Hotel Online  Special Report
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Starwood 2nd Qtr Net Income of $145 million Down
5.8% from Same Period in Prior Year; REVPAR
Up 12.7% Worldwide Compared to the
2nd Qtr 2004
Hotel Results 

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WHITE PLAINS, N.Y. July 26, 2005 - Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT): Starwood Hotels & Resorts Worldwide, Inc. ("Starwood" or the "Company") today reported EPS from continuing operations for the second quarter of 2005 of $0.65 compared to $0.56 in the second quarter of 2004. Excluding special items of $11 million (after-tax) in the 2005 period related to the partial demolition of the Sheraton in Cancun, Mexico where we will build vacation ownership units, EPS from continuing operations was $0.70 for the second quarter of 2005 compared to $0.50 in the second quarter of 2004. Income from continuing operations was $145 million in the second quarter of 2005 compared to $120 million in 2004. Excluding special items, income from continuing operations was $156 million for the second quarter of 2005 compared to $107 million in 2004. Net income (after discontinued operations) was $145 million and EPS was $0.65 in the second quarter of 2005 compared to $154 million and EPS of $0.72 in the second quarter of 2004. The effective tax rate for the second quarter of 2005 was 24.7%.
 
Second Quarter 2005 Highlights:
  • EPS from continuing operations for the second quarter of 2005 was $0.65, including an after-tax charge of $11 million relating to the demolition of a portion of the Sheraton in Cancun, Mexico where we will build vacation ownership units, compared to $0.56 in second quarter of 2004. Excluding special items, EPS from continuing operations was $0.70 for the second quarter of 2005 compared to $0.50 for the second quarter of 2004.
  • REVPAR at Same-Store Owned Hotels in North America and worldwide increased 12.7% and 12.3%, respectively, when compared to the second quarter of 2004. ADR increased 9.0% and 7.5% in North America and worldwide, respectively.
  • Margins at Same-Store Owned Hotels in North America improved approximately 230 basis points when compared to the second quarter of 2004.
  • Globally, REVPAR for Same-Store Owned Hotels grew for W Hotels (17.2%), followed by Westin (13.0%), St. Regis/Luxury Collection (11.7%), and Sheraton (11.0%), with each of these brands experiencing both ADR and occupancy gains.
  • Third-party management and franchise fees in the quarter increased 21.3% when compared to 2004.
  • Vacation ownership and residential revenues, which exclude gains on sales of notes receivable, increased 66.4%. Excluding the fractional sales at the St. Regis Aspen and residential sales at the St. Regis in San Francisco, contract sales at vacation ownership properties were up 15.1% when compared to 2004.
  • Net income for the second quarter of 2005 was $145 million, including the after-tax charge of $11 million relating to the demolition of a portion of the Sheraton in Cancun, Mexico referred to above, compared to $154 million in the second quarter of 2004. Excluding special items, income from continuing operations was $156 million compared to $107 million in 2004. Total Company Adjusted EBITDA increased 26.1% to $391 million when compared to $310 million in 2004.
  • According to Smith Travel Research system-wide market share in North America increased 90 basis points when compared to 2004.

Steven J. Heyer, CEO, said: "Our results this quarter were outstanding and we are pleased to be raising our guidance for the remainder of the year. For the eleventh quarter in a row we've gained market share. I am thrilled with the progress we are making on our brand-building efforts and service innovation, which I believe will continue to keep us ahead of our competition and will accelerate our market share growth. The marketing and service programs we have and are developing will help us secure an emotional connection with our guests and cement our position as brand leader in the upper upscale and luxury segments.

"Our global development pipeline remains stronger than ever and new brand launches like Project XYZ should capture the lion's share of new select serve opportunities. The strength of our brands should also enable Starwood to capture share of wallet both inside and outside of the four walls of the hotel. Already, the Westin Heavenly Bed ensemble available at Nordstrom's, the Bliss catalogue business and the W Stores are adding to our top and bottom lines.

"During the quarter we announced several additional asset sales including the legendary Hotel Danieli in Venice, moving us in line to achieve our goal of $500 million in asset sales. We continue to evaluate our current portfolio of owned assets with a focus on harvesting previously unrecognized assets either through additional asset sales or redevelopment opportunities."

"Business continues to be robust and supply remains constrained. Our team is excited about the work we are doing and the direction we are heading."

Operating Results: Second Quarter Ended June 30, 2005

Cash flow from operations was $171 million compared to $119 million in 2004. Total Company Adjusted EBITDA was $391 million compared to $310 million in 2004.

Owned, Leased and Consolidated Joint Venture Hotels

REVPAR for Same-Store Owned Hotels in North America and worldwide increased 12.7% and 12.3%, respectively, when compared to 2004. REVPAR at Same-Store Owned Hotels in North America increased 17.2% at W, 14.2% at both St. Regis/Luxury Collection and Westin, and 9.9% at Sheraton. REVPAR growth was particularly strong at the Company's owned hotels in New York, Chicago, Ft. Lauderdale, Denver, Los Angeles, Maui, Toronto, San Diego, Atlanta and Washington D.C. Revenue from transient travel was up 14.9% in North America when compared to 2004. Internationally, Same-Store Owned Hotel REVPAR increased 11.4%, with Latin America up 19.5% (REVPAR in owned hotels in Argentina, Brazil, Peru and resort areas in Mexico was particularly strong), Asia Pacific up 11.9%, and Europe up 9.8%. Excluding the favorable effects of foreign exchange, REVPAR increased 7.0% internationally.

Total revenues at Same-Store Owned Hotels worldwide increased 9.7%, to $929 million when compared to $847 million in 2004 while costs and expenses at the hotels increased 6.9% to $664 million in 2005 compared to $621 million in 2004. Total revenues at Same-Store Owned Hotels in North America increased 9.3% to $674 million in 2005 when compared to $617 million in 2004 while costs and expenses at these hotels increased 5.9% to $481 million when compared to $454 million in 2004.

System-wide REVPAR; Management/Franchise Fees

System-wide (owned, managed and franchised) REVPAR for Same-Store Hotels in North America increased 11.8%; W Hotels 17.6%, Sheraton 12.0%, Westin and Four Points by Sheraton 11.7% each, and St. Regis/Luxury Collection 4.2%. For the eleventh 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 third-party management and franchise fees were $91 million, up $16 million, or 21.3%, from last year.

Distribution

Starwood's central distribution systems gross bookings increased approximately 10% when compared to 2004. Gross online bookings through proprietary branded websites increased 30% as compared to 2004, with gross dollar bookings from the proprietary branded sites increasing 45%. Gross online dollar bookings represented approximately 12% of the overall gross dollar bookings, with 74% of that coming from our proprietary branded websites, as compared to 10% of overall gross dollar bookings, with 72% of that from proprietary branded websites in 2004.

Vacation Ownership and Residential

Vacation ownership and residential revenue, which excludes gains on sales of notes receivable (there were no sales of notes receivable in the second quarter of 2005), was up $93 million, or 66.4% to $233 million when compared to 2004 primarily due to residential sales at the St. Regis Museum Tower in San Francisco and vacation ownership sales at our resorts in Maui, Orlando and Scottsdale. Contract sales, excluding fractional sales at the St. Regis Aspen and residential sales at the St. Regis in San Francisco, were up 15.1% when compared to 2004. The average price per timeshare unit sold increased approximately 12.0% to $22,480, and the number of contracts signed increased approximately 2.7% when compared to 2004.

In December 2004, the Company completed the conversion of 98 guest rooms at the St. Regis in Aspen, Colorado into 25 fractional units, which are being sold in four week intervals, and 20 new hotel rooms. In the second quarter of 2005, the Company recognized revenues of $4 million related to this project. Also, in the second quarter of 2005, the Company continued selling condominiums at the St. Regis Museum Tower which is under construction in San Francisco, and recognized revenues of approximately $40 million.

In addition to its robust pipeline of existing vacation ownership inventory, the Company continues to evaluate its existing owned real estate for potential conversion to vacation ownership, fractional, or residential projects. For example, as discussed earlier, the Company has partially demolished the Sheraton in Cancun, Mexico where it will build a timeshare development that is expected to have up to 73 units upon completion. The Company is also working with its business partners to develop similar conversion opportunities at managed hotels.

