full year Adjusted EBITDA would be expected to increase approximately 23.2% to approximately $1.130 billion, when compared to 2003 Adjusted EBITDA of $917 million, after adjusting for the sale of 20 hotels in 2003.
Full year income from continuing operations before special items would be expected to be approximately $317 million. Full year EPS from continuing operations before special items would be expected to be approximately $1.48 at a 17% effective tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2005).
Full year capital expenditures (excluding timeshare inventory) would be approximately $500 million, including approximately $100 million for the St. Regis San Francisco multi-use project under construction, $175 million for other growth initiatives and $225 million for maintenance capital. Additionally, net capital expenditures for timeshare inventory would be approximately $50 million focusing on projects in Aspen, Maui, Scottsdale and Orlando.
For the full year the Company expects cash interest expense of approximately $280 million and cash taxes of approximately $20 million.

For the full year 2005, excluding the effects of the proposed Share-Based Payment amendment to FASB Statement No. 123, if REVPAR at Same-Store Owned Hotels in North America increases approximately 6% - 8% versus the full year 2004:

Full year Adjusted EBITDA would be expected to increase approximately 15.0% to approximately $1.3 billion (which does not include interest income from the Le Meridien investment), when compared to 2004 Adjusted EBITDA of $1.130 billion.
Full year income from continuing operations would be expected to be approximately $390 million at a 26% effective tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2006), when compared to 2004 income from continuing operations before special items of approximately $317 million at a 17% effective tax rate.
Full year EPS would be expected to increase approximately 23% to $1.82 when compared to 2004 EPS from continuing operations before special items of $1.48.

Special Items:

The Company recorded net credits of $20 million (after-tax) for special items in the third quarter of 2004 compared to $2 million of net charges (after-tax) in the same period of 2003.

Special items in the third quarter of 2004 primarily relate to the reversal of a reserve due to a favorable judgment in a litigation matter.

The following represents a reconciliation of income from continuing operations before special items to income from continuing operations after special items (in millions, except per share data):

Three Months Ended                                  Nine Months Ended
   September 30,                                      September 30,
-------------------                                 ------------------
2004      2003                                      2004     2003
--------- ---------                                 --------- --------
                    Income from continuing
                     operations before special
     $85       $49   items                              $225      $89
--------- ---------                                 --------- --------
   $0.40     $0.24 EPS before special items           $1.05    $0.43
--------- ---------                                 --------- --------

                    Special Items:
                    Restructuring and other special
      37         1   credits, net (a)                     37        1
                    Adjustment to costs associated
                     with construction remediation
       -        (3) (b)                                   4       (3)
                    Loss on asset dispositions and
      (4)       (3) impairments, net (c)                 (8)    (179)
--------- ---------                                 --------- --------
      33        (5) Total special items - pre-tax         33     (181)
                    Income tax benefit (expense)
     (13)        3   for special items (d)               (12)      81
                    Favorable settlement of tax
       -         -   matters(e)                           12       28
--------- ---------                                 --------- --------
      20        (2) Total special items - after-tax       33      (72)
--------- ---------                                 --------- --------

                    Income from continuing
    $105       $47   operations                         $258      $17
--------- ---------                                 --------- --------

$0.49 $0.23 EPS including special items $1.21 $0.08
========= ========= ========= ========

(a) During the three and nine months ended September 30, 2004, the Company reversed a $37 million reserve previously recorded through restructuring and other special charges due to a favorable judgment in a litigation matter. During the three and nine months ended September 30, 2003, the Company collected receivables which were previously deemed uncollectible following the events of September 11, 2001 and therefore, treated as a special item at that time.

(b) For the nine months ended September 30, 2004, this represents an adjustment to the Company's share of costs for construction remediation efforts at a property owned by a vacation ownership unconsolidated joint venture that were previously recorded in 2002 and 2003.

