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Starwood Reports 4th Qtr Net Income of $79 million, Down 46% from a Year Earlier;
RevPAR Decreased 19.6% at Owned Hotels
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12 Month Hotel Operating Statistics

 



WHITE PLAINS, N.Y. January 29, 2009 - Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported fourth quarter 2008 financial results.

Fourth Quarter 2008 Highlights

     
  • Excluding special items, EPS from continuing operations was $0.49. Including special items, EPS from continuing operations was a loss of $0.25. 
  • Total Company Adjusted EBITDA was $273 million. 
  • Excluding special items, income from continuing operations was $88 million. Including special items, the loss from continuing operations was $45 million. 
  • Special items totaled $133 million of net charges ($0.74 per share) primarily related to $30 million of severance costs, $79 million of impairment charges from discontinued vacation ownership projects and $86 million of impairment charges primarily at five owned hotels in North America. 
  • Worldwide System-wide REVPAR for Same-Store Hotels decreased 12.1% (9.1% in constant dollars) compared to the fourth quarter of 2007. System-wide REVPAR for Same-Store Hotels in North America decreased 13.2% (11.7% in constant dollars). 
  • Management and franchise revenues decreased 4.7% compared to 2007. 
  • Worldwide REVPAR for Starwood branded Same-Store Owned Hotels decreased 19.6% (15.4% in constant dollars) compared to the fourth quarter of 2007. REVPAR for Starwood branded Same-Store Owned Hotels in North America decreased 18.6% (16.3% in constant dollars). 
  • Margins at Starwood branded Same-Store Owned Hotels Worldwide and in North America decreased 479 and 596 basis points, respectively, compared to the fourth quarter of 2007. 
  • Revenues from vacation ownership and residential sales decreased 48.7% compared to 2007. 
  • The Company signed 31 hotel management and franchise contracts in the quarter representing approximately 6,100 rooms. For the full year, the Company signed 147 hotel contracts representing approximately 35,700 rooms. 
Fourth Quarter 2008 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported a loss from continuing operations for the fourth quarter of 2008 of $0.25 per share compared to EPS of $0.74 in the fourth quarter of 2007. Excluding special items, which net to a charge of $133 million in 2008 and $11 million in 2007, EPS from continuing operations was $0.49 for the fourth quarter of 2008 compared to $0.79 in the fourth quarter of 2007. Excluding special items, the effective income tax rate in the fourth quarter of 2008 was 27.5% compared to 28.5% in the same period of 2007.

Special items in the fourth quarter of 2008 totaled $133 million of net charges ($0.74 per share) primarily related to $30 million of severance costs, $79 million of impairment charges from discontinued vacation ownership projects, and $86 million of impairment charges primarily at five owned hotels in North America.

The loss from continuing operations was $45 million in the fourth quarter of 2008 compared to income of $146 million in 2007. Excluding special items, income from continuing operations was $88 million for the fourth quarter of 2008 compared to $157 million in 2007.

Net income was $79 million and EPS was $0.43 in the fourth quarter of 2008 compared to $146 million and EPS of $0.74 in the fourth quarter of 2007. The 2008 results include a gain of $124 million (net of taxes) in discontinued operations, resulting from the sale of three hotels which were sold unencumbered by management or franchise agreements.

Frits van Paasschen, CEO said, “In the past year, we have made significant progress in reducing our costs, which enabled us to deliver better than expected quarterly results despite worse than expected REVPAR. Cost reductions completed so far should yield a $100 million reduction in our SG&A on a run-rate basis. Our extensive cost cutting efforts at the property level will help offset some of the margin erosion that results from declining REVPAR. We also scaled back our capital spending in all areas for 2009. While the outlook for 2009 remains challenging, we are prepared for the worst and confident that we will emerge from this downturn stronger than ever. We have experienced operating teams in the field, some of the strongest brands in the lodging industry, and a pipeline that will drive our global fee growth.”