Currently, the Company is working on new phases at the Westin Ka'anapali Ocean Resort Villas in Maui, Hawaii, the Westin Kierland Villas in Scottsdale, Arizona, the Sheraton Broadway Plantation in Myrtle Beach, South Carolina, the Harborside Resort at Atlantis, Nassau, Bahamas, and the Sheraton Vistana Villages in Orlando, Florida.

In addition to the expansion at the existing properties above, Starwood Vacation Ownership is in the predevelopment phase of several new vacation ownership resorts including one in Princeville on the island of Kauai, Hawaii. The Company is also working on its second St. Regis-branded fractional resort in Punta Mita, Mexico.
As discussed earlier, the Company did not sell any notes receivable and thereby did not recognize any gains during the second quarter of 2005 compared to gains of $8 million in the same period of 2004.

Brand Development/Unit Growth

During the second quarter, the Company signed 26 full service hotel management and franchise contracts (representing approximately 6,200 rooms) including the Westin Orlando Convention Center (Orlando, Florida, 492 rooms), Westin North Shore (Wheeling, Illinois, 440 rooms), Sheraton Urumqi (Urumqi, China, 410 rooms) and Westin Guangzhou (Guangzhou, China, 400 rooms) and opened nine new hotels and resorts, including the Sheraton Los Angeles Downtown Hotel (Los Angeles, California, 485 rooms) and Sheraton Miami Mart Hotel (Miami, Florida, 332 rooms). 

Nine properties (representing approximately 2,600 rooms) were removed from the system during the quarter (5 Four Points and 4 Sheratons). Including openings during the first six months of 2005, the Company expects to open approximately 50 new full-service hotels and resorts (approximately 10,000 rooms) around the world in 2005. The Company had approximately 190 full service hotels and approximately 48,000 rooms in its active global development pipeline at June 30, 2005, with roughly half of that number in international locations.

In July 2005, the company opened a new Bliss spa at the W San Francisco hotel. Later in 2005 and in 2006, the Company plans to open 3 new Bliss spas in W hotels in Dallas, Los Angeles and Chicago and 2 new Remede Spas in St. Regis hotels in San Francisco and New York with several others in various planning stages.

Results for the Six Months Ended June 30, 2005:

EPS from continuing operations was $1.01 compared to $0.72 in 2004. Excluding special items, EPS from continuing operations was $1.05 compared to $0.66 in 2004. Income from continuing operations was $224 million compared to $153 million in 2004. Excluding special items, income from continuing operations was $233 million compared to $140 million in 2004. Net income (after discontinued operations) was $224 million and EPS was $1.01 compared to $188 million and $0.88, respectively, in 2004.

Cash flow from operations was $230 million compared to $182 million in 2004. Total Company Adjusted EBITDA was $679 million compared to $532 million in 2004.

Capital:

Gross capital spending during the quarter included approximately $68 million in renovations of hotel assets including construction capital at the Sheraton Hotel and Towers in New York, New York, the St. Regis in New York, New York, the Sheraton Centre Toronto Hotel in Toronto, Canada, and the Boston Park Plaza in Boston, Massachusetts. Investment spending on gross VOI inventory was $40 million, which was more than offset by cost of sales of $46 million during the quarter. The inventory spend included VOI construction at the Westin Ka'anapali Ocean Resort Villas in Maui, Hawaii, the Sheraton Vistana Villages in Orlando, Florida, and the Westin Kierland Villas in Scottsdale, Arizona and construction of fractional units at the St. Regis in Aspen, Colorado. Additionally during the quarter, further investment spending of $27 million included the ongoing development of the St. Regis Museum Tower in San Francisco which will consist of 260 hotel rooms and 102 condominium units. To date, the Company has invested $275 million in the St. Regis Museum Tower project, which is expected to open in late 2005. The Company expects to realize gross proceeds of approximately $240 million from the sale of the project's condominiums and has recognized approximately $99 million in revenues to date.

Balance Sheet:

At June 30, 2005, the Company had total debt of $4.359 billion and cash and cash equivalents (including $518 million of restricted cash) of $899 million, or net debt of $3.460 billion, compared to net debt of $3.669 billion at the end of the first quarter of 2005. In addition, the Company continues to have an approximate $200 million investment in the senior debt of Le Meridien hotels.

At June 30, 2005, debt was approximately 77% fixed rate and 23% floating rate and its weighted average maturity was 4.6 years with a weighted average interest rate of 6.03%. The Company had cash (including total restricted cash) and availability under domestic and international revolving credit facilities of approximately $1.892 billion.

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 three months ended September 30, 2005, if REVPAR at Same-Store Owned Hotels in North America increases approximately 10% -12% versus the same period in 2004:

  • Adjusted EBITDA would be expected to be approximately $342 million, an increase of 17.5% when compared to $291 million in the same period of 2004.
  • Net income would be expected to be approximately $114 million, an increase of 34.1% when compared to income from continuing operations before special items in the third quarter of 2004.
  • EPS would be expected to be $0.51, an increase of 27.5% when compared to EPS from continuing operations before special items in the third quarter of 2004.
For the full year 2005, if REVPAR at Same-Store Owned Hotels in North America increases approximately 10% - 12% versus the full year 2004:
  • Full year revenues, including other revenues from managed and franchised properties, would be expected to be approximately $5.950 billion.
  • Full year Adjusted EBITDA would be expected to increase approximately 21.3% to approximately $1.395 billion, when compared to 2004 Adjusted EBITDA of $1.150 billion.
  • Full year net income before special items would be expected to be approximately $484 million at approximately a 25% 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 $348 million at a 13.9% effective tax rate.
  • Full year EPS before special items would be expected to increase approximately 34.6% to $2.18 when compared to 2004 EPS from continuing operations before special items of $1.62.
  • Full year capital expenditures (excluding timeshare inventory) would be approximately $600 million, including $300 million for maintenance, renovation and technology, approximately $100 million for the completion of the St. Regis San Francisco multi-use project under construction, and $200 million for other growth initiatives. Additionally, net capital expenditures for timeshare inventory would be approximately $100 million.
  • For the full year the Company expects cash interest expense of approximately $281 million and cash taxes of approximately $50 million.
Special Items:

The Company recorded net charges of $11 million (after-tax) for special items in the second quarter of 2005 compared to $13 million of net credits (after-tax) in the same period of 2004.

Special items in the second quarter of 2005 primarily relate to impairment charges associated with a hotel in Cancun, Mexico that is being partially demolished to build vacation ownership units.

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                                         Six Months Ended
 Ended June 30,                                           June 30,
---------------                                       ----------------
 2005     2004                                         2005      2004
------   ------                                       ------    ------

                 Income from continuing operations
 $156     $107    before special items                 $233      $140
------   ------                                       ------    ------
$0.70    $0.50   EPS before special items             $1.05     $0.66
------   ------                                       ------    ------

                 Special Items
                 Adjustment to costs associated
   --        3    with construction remediation(a)       --         4
                 Loss on asset dispositions and
  (17)      (3)   impairments, net(b)                   (16)       (4)
------   ------                                       ------    ------
  (17)      --   Total special items - pre-tax          (16)       --
                 Income tax benefit for special
    6        1    items(c)                                5         1
                 Favorable settlement of tax
   --       12    matters(d)                              2        12
------   ------                                       ------    ------
  (11)      13   Total special items - after-tax         (9)       13
------   ------                                       ------    ------

 $145     $120   Income from continuing operations     $224      $153
------   ------                                       ------    ------
$0.65    $0.56   EPS including special items          $1.01     $0.72
======   ======                                       ======    ======

(a) Represents adjustments 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.
(b) For the three and six months ended June 30, 2005, primarily
    reflects impairment charges associated with the Sheraton hotel in
    Cancun, Mexico that is being partially demolished in order to
    build vacation ownership units. Loss of $3 million and $4 million
    for the three and six months ended June 30, 2004, respectively,
    reflects impairment charges primarily associated with the
    renovation of a portion of the W New York for the Bliss Spa.
(c) Represents taxes on special items at the Company's incremental tax rate.
(d) Tax benefit in the six months ended June 30, 2005 reflects a state tax refund related to tax years prior to the 1995 split-up of ITT Corporation. Tax benefit of $12 million in the three and six months ended June 30, 2004, respectively, reflects the favorable results of certain changes to the Federal tax rules.