(c) Loss of $4 million and $8 million for the three and nine months ended September 30, 2004, respectively, reflects impairment charges primarily associated with the Company's investment in a joint venture that owns a hotel managed by the Company and the renovation of a portion of the W New York for the Bliss spa. Loss for the three and nine months ended September 30, 2003 primarily represents the initial and subsequent impairment charges recorded due to the classification of a portfolio of 18 domestic non-core hotels as held for sale, 16 of which were subsequently sold in 2003.

(d) Represents taxes on special items at the Company's incremental tax rate.

(e) Tax benefit of $12 million in the nine months ended September 30, 2004 reflects the favorable results of certain changes to the Federal tax rules. Tax benefit of $28 million for the nine months ended September 30, 2003 relates to various tax matters that were successfully settled during 2003.

The Company has included the above supplemental information concerning special items to assist investors in analyzing Starwood's financial position and results of operations. The Company has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of core on-going operations.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per Share data)

    Three Months Ended                          Nine Months Ended
      September 30,                               September 30,
------------------------                   --------------------------

2004   2003 % Variance                     2004    2003 % Variance
------ ------ ----------                   ------- ------- ----------
                          Revenues
                          Owned, leased and
                           consolidated
                           joint venture
$811   $735       10.3   hotels           $2,448 $2,288        7.0
                          Vacation
                           ownership sales
   175    129       35.7   and services        443     327       35.5
                          Management fees,
                           franchise fees
   105     68       54.4   and other income    299     184       62.5
                          Other revenues
                           from managed and
                           franchised
   245    204       20.1   properties(a)       736     634       16.1
------ ------ ----------                   ------- ------- ----------
1,336 1,136       17.6                     3,926   3,433       14.4
                          Costs and
                           Expenses
                          Owned, leased and
                           consolidated
                           joint venture
   617    577       (6.9) hotels            1,864   1,781       (4.7)
                          Vacation
   132     98      (34.7) ownership           334     252      (32.5)
                          Selling, general,
                           administrative
    74     45      (64.4) and other           244     159      (53.5)
                          Restructuring and
                           other special
   (37)    (1)       n/m   credits, net        (37)     (1)       n/m
   103    100       (3.0) Depreciation         306     309        1.0
     4      4          - Amortization          13      14        7.1
                          Other expenses
                           from managed and
                           franchised
   245    204      (20.1) properties(a)       736     634      (16.1)
------ ------ ----------                   ------- ------- ----------
1,138 1,027      (10.8)                    3,460   3,148       (9.9)
   198    109       81.7 Operating income     466     285       63.5
                          Gain on sale of
                           VOI notes
     3      1        n/m   receivable           11       6       83.3
                          Equity earnings
                           from
                           unconsolidated
     6      2        n/m   ventures             22      10        n/m
                          Interest expense,
                           net of interest
                           income of $1,
                           $2, $2 and $3
   (64)   (69)       7.2   (b)                (193)   (219)      11.9
                          Loss on asset
                           dispositions and
    (4)    (3)     (33.3) impairments, net     (8)   (179)      95.5
------ ------ ----------                   ------- ------- ----------
                          Income (loss)
                           from continuing
                           operations
                           before taxes and
   139     40        n/m    minority equity     298     (97)      n/m
                          Income tax
                           benefit
   (34)     7        n/m   (expense)           (41)    113        n/m
                          Minority equity
     -      -          -   in net loss           1       1          -
------ ------ ----------                   ------- ------- ----------
                          Income from
                           continuing
   105     47        n/m   operations          258      17        n/m
                          Discontinued
                           operations:
                             Loss from
                              operations,
                              net of taxes
                              of $0, $0, $0
     -      -          -      and $1 (c)         -      (1)       n/m
                             Gain on
                              disposition
     2      1        n/m      (d)               37     206      (82.0)
------ ------ ----------                   ------- ------- ----------
$107    $48        n/m Net income          $295    $222       32.9
====== ====== ==========                   ======= ======= ==========