Fourth Quarter 2008 Operating Results

Management and Franchise Revenues

Worldwide System-wide REVPAR for Same-Store Hotels decreased 12.1% (9.1%using constant dollars) compared to the fourth quarter of 2007. International System-wide REVPAR for Same-Store Hotels decreased 10.8% (6.1% using constant dollars). Worldwide System-wide REVPAR increased 8.6% in Africa and the Middle East. Worldwide System-wide REVPAR decreases for the other regions were: 3.3% in Latin America, 13.2% in North America, 14.4% in Asia Pacific, and 17.8% in Europe. Worldwide System-wide REVPAR decreases by brand were: Sheraton 9.6%, Westin 11.4%, Le Méridien 11.5%, Four Points by Sheraton 11.5%, W Hotels 21.1%, and St. Regis/Luxury Collection 23.3%.

Management fees, franchise fees and other income were $215 million, down $20 million, or 8.5%, from the fourth quarter of 2007. Management fees decreased 5.6% to $119 million and franchise fees decreased 12.2% to $36 million.

Approximately 57% of the Company’s management and franchise fees are generated in markets outside the United States.

During the fourth quarter of 2008, the Company signed 31 hotel management and franchise contracts representing approximately 6,100 rooms of which 27 are new builds and four are conversions from other brands. At December 31, 2008, the Company had over 425 hotels in the active pipeline representing approximately 100,000 rooms, driven by strong interest in all Starwood brands. Of these rooms, 64% are in the upper upscale and luxury segments and 62% are in international locations.

During the fourth quarter of 2008, 21 new hotels and resorts (representing approximately 4,200 rooms) entered the system, including the Westin Book Cadillac (Detroit, MI, 453 rooms), St. Regis Punta Mita (Nayarit, Mexico, 120 rooms), Aloft Beijing (Beijing, China, 186 rooms), and the Le Méridien Bangkok (Bangkok, Thailand, 282 rooms). Fifteen properties (representing approximately 2,700 rooms) were removed from the system during the quarter.

Owned, Leased and Consolidated Joint Venture Hotels

Worldwide REVPAR for Starwood branded Same-Store Owned Hotels decreased 19.6%. REVPAR at Starwood branded Same-Store Owned Hotels in North America decreased 18.6%. Internationally, Starwood branded Same-Store Owned Hotel REVPAR decreased 21.3% (down 9.1% using constant dollars).

Revenues at Starwood branded Same-Store Owned Hotels in North America decreased 17.4% while costs and expenses decreased 10.3% when compared to 2007. Margins at these hotels decreased 596 basis points.

Revenues at Starwood branded Same-Store Owned Hotels Worldwide decreased 18.6% (down 16.3% in constant dollars) while costs and expenses decreased 13.1% when compared to 2007. Margins at these hotels decreased 479 basis points.

Approximately 47% of Starwood’s Owned Hotel earnings (before depreciation) are generated from outside the United States.

Revenues at owned, leased and consolidated joint venture hotels were $504 million when compared to $631 million in 2007.

Vacation Ownership

Total vacation ownership reported revenues decreased 48.3% to $134 million when compared to 2007. Originated contract sales of vacation ownership intervals decreased 43.2% primarily due to an overall decline in demand and the sellout of the Company’s Westin Ka’anapali Ocean Resort North in Maui. The average price per vacation ownership unit sold decreased 31.1% to approximately $17,000, driven by a higher sales mix of lower-priced inventory, including a higher percentage of lower-priced biennial inventory in Hawaii. The number of contracts signed decreased 17.2% when compared to 2007.

The Company did not sell any vacation ownership receivables during the fourth quarter. Although conditions remain uncertain in the asset backed securities market, the Company is exploring a variety of avenues to sell vacation ownership receivables. However, given unpredictable market conditions, the Company does not expect any gains from securitizations in 2009.

As a result of the current economic climate and business conditions, the Company has undertaken a comprehensive review of its vacation ownership business. The Company has significantly scaled back its overhead to match reduced revenue expectations. This included closing five sales centers and terminating over 500 employees during the fourth quarter. In 2008 and early 2009, the Company closed nine sales centers and three call centers and terminated approximately 900 employees. Additionally, the Company has reset capital plans for this business. No new projects are being initiated and the Company has decided to discontinue further development of some projects that were in their early stages. As a result, development costs and land values at certain projects have been written down to their fair value, resulting in an impairment charge during the fourth quarter of 2008 of approximately $72 million.

Residential

Residential fees in the fourth quarter of 2008 totaled $2 million compared to $6 million in the same period in 2007.