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                             Six Months Ended
       June 30,                                      June 30,
----------------------                       -------------------------
                 %                                               %
 2005   2004  Variance                         2005    2004   Variance
------ ------ --------                       ------- ------- ---------
                       Revenues
                       Owned, leased and
                        consolidated joint
 $939   $868      8.2   venture hotels       $1,752  $1,637       7.0
                       Vacation ownership
                        and residential
  233    140     66.4   sales and services      464     268      73.1
                       Management fees,
                        franchise fees and
  119    104     14.4   other income            223     194      14.9
                       Other revenues from
                        managed and
                        franchised
  268    251      6.8   properties (a)          526     491       7.1
------ ------ --------                       ------- ------- ---------
1,559  1,363     14.4                         2,965   2,590      14.5
                       Costs and Expenses
                       Owned, leased and
                        consolidated joint
  675    640     (5.5)  venture hotels        1,316   1,247      (5.5)
                       Vacation ownership
  167    105    (59.0)  and residential         334     202     (65.3)
                       Selling, general,
                        administrative and
   94     88     (6.8)  other                   176     170      (3.5)
  101    101       --  Depreciation             206     203      (1.5)
    4      5     20.0  Amortization               9       9        --
                       Other expenses from
                        managed and
                        franchised
  268    251     (6.8)  properties(a)           526     491      (7.1)
------ ------ --------                       ------- ------- ---------
1,309  1,190    (10.0)                        2,567   2,322     (10.6)
  250    173     44.5  Operating income         398     268      48.5
                       Gain on sale of VOI
   --      8   (100.0)  notes receivable         --       8    (100.0)
                       Equity earnings from
                        unconsolidated
   18     12     50.0   ventures, net            31      16      93.8
                       Interest expense, net
                        of interest income
  (60)   (65)     7.7   of $3, $1, $5 and $1   (122)   (129)      5.4
                       Loss on asset
                        dispositions and
  (17)    (3)     n/m   impairments, net        (16)     (4)      n/m
------ ------ --------                       ------- ------- ---------
                       Income from
                        continuing
                        operations before
                        taxes and minority
  191    125     52.8   equity                  291     159      83.0
  (47)    (5)     n/m  Income tax expense       (68)     (7)      n/m
                       Minority equity in
    1     --      n/m   net loss                  1       1        --
------ ------ --------                       ------- ------- ---------
                       Income from
                        continuing
  145    120     20.8   operations              224     153      46.4
                       Discontinued
                        operations:
                       Gain on 
   --     34   (100.0)  disposition(b)           --      35    (100.0)
------ ------ --------                       ------- ------- ---------
 $145   $154     (5.8) Net income              $224    $188      19.1
====== ====== ========                       ======= ======= =========
                       Earnings Per Share -
                        Basic
$0.67  $0.57     17.5  Continuing operations  $1.04   $0.74      40.5
                       Discontinued
   --   0.17   (100.0)  operations               --    0.17    (100.0)
------ ------ --------                       ------- ------- ---------
$0.67  $0.74     (9.5) Net income             $1.04   $0.91      14.3
====== ====== ========                       ======= ======= =========
                       Earnings Per Share -
                        Diluted
$0.65  $0.56     16.1  Continuing operations  $1.01   $0.72      40.3
                       Discontinued
   --   0.16   (100.0)  operations               --    0.16    (100.0)
------ ------ --------                       ------- ------- ---------
$0.65  $0.72     (9.7) Net income             $1.01   $0.88      14.8
====== ====== ========                       ======= ======= =========

                       Weighted average
  216    208            number of Shares        214     206
====== ======                                ======= =======
                       Weighted average
                        number of Shares
  223    215            assuming dilution       222     213
====== ======                                ======= =======
 

(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) 2004 activity 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.
n/m = not meaningful
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                      CONSOLIDATED BALANCE SHEETS
                   (in millions, except share data)
                                               June 30,   December 31,
                                                 2005         2004
                                             ------------ ------------
Assets
Current assets:
 Cash and cash equivalents                          $381         $326
 Restricted cash                                     509          347
 Accounts receivable, net of allowance for
  doubtful accounts of $61 and $58                   598          482
 Inventories                                         316          371
 Prepaid expenses and other                          197          157
                                             ------------ ------------
   Total current assets                            2,001        1,683
 Investments                                         432          453
 Plant, property and equipment, net                6,778        6,997
 Goodwill and intangible assets, net               2,532        2,544
 Other assets (a)                                    653          621
                                             ------------ ------------
                                                 $12,396      $12,298
                                             ============ ============

Liabilities and Stockholders' Equity
Current liabilities:
 Short-term borrowings and current maturities
  of long-term debt (b)                             $634         $619
 Accounts payable                                    154          200
 Accrued expenses                                    719          872
 Accrued salaries, wages and benefits                248          299
 Accrued taxes and other                             158          138
                                             ------------ ------------
   Total current liabilities                       1,913        2,128
Long-term debt (b)                                 3,725        3,823
Deferred income taxes                                851          880
Other liabilities                                    624          652
                                             ------------ ------------
                                                   7,113        7,483
Minority interest                                     24           27
Exchangeable units and Class B preferred
 shares, at redemption value of $38.50                --           --
Commitments and contingencies
Stockholders' equity:
   Class A exchangeable preferred shares of
    the Trust; $0.01 par value; authorized
    30,000,000 shares; outstanding 564,397
    and 597,825 shares at June 30, 2005 and
    December 31, 2004, respectively                   --           --
   Corporation common stock; $0.01 par value;
    authorized 1,050,000,000 shares;
    outstanding 216,975,974 and 208,730,800
    shares at June 30, 2005 and December 31,
    2004, respectively                                 2            2
   Trust Class B shares of beneficial
    interest; $0.01 par value; authorized
    1,000,000,000 shares; outstanding
    216,975,974 and 208,730,800 shares at
    June 30, 2005 and December 31, 2004,
    respectively                                       2            2
Additional paid-in capital                         5,488        5,121
Deferred compensation                                (69)         (14)
Accumulated other comprehensive loss                (320)        (255)
Retained earnings (accumulated deficit)              156          (68)
                                             ------------ ------------
   Total stockholders' equity                      5,259        4,788
                                             ------------ ------------
                                                 $12,396      $12,298
                                             ============ ============
 

(a) Includes restricted cash of $9 million and $10 million at June 30, 2005 and December 31, 2004, respectively.
(b) Excludes Starwood's share of unconsolidated joint venture debt aggregating approximately $391 million and $438 million at June 30, 2005 and December 31, 2004, respectively.
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
          Non-GAAP to GAAP Reconciliations - Historical Data
                             (in millions)
 Three Months Ended                                Six Months Ended
      June 30,                                         June 30,
---------------------                            ---------------------
                %                                                %
2005  2004   Variance                            2005  2004   Variance
----- ----- ---------                            ----- ----- ---------

                      Reconciliation of Net
                       Income to EBITDA and
                       Adjusted EBITDA
$145  $154      (5.8) Net income                 $224  $188      19.1
  68    70       2.9  Interest expense(a)         137   141       2.8
                      Income tax (benefit)
  47   (29)      n/m   expense(b)                  68   (27)      n/m
 108   109       0.9  Depreciation(c)             222   219      (1.4)
   6     6        --  Amortization(d)              12    12        --
----- ----- ---------                            ----- ----- ---------
 374   310      20.6  EBITDA                      663   533      24.4
                      Adjustment to costs
                       associated with
  --    (3)   (100.0)  construction remediation    --    (4)   (100.0)
                      Loss on asset dispositions
  17     3       n/m   and impairments, net        16     4       n/m
  --    --        --  Discontinued operations(e)   --    (1)   (100.0)
----- ----- ---------                            ----- ----- ---------
$391  $310      26.1  Adjusted EBITDA            $679  $532      27.6
===== ===== =========                            ===== ===== =========
 

(a) Includes $5 and $4 million of interest expense related to
    unconsolidated joint ventures for the three months ended June 30,
    2005 and 2004, respectively, and $10 and $11 million for the six
    months ended June 30, 2005 and 2004, respectively.
(b) Includes $0 and $(34) million of tax expense (benefit) recorded in discontinued operations for the three months ended June 30, 2005 and 2004, respectively, and $0 and $(34) million for the six months ended June 30, 2005 and 2004, respectively.
(c) Includes $7 and $8 million of Starwood's share of depreciation
    expense of unconsolidated joint ventures for the three months
    ended June 30, 2005 and 2004, respectively, and $16 and $16
    million for the six months ended June 30, 2005 and 2004,
    respectively.