                          Earnings Per
                           Share -- Basic
                          Continuing
$0.51 $0.23        n/m   operations        $1.25   $0.09        n/m
                          Discontinued
0.01   0.01          -   operations         0.18    1.01      (82.2)
------ ------ ----------                   ------- ------- ----------
$0.52 $0.24        n/m Net income         $1.43   $1.10       30.0
====== ====== ==========                   ======= ======= ==========

                          Earnings Per
                           Share -- Diluted
                          Continuing
$0.49 $0.23        n/m   operations        $1.21   $0.08        n/m
                          Discontinued
0.01      -        n/m   operations         0.17    1.00      (83.0)
------ ------ ----------                   ------- ------- ----------
$0.50 $0.23        n/m Net income         $1.38   $1.08       27.8
====== ====== ==========                   ======= ======= ==========

                          Weighted average
   208    203              number of Shares    207     202
====== ======                              ======= =======
                          Weighted average
                           number of Shares
                           assuming
   215    208              dilution            214     205
====== ======                              ======= =======

(a) The Company includes in revenues the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin and includes in costs and expenses these reimbursed costs. These costs relate primarily to payroll costs at managed properties where the Company is the employer.

(b) Interest expense is net of $0 million of discontinued operations allocations for the three and nine month periods ended September 30, 2004 and $0 and $7 million for the three and nine month periods ended September 30, 2003, respectively.

(c) For 2003, the Hotel Principe di Savoia in Milan, Italy ("Principe") is reported as a discontinued operation as a result of the sale of this hotel in June 2003 with no continuing involvement.

(d) 2004 and 2003 activity primarily represents the reversal of reserves that are no longer required as the related contingencies have been resolved and the favorable resolution of certain tax matters related to the 1999 divestiture of the Company's gaming business. Also includes a $194 million (pre-tax) gain in the nine months ended September 30, 2003 recorded in connection with the sale of the Principe in June 2003.

n/m = not meaningful

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                      CONSOLIDATED BALANCE SHEETS
                   (In millions, except share data)

                                           September 30, December 31,
                                                2004          2003
                                           -------------- ------------
                                            (unaudited)
Assets
Current assets:
    Cash and cash equivalents                       $231         $427
    Restricted cash                                  189           81
    Accounts receivable, net of allowance
     for doubtful accounts of $56 and $53            438          418
    Inventories                                      320          232
    Prepaid expenses and other                       177          104
                                           -------------- ------------
       Total current assets                        1,355        1,262
Investments                                        463          415
Plant, property and equipment, net               6,944        7,106
Goodwill and intangible assets, net              2,509        2,488
Other assets (a)                                   737          623
                                           -------------- ------------
                                                 $12,008      $11,894
                                           ============== ============

Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings and current
   maturities of long-term debt     (b)             $243         $233
Accounts payable                                   154          171
Accrued expenses                                   688          836
Accrued salaries, wages and benefits               270          228
Accrued taxes and other                            182          176
                                           -------------- ------------
    Total current liabilities                      1,537        1,644
Long-term debt   (b)                               4,258        4,393
Deferred income taxes                                840          898
Other liabilities                                    655          574
                                           -------------- ------------
                                                   7,290        7,509
                                           -------------- ------------
Minority interest                                     27           28
                                           -------------- ------------
Exchangeable units and Class B preferred
shares, at redemption value of $38.50                 -           31
                                           -------------- ------------
Commitments and contingencies
Stockholders' equity:
     Class A exchangeable preferred shares
      of the Trust; $0.01 par value;
      authorized 30,000,000 shares;
      outstanding 597,983 and 480,880
      shares at September 30, 2004 and
      December 31, 2003, respectively                  -            -
     Corporation common stock; $0.01 par
      value; authorized 1,050,000,000
      shares; outstanding 205,944,530 and
      201,812,126 shares at September 30,
      2004 and December 31, 2003,
      respectively                                     2            2
     Trust Class B shares of beneficial
      interest; $0.01 par value; authorized
      1,000,000,000 shares; outstanding
      205,944,530 and 201,812,126 shares at
      September 30, 2004 and December 31,
      2003, respectively                               2            2
                 Additional paid-in capital        5,043        4,952
                      Deferred compensation          (18)          (9)
       Accumulated other comprehensive loss         (346)        (334)
    Retained earnings (accumulated deficit)            8         (287)
                                           -------------- ------------
                 Total stockholders' equity        4,691        4,326
                                           -------------- ------------
                                                 $12,008      $11,894
                                           ============== ============