Selling, General, Administrative and Other

Selling, general, administrative and other expenses decreased 35.6% to $96 million compared to the fourth quarter of 2007. The decrease was primarily due to the Company's continued focus on reducing its cost structure.

In the fourth quarter, the Company completed the second phase of its overhead cost reduction program, making significant reductions across several corporate departments and divisional headquarters. These actions have resulted in expected run rate savings of approximately $100 million. The Company anticipates completing the review of other functional areas, and implementing reductions in those areas, by the end of the first quarter of 2009.

Restructuring Charges and Other Special Charges, Net

During the fourth quarter of 2008, the Company recorded a $109 million charge, including approximately $30 million of severance and related charges associated with its ongoing initiative of rationalizing its cost structure in light of the current economic climate and the decline in activity in its business units. The charge also included impairment charges of approximately $79 million primarily related to the Company’s decision to not develop certain vacation ownership projects.

Loss on Asset Dispositions and Impairments, Net

During the fourth quarter of 2008, the Company recorded impairment charges of $64 million related to five owned hotels in which the carrying values exceeded their estimated fair values. In addition, the Company recorded a $22 million impairment charge to write down its economic retained interests in securitized vacation ownership notes receivable based on a change to the expected future cash flows as a result of the current economic climate.

Asset Sales

During the fourth quarter of 2008, the Company sold three hotels in Venice, Italy for net cash proceeds of $206 million. These hotels were sold unencumbered by any management or franchise agreement and the Company recorded a gain on the sale of these hotels of $124 million (net of taxes) in discontinued operations. Additionally, during the fourth quarter of 2008, the Company sold the Westin Turnberry for net cash proceeds of $99 million. This sale was subject to a long-term management agreement and the Company recorded a deferred gain of $27 million in connection with the sale.

Capital

Gross capital spending during the quarter included approximately $89 million in renovations of hotel assets, including construction capital, at the Sheraton Steamboat Resort, Sheraton Buenos Aires, W Times Square and Phoenician Resort. Investment spending on gross vacation ownership interest (“VOI”) and residential inventory was $98 million, primarily in Bal Harbour, Maui, Orlando and Cancun.

Share Repurchase

During the fourth quarter of 2008, the Company did not repurchase any shares. In the twelve months ended December 31, 2008, the Company repurchased approximately 13.6 million shares at a total cost of approximately $593 million. The Company had approximately 183 million shares outstanding (including partnership units) at December 31, 2008.

Dividend

In November, 2008, the Company’s Board of Directors declared its annual dividend of $0.90 per share. The dividend was paid by the Company on January 9, 2009 to holders of record on December 31, 2008.

IRS Tax Settlement

In January 2009, the Company and the IRS reached an agreement in principle to settle the litigation pertaining to the tax treatment of the Company’s 1998 disposition of World Directories, Inc. Under the proposed settlement, the Company expects to receive a refund of over $200 million as a result of tax payments previously made. The Company expects to finalize the details of the agreement and obtain the refund during the summer of 2009.

Balance Sheet

At December 31, 2008, the Company had total debt of $4.008 billion and cash and cash equivalents of $491 million (including $102 million of restricted cash), or net debt of $3.517 billion, compared to net debt of $3.240 billion at the end of 2007.

At December 31, 2008, debt was approximately 59% fixed rate and 41% floating rate and its weighted average maturity was 3.9 years with a weighted average interest rate of 5.24%. The Company had cash (including total restricted cash) and availability under the domestic and international revolving credit facility of approximately $2.070 billion.

Results for the Twelve Months Ended December 31, 2008

EPS from continuing operations decreased to $1.37 compared to $2.57 in 2007. Excluding special items, EPS from continuing operations was $2.19 compared to $2.76 in 2007. Excluding special items, income from continuing operations was $406 million compared to $582 million in 2007. Net income was $329 million and EPS was $1.77 compared to $542 million and $2.57, respectively, in 2007. Total Company Adjusted EBITDA, which was impacted by the sale or closure of 19 hotels since the beginning of 2007, was $1.157 billion compared to $1.356 billion in 2007.