(d) Includes $2 and $1 million of Starwood's share of amortization expense of unconsolidated joint ventures for the three months ended June 30, 2005 and 2004, respectively, and $3 and $3 million for the six months ended June 30, 2005 and 2004, respectively.
(e) Excludes the taxes already added back as noted in (b) above.
 
 
 

 Three Months                                         Six Months Ended
 Ended June 30,                                           June 30,
---------------                                       ----------------
 2005    2004                                          2005     2004
------- -------                                       -------  -------
                Cash Flow Data
  $145    $154  Net income                              $224     $188
                Exclude:
    --     (34)   Discontinued operations, net            --      (35)
------- -------                                       -------  -------
   145     120  Income from continuing operations        224      153
  (103)    (44) Increase in restricted cash             (161)    (130)
                Adjustments to income from continuing
                 operations, changes in working
   129      43   capital, and other                      167      158
------- -------                                       -------  -------
   171     119    Cash from continuing operations        230      181
    --      --    Cash from discontinued operations       --        1
------- -------                                       -------  -------
  $171    $119  Cash from operating activities          $230     $182
======= =======                                       =======  =======
  $(82)   $(64) Cash used for investing activities     $(151)   $(244)
======= =======                                       =======  =======
  $(13)  $(128) Cash used for financing activities      $(11)   $(201)
======= =======                                       =======  =======
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
         Non-GAAP to GAAP Reconciliations - Future Performance
                             (In millions)
                                                        Year Ended
                                                     December 31, 2005
Net income before special items                                  $484
Special items (see page 7)                                         (9)
Net income                                                       $475

EPS before special items                                        $2.18
Special items (see page 7)                                      (0.04)
EPS                                                             $2.14
 
 

Three Months Ended                                      Year Ended
September 30, 2005                                   December 31, 2005
------------------                                   -----------------
            $114  Net Income                                     $475
              72  Interest expense                                281
              38  Income tax expense                              151
             118  Depreciation and amortization                   472
-----------------                                    -----------------
             342  EBITDA                                        1,379
                  Loss on asset dispositions and
              --   impairments, net                                16
-----------------                                    -----------------
            $342  Adjusted EBITDA                              $1,395
=================                                    =================
 
 

Three Months Ended                                      Year Ended
September 30, 2004                                   December 31, 2004
-------------------                                  -----------------

             $107  Net income                                    $395
               68   Interest expense                              275
               35   Income tax expense                             34
              111   Depreciation                                  445
                6  Amortization                                    26
------------------                                    ----------------
              327  EBITDA                                       1,175
                   Loss on asset dispositions and
                4   impairments, net                               33
               (3)  Discontinued operations                       (17)
                   Restructuring and other special
              (37)  credits, net                                  (37)
                   Adjustment to costs associated
               --   with construction remediation                  (4)
------------------                                    ----------------
             $291  Adjusted EBITDA                             $1,150
==================                                    ================
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                  Non-GAAP to GAAP Reconciliations -
              Same Store Owned Hotel Revenue and Expenses
                             (In millions)
 Three Months Ended                              Six Months Ended
      June 30,                                       June 30,
--------------------                         -------------------------
               %        Same-Store Owned                         %
2005  2004  Variance   Hotels(1) Worldwide    2005    2004    Variance
----- ----- --------                         ------- ------- ---------

                     Revenue
                       Same-Store Owned
$929  $847      9.7     Hotels               $1,702  $1,576       8.0
                       Hotels Sold or Closed
                        in 2005 and 2004 (4
   1    10    (90.0)    hotels)                   6      19     (68.4)
                       Hotels Without
                        Comparable Results
   8     9    (11.1)    (4 hotels)               43      41       4.9
                       Other ancillary hotel
   1     2    (50.0)    operations                1       1        --
----- ----- --------                         ------- ------- ---------
                     Total Owned, Leased and
                      Consolidated Joint
$939  $868      8.2   Venture Hotels Revenue $1,752  $1,637       7.0
===== ===== ========                         ======= ======= =========

                     Costs and Expenses
                       Same-Store Owned
$664  $621     (6.9)    Hotels               $1,275  $1,199      (6.3)
                       Hotels Sold or Closed
                        in 2005 and 2004 (4
   1     8     87.5     hotels)                   6      16      62.5
                       Hotels Without
                        Comparable Results
   8     9     11.1     (4 hotels)               33      30     (10.0)
                       Other ancillary hotel
   2     2       --     operations                2       2        --
----- ----- --------                         ------- ------- ---------
                     Total Owned, Leased and
                      Consolidated Joint
                      Venture Hotels Costs
$675  $640     (5.5)  and Expenses           $1,316  $1,247      (5.5)
===== ===== ========                         ======= ======= =========
 

 Three Months Ended                              Six Months Ended
      June 30,                                       June 30,
--------------------                         -------------------------
               %     Same-Store Owned Hotels                     %
2005  2004  Variance      North America       2005    2004    Variance
----- ----- --------                         ------- ------- ---------

                     Revenue
                       Same-Store Owned
$674  $617      9.2     Hotels               $1,237  $1,158       6.8
                       Hotels Sold or Closed
                        in 2005 and 2004
  --     4   (100.0)    (3 hotels)                2      10     (80.0)
                       Hotels Without 
                        Comparable Results
   4     5    (20.0)    (3 hotels)               33      32       3.1
----- ----- --------                         ------- ------- ---------
                     Total Owned, Leased and
                      Consolidated Joint
$678  $626      8.3   Venture Hotels Revenue $1,272  $1,200       6.0
===== ===== ========                         ======= ======= =========

                     Costs and Expenses
                       Same-Store Owned
$481  $454     (5.9)    Hotels                 $923    $881      (4.8)
                       Hotels Sold or Closed
                        in 2005 and 2004
  --     4    100.0     (3 hotels)                2       8      75.0
                       Hotels Without
                        Comparable Results
   6     6       --     (3 hotels)               27      24     (12.5)
----- ----- --------                         ------- ------- ---------
                     Total Owned, Leased and
                      Consolidated Joint
                      Venture Hotels Costs
$487  $464     (5.0)  and Expenses             $952    $913      (4.3)
===== ===== ========                         ======= ======= =========

 Three Months Ended                              Six Months Ended
      June 30,                                       June 30,
--------------------                         -------------------------
               %     Same-Store Owned Hotels                     %
2005  2004  Variance      International       2005    2004    Variance
----- ----- --------                         ------- ------- ---------

                     Revenue
                       Same-Store Owned
$255  $230     10.9     Hotels                 $465    $418      11.2
                       Hotels Sold or Closed
                        in 2005 and 2004
   1     6    (83.3)    (1 hotel)                 4       9     (55.5)
                       Hotels Without
                        Comparable Results
   4     4       --     (1 hotel)                10       9      11.1
                       Other ancillary hotel
   1     2    (50.0)    operations                1       1        --
----- ----- --------                         ------- ------- ---------
                     Total Owned, Leased and
                      Consolidated Joint
$261  $242      7.9   Venture Hotels Revenue   $480    $437       9.8
===== ===== ========                         ======= ======= =========

                     Costs and Expenses
                       Same-Store Owned
$183  $167     (9.6)    Hotels                 $352    $318     (10.7)
                       Hotels Sold or Closed
                        in 2005 and 2004
   1     4     75.0     (1 hotel)                 4       8      50.0
                       Hotels Without
                        Comparable Results
   2     3     33.3     (1 hotel)                 6       6        --
                       Other ancillary
   2     2       --     hotel operations          2       2        --
----- ----- --------                         ------- ------- ---------
                     Total Owned, Leased and
                      Consolidated Joint
                      Venture Hotels Costs
$188  $176     (6.8)  and Expenses             $364    $334      (9.0)
===== ===== ========                         ======= ======= =========
 

(1) Same-Store Owned Hotel Results exclude 4 hotels sold or closed in
    2005 and 2004 and 4 hotels without comparable results.
 