_________

(a) Includes restricted cash of $108 million and $19 million at
September 30, 2004 and December 31, 2003, respectively.

   (b) Excludes Starwood's share of unconsolidated joint venture debt
        aggregating approximately $414 million and $410 million at
        September 30, 2004 and December 31, 2003, respectively.

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
          Non-GAAP to GAAP Reconciliations - Historical Data
                             (In millions)

   Three Months Ended                             Nine Months Ended
     September 30,                                  September 30,
------------------------                        ----------------------

2004 2003 % Variance 2004 2003 % Variance
------ ------ ---------- ----- ----- ----------

                         Reconciliation of Net
                          Income to EBITDA and
                          Adjusted EBITDA
$107    $48        n/m Net income             $295 $222       32.9
   68     76      (10.5) Interest expense(a)     209   242      (13.6)
                         Income tax (benefit)
   35     (7)       n/m   expense(b)               8   (72)       n/m
111    107        3.7 Depreciation(c)         330   330          -
    6      5       20.0 Amortization   (d)       18    18          -
------ ------ ----------                        ----- ----- ----------
327    229       42.8 EBITDA                  860   740       16.2
                         Adjustment to costs
                          associated with
                          construction
    -      3        n/m   remediation             (4)    3        n/m
                         Loss on asset
                          dispositions and
    4      3       33.3   impairments, net         8   179      (95.5)
                         Restructuring and
                          other special
(37)    (1)       n/m   credits, net           (37)   (1)       n/m
                         Discontinued
   (3)    (1)       n/m   operations(e)           (4) (254)      98.4
------ ------ ----------                        ----- ----- ----------
291    233       24.9 Adjusted EBITDA         823   667       23.4
                         Hotels Sold in 2003
                          (20 hotels) (f)
    -     (7)       n/m    Revenues                - (110)       n/m
    -      6        n/m    Costs and expenses      -    89        n/m
------ ------ ----------                        ----- ----- ----------
                         Adjusted EBITDA
                          excluding assets sold
$291   $232       25.4   in 2003               $823 $646       27.4
====== ====== ==========                        ===== ===== ==========

(a) Includes $3, $5, $14 and $13 million of interest expense related to unconsolidated joint ventures for the three months ended September 30, 2004 and 2003 and the nine months ended September 30, 2004 and 2003, respectively. Also includes $0 and $7 million of interest expense allocated to discontinued operations for the three and nine months ended September 30, 2003, respectively. No interest expense was allocated to discontinued operations in 2004.

(b) Includes $1, $0, $(33) and $41 million of tax (benefit) expense recorded in discontinued operations for the three months ended September 30, 2004 and 2003 and for the nine months ended September 30, 2004 and 2003, respectively.

(c) Includes $8, $7, $24 and $20 million of Starwood's share of depreciation expense of unconsolidated joint ventures for the three months ended September 30, 2004 and 2003 and the nine months ended September 30, 2004 and 2003, respectively. Also includes $1 million of depreciation expense included in discontinued operations for the nine months ended September 30, 2003. No depreciation expense was allocated to discontinued operations in the third quarter of 2003 or in 2004.

(d) Includes $2, $1, $5 and $4 million of Starwood's share of amortization expense of unconsolidated joint ventures for the three months ended September 30, 2004 and 2003 and the nine months ended September 30, 2004 and 2003, respectively.

(e) Excludes the interest expense, taxes, and depreciation balances already added back as noted in (a), (b) and (c) above.