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Hotel Results - Same Store Owned Hotels(1)
                      For the Three Months Ended
                             June 30, 2005
                               UNAUDITED
                                WORLDWIDE            NORTH AMERICA
                          ---------------------  ---------------------
                           2005    2004   Var.    2005    2004   Var.
                          ------- ------- -----  ------- ------- -----

                                134 Hotels             91 Hotels
                          ---------------------  ---------------------
SAME STORE OWNED HOTELS
        REVPAR ($)        131.98  117.49  12.3%  130.18  115.54  12.7%
        ADR ($)           178.24  165.85   7.5%  171.30  157.15   9.0%
        OCCUPANCY (%)       74.0%   70.8%  3.2     76.0%   73.5%  2.5

                                   58                     36
                          ---------------------  ---------------------
SHERATON
        REVPAR ($)        107.89   97.21  11.0%  114.84  104.45   9.9%
        ADR ($)           150.69  140.23   7.5%  154.33  141.00   9.5%
        OCCUPANCY (%)       71.6%   69.3%  2.3     74.4%   74.1%  0.3

                                   36                     22
                          ---------------------  ---------------------
WESTIN
        REVPAR ($)        142.51  126.13  13.0%  124.26  108.79  14.2%
        ADR ($)           183.73  172.21   6.7%  158.13  146.06   8.3%
        OCCUPANCY (%)       77.6%   73.2%  4.4     78.6%   74.5%  4.1

                                   10                     4
                          ---------------------  ---------------------
ST. REGIS/
 LUXURY COLLECTION
        REVPAR ($)        289.21  258.86  11.7%  266.55  233.32  14.2%
        ADR ($)           404.50  390.77   3.5%  356.99  338.31   5.5%
        OCCUPANCY (%)       71.5%   66.2%  5.3     74.7%   69.0%  5.7

                                   12                     12
                          ---------------------  ---------------------
W
        REVPAR ($)        196.28  167.46  17.2%  196.28  167.46  17.2%
        ADR ($)           243.82  218.23  11.7%  243.82  218.23  11.7%
        OCCUPANCY (%)       80.5%   76.7%  3.8     80.5%   76.7%  3.8

                                   18                     17
                          ---------------------  ---------------------
OTHER
        REVPAR ($)         90.90   80.83  12.5%   89.39   78.74  13.5%
        ADR ($)           127.43  118.65   7.4%  125.71  118.30   6.3%
        OCCUPANCY (%)       71.3%   68.1%  3.2     71.1%   66.6%  4.5
 

(1) Hotel Results exclude 4 hotels sold or closed and 3 hotels without comparable results during 2004 and 2005.
(2) See next page for breakdown by division
 

                                                   INTERNATIONAL(2)
                                                 2005     2004   Var.
                                                -------- ------- -----

                                                       43 Hotels
SAME STORE OWNED HOTELS
        REVPAR ($)                               137.30  123.26  11.4%
        ADR ($)                                  200.96  195.77   2.7%
        OCCUPANCY (%)                              68.3%   63.0%  5.3

                                                         22
SHERATON
        REVPAR ($)                                92.95   81.69  13.8%
        ADR ($)                                  141.78  138.16   2.6%
        OCCUPANCY (%)                              65.6%   59.1%  6.5

                                                         14
WESTIN
        REVPAR ($)                               200.32  180.80  10.8%
        ADR ($)                                  269.39  260.77   3.3%
        OCCUPANCY (%)                              74.4%   69.3%  5.1

                                                          6
ST. REGIS/LUXURY COLLECTION
        REVPAR ($)                               327.07  303.43   7.8%
        ADR ($)                                  494.00  493.43   0.1%
        OCCUPANCY (%)                              66.2%   61.5%  4.7
 

W
        REVPAR ($)
        ADR ($)
        OCCUPANCY (%)
                                                          1
OTHER
        REVPAR ($)                               100.04   93.54   6.9%
        ADR ($)                                  137.63  120.53  14.2%
        OCCUPANCY (%)                              72.7%   77.6% (4.9)
 

(1) Hotel Results exclude 4 hotels sold or closed and 3 hotels without comparable results during 2004 and 2005.
(2) See next page for breakdown by division
 
 

              STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Hotel Results - Same Store Owned Hotels(1)
                      For the Three Months Ended
                             June 30, 2005
                               UNAUDITED
                                  EUROPE             LATIN AMERICA
                           --------------------- ---------------------
                            2005    2004   Var.   2005    2004   Var.
                           ------- ------- ----- ------- ------- -----

                                 28 Hotels             11 Hotels
                           --------------------- ---------------------
SAME STORE OWNED HOTELS
        REVPAR ($)         194.63  177.28   9.8%  64.50   53.98  19.5%
        ADR ($)            271.09  265.21   2.2% 103.35   99.83   3.5%
        OCCUPANCY (%)        71.8%   66.8%  5.0    62.4%   54.1%  8.3

                                    11                    8
                           --------------------- ---------------------
SHERATON
        REVPAR ($)         126.69  114.10  11.0%  55.17   46.05  19.8%
        ADR ($)            172.74  171.23   0.9%  96.10   92.52   3.9%
        OCCUPANCY (%)        73.3%   66.6%  6.7    57.4%   49.8%  7.6

                                    11                    3
                           --------------------- ---------------------
WESTIN
        REVPAR ($)         238.48  217.37   9.7%  99.95   84.13  18.8%
        ADR ($)            332.76  315.41   5.5% 122.73  119.44   2.8%
        OCCUPANCY (%)        71.7%   68.9%  2.8    81.4%   70.4% 11.0

                                    6
ST. REGIS/
 LUXURY COLLECTION
        REVPAR ($)         327.07  303.43   7.8%
        ADR ($)            494.00  493.43   0.1%
        OCCUPANCY (%)        66.2%   61.5%  4.7
 

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

(1) Hotel Results exclude 4 hotels sold or closed and 3 hotels without
    comparable results during 2004 and 2005.
 

                                                     ASIA PACIFIC
                                                  2005    2004   Var.
                                                 ------- ------- -----

                                                        4 Hotels
SAME STORE OWNED HOTELS
        REVPAR ($)                               110.82   99.01  11.9%
        ADR ($)                                  156.94  138.70  13.2%
        OCCUPANCY (%)                              70.6%   71.4% (0.8)

                                                          3
SHERATON
        REVPAR ($)                               117.43  102.36  14.7%
        ADR ($)                                  169.35  151.49  11.8%
        OCCUPANCY (%)                              69.3%   67.6%  1.7
 

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

ST. REGIS/LUXURY COLLECTION
        REVPAR ($)
        ADR ($)
        OCCUPANCY (%)
                                                          1
OTHER
        REVPAR ($)                               100.04   93.54   6.9%
        ADR ($)                                  137.63  120.53  14.2%
        OCCUPANCY (%)                              72.7%   77.6% (4.9)
 

(1) Hotel Results exclude 4 hotels sold or closed and 3 hotels without
    comparable results during 2004 and 2005.
 
 

             STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Hotel Results - Same Store Owned Hotels(1)
                      For the Three Months Ended
                             June 30, 2005
                UNAUDITED ($ thousands except variances)
                           WORLDWIDE(2)           NORTH AMERICA(2)
                     ------------------------ ------------------------
                      2005     2004     Var.   2005     2004     Var.
                     -------- -------- ------ -------- -------- ------

                            134 Hotels                91 Hotels
                     ------------------------ ------------------------
SAME STORE 
 OWNED HOTELS
       Total REVENUE 928,951  847,188    9.7% 674,173  616,627    9.3%
       Total EXPENSE 664,554  621,516  (6.9%) 481,103  454,387  (5.9%)

                               58                       36
                     ------------------------ ------------------------
SHERATON
       REVENUE       364,631  338,739    7.6% 253,467  240,513    5.4%
       EXPENSE       264,395  246,701  (7.2%) 180,127  174,040  (3.5%)
 

                               36                       22
                     ------------------------ ------------------------
WESTIN
       REVENUE       295,263  265,614   11.2% 194,662  173,829   12.0%
       EXPENSE       204,833  191,443  (7.0%) 135,618  126,413  (7.3%)
 

                               10                        4
                     ------------------------ ------------------------
ST. REGIS/
 LUXURY COLLECTION
       REVENUE       104,638   98,186    6.6%  69,675   65,080    7.1%
       EXPENSE        73,729   70,360  (4.8%)  51,384   48,160  (6.7%)
 

                               12                       12
                     ------------------------ ------------------------
W(2)
       REVENUE       107,838   93,742   15.0% 107,838   93,742   15.0%
       EXPENSE        77,411   71,460  (8.3%)  77,411   71,460  (8.3%)
 

                               18                       17
                     ------------------------ ------------------------
OTHER
       REVENUE        56,581   50,907   11.1%  48,531   43,463   11.7%
       EXPENSE        44,186   41,552  (6.3%)  36,563   34,314  (6.6%)
 

(1) Hotel Results exclude 4 hotels sold or closed and 3 hotels without comparable results during 2004 and 2005.
(2) Includes lease expense of $4,288 in 2005 and 2004 related to the lease of the W Times Square in New York
(3) See next page for breakdown by division

                                                 INTERNATIONAL(3)
                                              2005     2004     Var.
                                             -------- -------- -------

                                                     43 Hotels
SAME STORE OWNED HOTELS
        Total REVENUE                        254,778  230,561    10.5%
        Total EXPENSE                        183,451  167,129   (9.8%)
 

                                                        22
SHERATON
        REVENUE                              111,164   98,226    13.2%
        EXPENSE                               84,268   72,661  (16.0%)
 

                                                        14
WESTIN
        REVENUE                              100,601   91,785     9.6%
        EXPENSE                               69,215   65,030   (6.4%)
 

                                                        6
ST. REGIS/LUXURY COLLECTION
        REVENUE                               34,963   33,106     5.6%
        EXPENSE                               22,345   22,200   (0.7%)
 
 

W(2)
        REVENUE 
        EXPENSE 

                                                        1
OTHER
        REVENUE                                8,050    7,444     8.1%
        EXPENSE                                7,623    7,238   (5.3%)
 

(1) Hotel Results exclude 4 hotels sold or closed and 3 hotels without comparable results during 2004 and 2005.
(2) Includes lease expense of $4,288 in 2005 and 2004 related to the lease of the W Times Square in New York
(3) See next page for breakdown by division
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Hotel Results - Same Store Owned Hotels(1)
                      For the Three Months Ended
                             June 30, 2005
               UNAUDITED ($ thousands except variances)
                              EUROPE                LATIN AMERICA
                     ------------------------- -----------------------
                      2005     2004     Var.    2005    2004    Var.
                     -------- -------- ------- ------- ------- -------

                             28 Hotels                11 Hotels
                     ------------------------- -----------------------
SAME STORE OWNED
 HOTELS
       Total REVENUE 179,686  167,292     7.4% 47,137  38,194    23.4%
       Total EXPENSE 130,019  121,812   (6.7%) 31,823  25,653  (24.1%)
 

                                11                       8
                     ------------------------- -----------------------
SHERATON
       REVENUE        61,074   55,581     9.9% 30,185  25,014    20.7%
       EXPENSE        48,790   43,529  (12.1%) 21,492  16,706  (28.6%)
 

                                11                       3
                     ------------------------- -----------------------
WESTIN
       REVENUE        83,649   78,605     6.4% 16,952  13,180    28.6%
       EXPENSE        58,884   56,083   (5.0%) 10,331   8,947  (15.5%)
 

                                6 
ST. REGIS/
 LUXURY COLLECTION
       REVENUE        34,963   33,106     5.6% 
       EXPENSE        22,345   22,200   (0.7%) 
 
 

OTHER
       REVENUE
       EXPENSE

(1) Hotel Results exclude 4 hotels sold or closed and 3 hotels without
    comparable results during 2004 and 2005.
 

                                                    ASIA PACIFIC
                                               2005     2004    Var.
                                              -------- ------- -------

                                                      4 Hotels
SAME STORE OWNED HOTELS
        Total REVENUE                          27,955  25,075    11.5%
        Total EXPENSE                          21,609  19,664   (9.9%)
 

                                                         3
SHERATON
        REVENUE                                19,905  17,631    12.9%
        EXPENSE                                13,986  12,426  (12.6%)
 
 

WESTIN
        REVENUE 
        EXPENSE 
 

ST. REGIS/LUXURY COLLECTION
        REVENUE 
        EXPENSE 

                                                         1
OTHER
        REVENUE                                 8,050   7,444     8.1%
        EXPENSE                                 7,623   7,238   (5.3%)
 

(1) Hotel Results exclude 4 hotels sold or closed and 3 hotels without
    comparable results during 2004 and 2005.
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Hotel Results - Same Store Owned Hotels(1)
                       For the Six Months Ended
                             June 30, 2005
                               UNAUDITED
                                 WORLDWIDE           NORTH AMERICA
                           --------------------- ---------------------
                            2005    2004   Var.   2005    2004   Var.
                           ------- ------- ----- ------- ------- -----

                                 133 Hotels            90 Hotels
                           --------------------- ---------------------
SAME STORE OWNED HOTELS
        REVPAR ($)         122.20  109.90  11.2% 120.46  108.85  10.7%
        ADR ($)            173.87  162.36   7.1% 168.65  155.81   8.2%
        OCCUPANCY (%)        70.3%   67.7%  2.6    71.4%   69.9%  1.5

                                    57                    35
                           --------------------- ---------------------
SHERATON
        REVPAR ($)          99.46   90.88   9.4% 103.09   95.46   8.0%
        ADR ($)            146.12  137.06   6.6% 148.89  136.98   8.7%
        OCCUPANCY (%)        68.1%   66.3%  1.8    69.2%   69.7% (0.5)

                                    36                    22
                           --------------------- ---------------------
WESTIN
        REVPAR ($)         135.00  120.42  12.1% 120.79  108.82  11.0%
        ADR ($)            180.70  168.58   7.2% 158.78  147.78   7.4%
        OCCUPANCY (%)        74.7%   71.4%  3.3    76.1%   73.6%  2.5

                                    10                    4
                           --------------------- ---------------------
ST. REGIS/
 LUXURY COLLECTION
        REVPAR ($)         266.71  238.78  11.7% 271.92  238.17  14.2%
        ADR ($)            396.77  384.29   3.2% 368.61  351.05   5.0%
        OCCUPANCY (%)        67.2%   62.1%  5.1    73.8%   67.8%  6.0

                                    12                    12
                           --------------------- ---------------------
W
        REVPAR ($)         176.30  152.22  15.8% 176.30  152.22  15.8%
        ADR ($)            233.63  212.32  10.0% 233.63  212.32  10.0%
        OCCUPANCY (%)        75.5%   71.7%  3.8    75.5%   71.7%  3.8

                                    18                    17
                           --------------------- ---------------------
OTHER
        REVPAR ($)          80.48   72.28  11.3%  75.69   67.71  11.8%
        ADR ($)            124.15  115.97   7.1% 121.12  114.72   5.6%
        OCCUPANCY (%)        64.8%   62.3%  2.5    62.5%   59.0%  3.5
 

(1) Hotel Results exclude 4 hotels sold or closed and 4 hotels without comparable results during 2004 and 2005.
(2) See next page for breakdown by division
 

                                                   INTERNATIONAL(2)
                                                 2005    2004    Var.
                                                ------- ------- ------

                                                       43 Hotels
SAME STORE OWNED HOTELS
        REVPAR ($)                              127.35  112.99   12.7%
        ADR ($)                                 190.37  184.47    3.2%
        OCCUPANCY (%)                             66.9%   61.3%   5.6

                                                         22
SHERATON
        REVPAR ($)                               91.76   81.14   13.1%
        ADR ($)                                 139.93  137.27    1.9%
        OCCUPANCY (%)                             65.6%   59.1%   6.5

                                                         14
WESTIN
        REVPAR ($)                              181.35  157.87   14.9%
        ADR ($)                                 258.09  245.44    5.2%
        OCCUPANCY (%)                             70.3%   64.3%   6.0

                                                          6
ST. REGIS/LUXURY COLLECTION
        REVPAR ($)                              258.00  239.85    7.6%
        ADR ($)                                 458.46  459.71  (0.3%)
        OCCUPANCY (%)                             56.3%   52.2%   4.1
 

W
        REVPAR ($) 
        ADR ($) 
        OCCUPANCY (%) 
                                                          1
OTHER
        REVPAR ($)                              109.54  100.04    9.5%
        ADR ($)                                 138.68  121.41   14.2%
        OCCUPANCY (%)                             79.0%   82.4%  (3.4)
 

(1) Hotel Results exclude 4 hotels sold or closed and 4 hotels without comparable results during 2004 and 2005.
(2) See next page for breakdown by division
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Hotel Results - Same Store Owned Hotels(1)
                      For the Six Months Ended
                             June 30, 2005
                               UNAUDITED
                                  EUROPE             LATIN AMERICA
                          ---------------------- ---------------------
                           2005    2004    Var.   2005    2004   Var.
                          ------- ------- ------ ------- ------- -----