(f) Represents 20 hotels (excluding the Principe which is reported in discontinued operations) that were sold in 2003. These amounts are included in the revenues and expenses from owned, leased and consolidated joint venture hotels in 2003.

Three Months Ended                                   Nine Months Ended
September 30,                                        September 30,
------------------                                   -----------------
2004      2003                                       2004     2003
-------- ---------                                   -------- --------
                   Cash Flow Data
   $107       $48 Net income                           $295     $222
                   Exclude:
     (2)       (1)      Discontinued operations, net     (37)    (205)
-------- ---------                                   -------- --------
    105        47 Income from continuing operations     258       17
                   (Increase) decrease in restricted
    (67)       64   cash                                (197)      13
                   Adjustments to income from
                    continuing operations, changes
    157       178   in working capital and other         315      471
-------- ---------                                   -------- --------
                        Cash from continuing
    195       289        operations                      376      501
                        Cash from discontinued
      -         -        operations                        1       10
-------- ---------                                   -------- --------
   $195      $289 Cash from operating activities       $377     $511
======== =========                                   ======== ========
                   Cash from (used for) investing
   $(80)     $308   activities                         $(324)    $837
======== =========                                   ======== ========
                   Cash used for financing
   $(50)    $(132) activities                         $(251)   $(678)
======== =========                                   ======== ========

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
         Non-GAAP to GAAP Reconciliations - Future Performance
                             (In millions)

                                                  Twelve Months Ended
                                                   December 31, 2004
                                                  --------------------

Income from continuing operations before special
items                                                           $317
Special items - after-tax (see page 7)                             33
                                                       ---------------
Income from continuing operations                                $350
                                                       ===============

EPS from continuing operations before special
items                                                          $1.48
Special items - after-tax (see page 7)                            .15
                                                       ---------------
EPS from continuing operations                                  $1.63
                                                       ===============

                              Three Months Twelve Months Twelve Months
                                 Ended         Ended         Ended
                              December 31, December 31, December 31,
                                  2004          2004          2005
                              ------------ ------------- -------------
Net income                            $92          $387          $390
Interest expense                       73           282           292
Income tax expense                     22            30           138
Depreciation and amortization         120           468           480
                              ------------ ------------- -------------
EBITDA                               $307        $1,167        $1,300
Loss on asset dispositions and
impairments, net                       -             8             -
Discontinued operations                 -            (4)            -
Restructuring and other
special credits, net                   -           (37)            -
Adjustment to costs associated
with construction remediation          -            (4)            -
                              ------------ ------------- -------------
Adjusted EBITDA                      $307        $1,130        $1,300
                              ============ ============= =============

                                                   Twelve Months Ended
                                                    December 31, 2003
                                                   -------------------

Net income                                                       $309
Interest expense                                                 312
Income tax benefit                                               (73)
Depreciation                                                     438
Amortization                                                       26
                                                            ----------
EBITDA                                                          1,012
Loss on asset dispositions and impairments, net                   183
Discontinued operations                                         (252)
Restructuring and other special credits, net                       (9)
Costs associated with construction remediation                      4
                                                            ----------
Adjusted EBITDA                                                   938
Hotels sold in 2003
     Revenues                                                    (110)
     Costs and expenses                                            89
                                                            ----------
Adjusted EBITDA excluding hotels sold in 2003                    $917
                                                            ==========

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                  Non-GAAP to GAAP Reconciliations -
              Same Store Owned Hotel Revenue and Expenses
                             (In millions)