                                 28 Hotels             11 Hotels
                          ---------------------- ---------------------
SAME STORE OWNED HOTELS
        REVPAR ($)        168.66  151.89   11.0%  73.27   61.77  18.6%
        ADR ($)           257.53  249.67    3.1% 110.95  108.05   2.7%
        OCCUPANCY (%)       65.5%   60.8%   4.7    66.0%   57.2%  8.8

                                   11                     8
                          ---------------------- ---------------------
SHERATON
        REVPAR ($)        118.43  106.79   10.9%  59.33   51.41  15.4%
        ADR ($)           172.90  169.63    1.9%  96.81   96.81   0.0%
        OCCUPANCY (%)       68.5%   63.0%   5.5    61.3%   53.1%  8.2

                                   11                     3
                          ---------------------- ---------------------
WESTIN
        REVPAR ($)        203.19  180.03   12.9% 126.21  101.12  24.8%
        ADR ($)           313.65  294.73    6.4% 150.07  139.27   7.8%
        OCCUPANCY (%)       64.8%   61.1%   3.7    84.1%   72.6% 11.5

                                    6 
ST. REGIS/
 LUXURY COLLECTION
        REVPAR ($)        258.00  239.85    7.6% 
        ADR ($)           458.46  459.71  (0.3%) 
        OCCUPANCY (%)       56.3%   52.2%   4.1 
 

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

(1) Hotel Results exclude 4 hotels sold or closed and 4 hotels without
    comparable results during 2004 and 2005.
 

                                                     ASIA PACIFIC
                                                 2005    2004    Var.
                                                ------- ------- ------

                                                       4 Hotels
SAME STORE OWNED HOTELS
        REVPAR ($)                              117.42  103.29   13.7%
        ADR ($)                                 158.10  140.72   12.4%
        OCCUPANCY (%)                             74.3%   73.4%   0.9

                                                          3
SHERATON
        REVPAR ($)                              122.25  105.28   16.1%
        ADR ($)                                 171.26  155.10   10.4%
        OCCUPANCY (%)                             71.4%   67.9%   3.5
 

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

ST. REGIS/LUXURY COLLECTION
        REVPAR ($) 
        ADR ($) 
        OCCUPANCY (%) 
                                                          1
OTHER
        REVPAR ($)                              109.54  100.04    9.5%
        ADR ($)                                 138.68  121.41   14.2%
        OCCUPANCY (%)                             79.0%   82.4% (3.4%)
 

(1) Hotel Results exclude 4 hotels sold or closed and 4 hotels without
    comparable results during 2004 and 2005.
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Hotel Results - Same Store Owned Hotels(1)
                       For the Six Months Ended
                             June 30, 2005
               UNAUDITED ($ thousands except variances)
                                                  WORLDWIDE(2)
                                            2005       2004      Var.
                                          ---------- ---------- ------

                                                   133 Hotels
SAME STORE OWNED HOTELS
        Total REVENUE                     1,701,818  1,576,067    8.0%
        Total EXPENSE                     1,275,245  1,198,852  (6.4%)
 

                                                      57
SHERATON
        REVENUE                             652,363    618,591    5.5%
        EXPENSE                             495,858    466,814  (6.2%)
 

                                                      36
WESTIN
        REVENUE                             556,474    504,853   10.2%
        EXPENSE                             399,888    372,779  (7.3%)
 

                                                      10
ST. REGIS/LUXURY COLLECTION
        REVENUE                             197,672    186,114    6.2%
        EXPENSE                             145,311    139,403  (4.2%)
 

                                                      12
W(2)
        REVENUE                             195,229    173,762   12.4%
        EXPENSE                             149,132    139,616  (6.8%)
 

                                                      18
OTHER
        REVENUE                             100,080     92,747    7.9%
        EXPENSE                              85,056     80,240  (6.0%)
 

(1) Hotel Results exclude 4 hotels sold or closed and 4 hotels without comparable results during 2004 and 2005.
(2) Includes lease expense of $8,575 in 2005 and 2004 related to the lease of the W Times Square in New York
(3) See next page for breakdown by division
 

                      NORTH AMERICA(2)           INTERNATIONAL(3)
                ---------------------------- -------------------------
                  2005       2004      Var.   2005     2004     Var.
                ---------- ---------- ------ -------- -------- -------

                          90 Hotels                  43 Hotels
                ---------------------------- -------------------------
SAME STORE
 OWNED HOTELS
  Total REVENUE 1,237,337  1,158,188    6.8% 464,481  417,879    11.2%
  Total EXPENSE   923,059    880,686  (4.8%) 352,185  318,165  (10.7%)
 

                            35                          22
                ---------------------------- -------------------------
SHERATON
  REVENUE         440,847    429,756    2.6% 211,516  188,835    12.0%
  EXPENSE         334,919    325,952  (2.8%) 160,939  140,862  (14.3%)
 

                            22                          14
                ---------------------------- -------------------------
WESTIN
  REVENUE         378,599    346,139    9.4% 177,875  158,714    12.1%
  EXPENSE         267,879    251,935  (6.3%) 132,009  120,844   (9.2%)
 

                             4                          6
                ---------------------------- -------------------------
ST. REGIS/LUXURY 
 COLLECTION
  REVENUE         139,799    131,726    6.1%  57,873   54,388     6.4%
  EXPENSE         101,963     97,704  (4.4%)  43,348   41,699   (4.0%)
 

                            12                     0
W(2)
  REVENUE         195,229    173,762   12.4%       0        0     0.0%
  EXPENSE         149,132    139,616  (6.8%)       0        0     0.0%
 

                            17                          1
                ---------------------------- -------------------------
OTHER
  REVENUE          82,863     76,805    7.9%  17,217   15,942     8.0%
  EXPENSE          69,167     65,480  (5.6%)  15,889   14,760   (7.6%)
 

(1) Hotel Results exclude 4 hotels sold or closed and 4 hotels without comparable results during 2004 and 2005.
(2) Includes lease expense of $8,575 in 2005 and 2004 related to the lease of the W Times Square in New York
(3) See next page for breakdown by division
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Hotel Results - Same Store Owned Hotels(1)
                       For the Six Months Ended
                             June 30, 2005
               UNAUDITED ($ thousands except variances)
                              EUROPE                LATIN AMERICA
                     ------------------------- -----------------------
                      2005     2004     Var.    2005    2004    Var.
                     -------- -------- ------- ------- ------- -------

                             28 Hotels                11 Hotels
                     ------------------------- -----------------------
SAME STORE 
 OWNED HOTELS
       Total REVENUE 308,138  283,123     8.8% 99,285  83,653    18.7%
       Total EXPENSE 245,985  225,192   (9.2%) 62,844  53,627  (17.2%)
 

                                11                       8
                     ------------------------- -----------------------
SHERATON
       REVENUE       110,292  100,191    10.1% 61,383  53,483    14.8%
       EXPENSE        91,851   81,323  (12.9%) 41,621  34,953  (19.1%)
 

                                11                       3
                     ------------------------- -----------------------
WESTIN
       REVENUE       139,973  128,544     8.9% 37,902  30,170    25.6%
       EXPENSE       110,786  102,170   (8.4%) 21,223  18,674  (13.6%)
 

                                6 
ST. REGIS/LUXURY 
 COLLECTION
       REVENUE        57,873   54,388     6.4% 
       EXPENSE        43,348   41,699   (4.0%) 
 
 

OTHER
       REVENUE
       EXPENSE

(1) Hotel Results exclude 4 hotels sold or closed and 4 hotels without
    comparable results during 2004 and 2005.
 