Three Months Ended                              Nine Months Ended
    September 30,                                  September 30,
---------------------                        -------------------------
                           Same Store
                         Owned Hotels (1)
2004 2003 % Variance       Worldwide          2004    2003 % Variance
----- ---------------                        ------- -----------------
                      Revenue
                          Same Store Owned
$792 $716      10.6       Hotels            $2,403 $2,147      11.9
                          Hotels Sold or
                           Closed in 2003
   -     7       n/m       (23 hotels)            -     110       n/m
                          Hotels without
                           Comparable
                           Results (2
14     7       n/m       hotels)               39      23      69.6
                          Other ancillary
   5     5         -       hotel operations       6       8     (25.0)
----- ----- ---------                        ------- ------- ---------
                      Total Owned, Leased
                       and Consolidated
                       Joint Venture Hotels
$811 $735      10.3   Revenue               $2,448 $2,288       7.0
                      Costs and Expenses
                          Same Store Owned
$603 $563      (7.1)      Hotels            $1,829 $1,667      (9.7)
                          Hotels Sold or
                           Closed in 2003
   1     6      83.3       (23 hotels)            1      92      98.9
                          Hotels without
                           Comparable
                           Results (2
12     6       n/m       hotels)               30      17     (76.5)
                          Other ancillary
   1     2      50.0       hotel operations       4       5      20.0
----- ----- ---------                        ------- ------- ---------
                      Total Owned, Leased
                       and Consolidated
                       Joint Venture Hotels
$617 $577      (6.9) Costs and Expenses    $1,864 $1,781      (4.7)
===== ===== =========                        ======= ======= =========

Three Months Ended                              Nine Months Ended
    September 30,                                  September 30,
---------------------                        -------------------------
                        Same Store Owned
                              Hotels
2004 2003 % Variance     North America        2004    2003 % Variance
----- ---------------                        ------- -----------------
                      Revenue
                          Same Store Owned
$567 $514      10.3       Hotels            $1,742 $1,577      10.5
                          Hotels Sold or
                           Closed in 2003
   -     7       n/m       (17 hotels)            -      98       n/m
                          Hotels without
                           Comparable
                           Results (2
14     7       n/m       hotels)               39      23      69.6
----- ----- ---------                        ------- ------- ---------
                      Total Owned, Leased
                       and Consolidated
                       Joint Venture Hotels
$581 $528      10.0   Revenue               $1,781 $1,698       4.9
                      Costs and Expenses
                          Same Store Owned
$435 $410      (6.1)      Hotels            $1,330 $1,232      (8.0)
                          Hotels Sold or
                           Closed in 2003
   1     6      83.3       (17 hotels)            1      76      98.7
                          Hotels without
                           Comparable
                           Results (2
12     6       n/m       hotels)               30      17     (76.5)
----- ----- ---------                        ------- ------- ---------
                      Total Owned, Leased
                       and Consolidated
                       Joint Venture Hotels
$448 $422      (6.2) Costs and Expenses    $1,361 $1,325      (2.7)
===== ===== =========                        ======= ======= =========

Three Months Ended                              Nine Months Ended
    September 30,                                  September 30,
---------------------                        -------------------------
                        Same Store Owned
                              Hotels
2004 2003 % Variance     International       2004    2003 % Variance
----- ---------------                        ------- -----------------
                      Revenue
                          Same Store Owned
$225 $202      11.4       Hotels              $661    $570      16.0
                          Hotels Sold or
                           Closed in 2003 (6
   -     -         -       hotels)                -      12       n/m
                          Other ancillary
   5     5         -       hotel operations       6       8     (25.0)
----- ----- ---------                        ------- ------- ---------
                      Total Owned, Leased
                       and Consolidated
                       Joint Venture Hotels
$230 $207      11.1   Revenue                 $667   $ 590      13.1
                      Costs and Expenses
                          Same Store Owned
$168 $153      (9.8)      Hotels              $499    $435     (14.7)
                          Hotels Sold or
                           Closed in 2003 (6
   -     -         -       hotels)                -      16       n/m
                          Other ancillary
   1     2      50.0       hotel operations       4       5      20.0
----- ----- ---------                        ------- ------- ---------
                      Total Owned, Leased
                       and Consolidated
                       Joint Venture Hotels
$169 $155      (9.0) Costs and Expenses      $503    $456     (10.3)
===== ===== =========                        ======= ======= =========
(1) Same Store Owned Hotel Results exclude 23 hotels sold or closed in
2003 and 2 hotels without comparable results.

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
             Hotel Results - Same Store Owned Hotels (1)
            For the Three Months Ended September 30, 2004
                              UNAUDITED

                                                 WORLDWIDE
                                      --------------------------------
                                         2004       2003       Var.
                                      ---------- ---------- ----------

                                                 139 Hotels
                                      --------------------------------
SAME STORE OWNED HOTELS
           REVPAR ($)                    111.15      98.98       12.3%
           ADR ($)                       155.55     144.06        8.0%
           OCCUPANCY (%)                   71.5%      68.7%       2.8

                                                    60
                                      --------------------------------
SHERATON
           REVPAR ($)                     93.60      80.62       16.1%
           ADR ($)                       133.09     121.69        9.4%
           OCCUPANCY (%)                  70.3%      66.3%        4.0

                                                    36
                                      --------------------------------
WESTIN
           REVPAR ($)                    120.07     111.57        7.6%
           ADR ($)                       164.36     152.92        7.5%
           OCCUPANCY (%)                   73.1%      73.0%       0.1

                                                    10
                                      --------------------------------
ST. REGIS/LUXURY COLLECTION
           REVPAR ($)                    210.74     184.56       14.2%
           ADR ($)                       350.51     327.79        6.9%
           OCCUPANCY (%)                   60.1%      56.3%       3.8

                                                    12
                                      --------------------------------
W
           REVPAR ($)                    152.28     142.52        6.8%
           ADR ($)                       203.47     192.61        5.6%
           OCCUPANCY (%)                   74.8%      74.0%       0.8

                                                    21
                                      --------------------------------
OTHER
           REVPAR ($)                     93.34      79.68       17.1%
           ADR ($)                       125.05     114.03        9.7%
           OCCUPANCY (%)                   74.6%      69.9%       4.7

                                               NORTH AMERICA
                                      --------------------------------
                                         2004       2003       Var.
                                      ---------- ---------- ----------

                                                  94 Hotels
                                      --------------------------------
SAME STORE OWNED HOTELS
           REVPAR ($)                    110.11      98.20       12.1%
           ADR ($)                       148.85     137.18        8.5%
           OCCUPANCY (%)                   74.0%      71.6%       2.4

                                                    36
                                      --------------------------------
SHERATON
           REVPAR ($)                    101.11      86.17       17.3%
           ADR ($)                       135.72     121.49       11.7%
           OCCUPANCY (%)                   74.5%      70.9%       3.6

                                                    22
                                      --------------------------------
WESTIN
           REVPAR ($)                    106.35      99.67        6.7%
           ADR ($)                       141.36     132.22        6.9%
           OCCUPANCY (%)                   75.2%      75.4%      -0.2

                                                     4
                                      --------------------------------
ST. REGIS/LUXURY COLLECTION
           REVPAR ($)                    165.09     149.81       10.2%
           ADR ($)                       282.88     266.78        6.0%
           OCCUPANCY (%)                   58.4%      56.2%       2.2

                                                    20
                                      --------------------------------
OTHER
           REVPAR ($)                     92.88      79.16       17.3%
           ADR ($)                       126.82     116.88        8.5%
           OCCUPANCY (%)                   73.2%      67.7%       5.5

                                              INTERNATIONAL(2)
                                      --------------------------------
                                         2004       2003       Var.
                                      ---------- ---------- ----------

                                                  45 Hotels
                                      --------------------------------
SAME STORE OWNED HOTELS
           REVPAR ($)                    114.06     101.16       12.8%
           ADR ($)                       177.06     166.90        6.1%
           OCCUPANCY (%)                   64.4%      60.6%       3.8

                                                    24
                                      --------------------------------
SHERATON
           REVPAR ($)                     79.18      69.97       13.2%
           ADR ($)                       127.03     122.17        4.0%
           OCCUPANCY (%)                   62.3%      57.3%       5.0