                                                    ASIA PACIFIC
                                                2005    2004    Var.
                                               ------- ------- -------

                                                       4 Hotels
SAME STORE OWNED HOTELS
        Total REVENUE                          57,058  51,103    11.7%
        Total EXPENSE                          43,356  39,346  (10.2%)
 

                                                         3
SHERATON
        REVENUE                                39,841  35,161    13.3%
        EXPENSE                                27,467  24,586  (11.7%)
 
 

WESTIN
        REVENUE 
        EXPENSE 
 

ST. REGIS/LUXURY COLLECTION
        REVENUE 
        EXPENSE 

                                                         1
OTHER
        REVENUE                                17,217  15,942     8.0%
        EXPENSE                                15,889  14,760   (7.6%)
 

(1) Hotel Results exclude 4 hotels sold or closed and 4 hotels without
    comparable results during 2004 and 2005.
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                        Debt Portfolio Summary
                          As of June 30, 2005
                               UNAUDITED
                                                              Avg
                Interest    Balance      % of     Interest   Maturity
     Debt        Terms   (in millions)  Portfolio   Rate   (in years)
--------------- -------- ------------- ---------- -------- -----------

Floating Rate
 Debt:
  Senior credit 
   facility
    Revolving 
     credit 
     facility   Various 
                 + 125            $14          0%    3.81%        1.3
    Term loan   LIBOR 
                 + 125            500         12%    4.59%        1.1
                         ------------- ---------- -------- -----------
                                  514         12%    4.57%        1.2
  Mortgages 
   and other    Various           186          4%    5.38%        2.2
  Interest rate 
   swaps        LIBOR
                 + 423            300          7%    7.75%
                         ------------- ---------- --------

    Total Floating              1,000         23%    5.67%        1.4
Fixed Rate Debt:
  Sheraton
   Holding public
   debt (1)                     1,052         24%    6.00%        7.5

  Senior notes (2)              1,510         35%    6.70%        4.4

  Convertible debt                360          8%    3.50%        0.9

  Mortgages 
   and other                      737         17%    7.25%        5.8
  Interest rate
   swaps                         (300)       (7%)    7.88%
                         ------------- ---------- --------

    Total Fixed                 3,359         77%    6.13%        5.2
                         ------------- ---------- --------

        Total Debt             $4,359        100%    6.03%        4.6
                         ============= ========== ========

(1) Balance consists of outstanding public debt of $1.047 billion and a $5 million fair value adjustment related to the unamortized gain on fixed to floating interest rate swaps terminated in September 2002 and March 2004.
(2) Balance consists of outstanding public debt of $1.496 billion and a $26 million fair value adjustment related to the unamortized gain on fixed to floating interest rate swaps terminated in September 2002 and March 2004 and a ($12) million fair value adjustment related to current fixed to floating interest rate swaps.

                                                Maturities
                                         less than 1 year       $634
                                                1-3 years      1,631
                                                3-5 years        485
                                     greater than 5 years      1,609
                                                              $4,359
 
 
 

              STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
       Hotels without Comparable Results & Other Selected Items
                         As of June 30, 2005
                        UNAUDITED ($ millions)

Properties without comparable results in 2005:
Property                                       Location
--------                                       --------
Sheraton Kauai                                 Koloa, HI
St. Regis Aspen                                Aspen, CO
Paradise Streams Caesars                       Mt. Pocono, PA
Sheraton Cancun                                Cancun, Mexico

Properties sold or closed in 2005 and 2004:
Property                                       Location
--------                                       --------
Englewood - Sheraton Denver Tech Center        Englewood, CO
Deerfield - Hilton                             Ft. Lauderdale, FL
Rancho Bernardo - Four Points                  Rancho Bernardo, CA
Lisbon - Sheraton Lisboa Htl & Twrs            Lisbon, Portugal
 
 

Selected Balance Sheet Items:
Cash and cash equivalents
 (including restricted cash of $518 million)                     $899
Debt level                                                     $4,359
 
 

              STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                         Capital Expenditures
              For the Three and Six Months Ended June 30, 2005
                        UNAUDITED ($ millions)
                                                          Q2     YTD
                                                        ------ -------
Capital Expenditures:
  Owned, Leased and Consolidated Joint Venture Hotels      68     126
  Corporate/IT                                             12      16
                                                        ------ -------
Subtotal                                                   80     142
Vacation Ownership Capital Expenditures:
  Capital expenditures (includes land acquisitions)         6       8
  Net capital expenditures for inventory (1)               (6)    (20)
                                                        ------ -------
Subtotal                                                    -     (12)

Development Capital                                        27      98
                                                        ------ -------

Total Capital Expenditures                                107     228
                                                        ====== =======

(1) Represents gross inventory capital expenditures of $40 and $73 in the three and six months ended June 30, 2005, respectively, less cost of sales of $46 and $93 in the three and six months ended June 30, 2005, respectively.
 
 

              STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Summary of Portfolio by Properties & Rooms
                          As of June 30, 2005
                               UNAUDITED
                             NAD             EAME            LAD
                      ---------------- --------------- ---------------
Owned                  Hotels   Rooms   Hotels  Rooms   Hotels  Rooms
                      ------- -------- ------- ------- ------- -------
Sheraton                  36   16,218      11   3,077       7   3,549
Westin                    22   10,359      11   2,374       3     901
Four Points                6    1,153       -       -       -       -
W                         12    4,294       -       -       -       -
Luxury Collection          1      654       5     638       2     320
St. Regis                  4      840       1     161       -       -
Other                     12    2,806       -       -       -       -
                      ------- -------- ------- ------- ------- -------
Total Owned               93   36,324      28   6,250      12   4,770
Managed & UJV
Sheraton                  42   20,828      72  21,170      10   1,995
Westin                    37   20,888       7   1,869       -       -
Four Points                1      475       7   1,035       2     263
W                          5      902       -       -       1     237
Luxury Collection          6    1,401       6     942       7     158
St. Regis                  2      403       1      95       -       -
Other                      1    2,567       -       -       -       -
                      ------- -------- ------- ------- ------- -------
Total Managed & UJV       94   47,464      93  25,111      20   2,653
Franchised
Sheraton                 114   35,953      29   7,043       3   1,074
Westin                    18    7,288       3   1,141       3     598
Four Points               92   16,363      10   1,376       9   1,350
Luxury Collection          3      600      12   1,354       -       -
                      ------- -------- ------- ------- ------- -------
Total Franchised         227   60,204      54  10,914      15   3,022
----------------------------------------------------------------------
Systemwide
Sheraton                 192   72,999     112  31,290      20   6,618
Westin                    77   38,535      21   5,384       6   1,499
Four Points               99   17,991      17   2,411      11   1,613
W                         17    5,196       -       -       1     237
Luxury Collection         10    2,655      23   2,934       9     478
St. Regis                  6    1,243       2     256       -       -
Other                     13    5,373       -       -       -       -
                      ------- -------- ------- ------- ------- -------
Total Systemwide         414  143,992     175  42,275      47  10,445
                      ======= ======== ======= ======= ======= =======
 
 

                                            ASIA            Total
                                      --------------- ----------------
Owned                                  Hotels  Rooms   Hotels   Rooms
                                      ------- ------- ------- --------
Sheraton                                   3   1,028      57   23,872
Westin                                     -       -      36   13,634
Four Points                                1     630       7    1,783
W                                          -       -      12    4,294
Luxury Collection                          -       -       8    1,612
St. Regis                                  -       -       5    1,001
Other                                      -       -      12    2,806
                                      ------- ------- ------- --------
Total Owned                                4   1,658     137   49,002
Managed & UJV
Sheraton                                  45  16,267     169   60,260
Westin                                    12   4,935      56   27,692
Four Points                                2     387      12    2,160
W                                          2     353       8    1,492
Luxury Collection                          -       -      19    2,501
St. Regis                                  2     591       5    1,089
Other                                      2     296       3    2,863
                                      ------- ------- ------- --------
Total Managed & UJV                       65  22,829     272   98,057
Franchised
Sheraton                                  17   5,682     163   49,752
Westin                                     5   1,226      29   10,253
Four Points                                1     126     112   19,215
Luxury Collection                          -       -      15    1,954
                                      ------- ------- ------- --------
Total Franchised                          23   7,034     319   81,174
----------------------------------------------------------------------
Systemwide
Sheraton                                  65  22,977     389  133,884
Westin                                    17   6,161     121   51,579
Four Points                                4   1,143     131   23,158
W                                          2     353      20    5,786
Luxury Collection                          -       -      42    6,067
St. Regis                                  2     591      10    2,090
Other                                      2     296      15    5,669
                                      ------- ------- ------- --------
Total Systemwide                          92  31,521     728  228,233
                                      ======= ======= ======= ========


 
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Contact:
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Also See: Starwood Reports 15% Increase in 4th Qtr Profit; Net Income $100 million vs $87 million a Year Earlier, REVPAR for Same-Store Owned Hotels Worldwide Increased 11.1% / Hotel Operating Statistics / February 2005
Starwood to Open More Than 70 Hotels in the Next Two Years; Westin Fastest Growing Upper Upscale Brand in 2004 / February 2005


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