                                                    14
                                      --------------------------------
WESTIN
           REVPAR ($)                    163.32     149.03        9.6%
           ADR ($)                       246.80     228.23        8.1%
           OCCUPANCY (%)                   66.2%      65.3%       0.9

                                                     6
                                      --------------------------------
ST. REGIS/LUXURY COLLECTION
           REVPAR ($)                    290.39     245.19       18.4%
           ADR ($)                       459.46     433.44        6.0%
           OCCUPANCY (%)                   63.2%      56.6%       6.6

W
           REVPAR ($)
           ADR ($)
           OCCUPANCY (%)

                                                     1
                                      --------------------------------
OTHER
           REVPAR ($)                     96.62      83.44       15.8%
           ADR ($)                       114.35      97.57       17.2%
           OCCUPANCY (%)                   84.5%      85.5%      (1.0)

(1) Hotel Results exclude 15 hotels sold or closed subsequent to June
30, 2003 and 2 hotels without comparable results

(2) See next page for breakdown by division

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                      Same Store Owned Hotels (1)
             For the Three Months Ended September 30, 2004
                               UNAUDITED

                                                   EUROPE
                                      --------------------------------
                                         2004       2003        Var.
                                      ---------- ---------- ----------

                                                  29 Hotels
                                      --------------------------------
SAME STORE OWNED HOTELS
           REVPAR ($)                    159.97     143.45       11.5%
           ADR ($)                       241.30     227.76        5.9%
           OCCUPANCY (%)                   66.3%      63.0%       3.3

                                                     12
                                      --------------------------------
SHERATON
           REVPAR ($)                    104.39      93.83       11.3%
           ADR ($)                       151.98     147.41        3.1%
           OCCUPANCY (%)                   68.7%      63.7%       5.0

                                                     11
                                      --------------------------------
WESTIN
           REVPAR ($)                    196.51     181.26        8.4%
           ADR ($)                       307.66     282.51        8.9%
           OCCUPANCY (%)                   63.9%      64.2%      (0.3)

OTHER
           REVPAR ($)
           ADR ($)
           OCCUPANCY (%)

                                               LATIN AMERICA
                                      --------------------------------
                                         2004       2003        Var.
                                      ---------- ---------- ----------

                                                  12 Hotels
                                      --------------------------------
SAME STORE OWNED HOTELS
           REVPAR ($)                     52.37      44.84       16.8%
           ADR ($)                        91.78      88.77        3.4%
           OCCUPANCY (%)                   57.1%      50.5%       6.6

                                                      9
                                      --------------------------------
SHERATON
           REVPAR ($)                     47.00      40.47       16.1%
           ADR ($)                        87.78      87.22        0.6%
           OCCUPANCY (%)                   53.5%      46.4%       7.1

                                                      3
                                      --------------------------------
WESTIN
           REVPAR ($)                     75.56      63.76       18.5%
           ADR ($)                       104.58      93.32       12.1%
           OCCUPANCY (%)                   72.3%      68.3%       4.0

ST. REGIS/LUXURY COLLECTION
           REVPAR ($)
           ADR ($)
           OCCUPANCY (%)

OTHER
           REVPAR ($)
           ADR ($)
           OCCUPANCY (%)

                                                ASIA PACIFIC
                                      --------------------------------
                                         2004       2003        Var.
                                      ---------- ---------- ----------

                                                  4 Hotels
                                      --------------------------------
SAME STORE OWNED HOTELS
           REVPAR ($)                    109.03      94.65       15.2%
           ADR ($)                       139.44     117.91       18.3%
           OCCUPANCY (%)                   78.2%      80.3%      (2.1)

                                                      3
                                      --------------------------------
SHERATON
           REVPAR ($)                    116.63     101.53       14.9%
           ADR ($)                       156.93     131.78       19.1%
           OCCUPANCY (%)                   74.3%      77.0%      (2.7)

WESTIN
           REVPAR ($)
           ADR ($)
           OCCUPANCY (%)