Outlook

For the full year 2009:

At the current time, given significant uncertainty in the global economy, it is very difficult to provide any definitive guidance looking out four quarters. What the Company can provide are some broad parameters being used for 2009 planning purposes. In the hotel business, the Company is planning on a significant decline in Worldwide REVPAR. The Company also anticipates another difficult year in the vacation ownership business with declines in originated sales. As previously discussed, the Company’s extensive cost reduction activities at the hotel level, in the vacation ownership business and in corporate overhead have offset some of the impact of declining revenues. The Company is also significantly scaling back capital expenditures for owned hotels and the vacation ownership business.

     
  • Assuming REVPAR at Same-Store Company Operated Hotels Worldwide REVPAR declines 12% and REVPAR at Branded Same-Store Owned Hotels declines 15% at today’s exchange rates: 
-- Adjusted EBITDA would be approximately $875 million. 
  
-- EPS before special items would be approximately $1.10. 
  
-- Same-Store Branded Owned Hotel EBITDA will decline approximately 35% versus 2008. 
  
-- Management and Franchise revenues will decline approximately 10%. 
  
-- Operating income from our vacation ownership and residential business will be down approximately $50 million. 
  
-- Selling, General and Administrative expenses will decline approximately $50 million. 
  
-- Income from continuing operations, before special items, is expected to be approximately $200 million, reflecting an effective tax rate of approximately 31%. 
  • Full year capital expenditures (excluding vacation ownership and residential inventory) would be approximately $150 million for maintenance, renovation and technology. In addition, in flight investment projects, including Bal Harbour, and prior commitments for joint ventures and other investments will total approximately $175 million. 
  • Full year depreciation and amortization would be approximately $355 million. 
  • Full year interest expense would be approximately $232 million and cash taxes of approximately $100 million. 
  • Vacation ownership and Residential, excluding the Bal Harbour project, is expected to generate approximately $25 million in positive cash flow, not inclusive of any sales of timeshare receivables. 
  • The Company expects to open 80 to 100 hotels in 2009 (representing approximately 20,000 rooms). 
For the three months ended March 31, 2009:
     
  • Adjusted EBITDA is expected to be $145 million to $160 million assuming: 
-- REVPAR decline at Same-Store Company Operated Hotels Worldwide of 17% to 19% (14% to 16% in constant dollars). 
  
-- REVPAR decline at Branded Same-Store Owned Hotels in North America of 27% to 30%. 
  
-- Management and franchise revenues will be down approximately 15%. 
  
-- Operating income from our vacation ownership and residential businesses will be down $10 million to $15 million. 
  • Income from continuing operations, before special items, is expected to be approximately $3 million to $13 million, reflecting an effective tax rate of approximately 31%. 
  • EPS before special items is expected to be approximately $0.02 to $0.07.. 
Special Items

The Company’s special items netted to a charge of $133 million (after tax) in the fourth quarter of 2008 compared to a charge of $11 million (after-tax) in the same period of 2007.

The following represents a reconciliation of income from continuing operations before special items to income from continuing operations including special items (in millions, except per share data):
Three Months Ended
Year Ended
December 31,
December 31,
   2008          2007   
   2008          2007   






  
88    
157     Income from continuing operations before special items  $ 406    
582    
0.49    
0.79     EPS before special items  2.19    
2.76    






  



Special Items



(109 

(5  Restructuring and other special charges, net (a)
(141 

(53
   (86 
   (24  Loss on asset dispositions and impairments, net (b)    (98 
   (44 

(195 

(29  Total special items – pre-tax
(239 

(97 

52 



Income tax benefit for special items (c)
77 


38 
   10    
   17     Income tax benefits related to hotel sales (d)    10    
   20    
   (133 
   (11  Total special items – after-tax     (152 
   (39 






  
(45 
146     (Loss)/income from continuing operations  254    
543    
(0.25  )
0.74     EPS including special items  1.37    
2.57    






  
(a) During the three months ended December 31, 2008, the Company recorded $30 million in restructuring charges, consisting primarily of severance costs, related to the ongoing initiative to streamline operations and eliminate costs.  Additionally, the Company recorded other special charges of $79 million primarily related to impairment charges associated with the write down of two vacation ownership projects that the Company no longer plans to develop as a result of the current economic crisis and its expected long-term impact on this business.           
  
The full year ended December 31, 2008 includes additional restructuring costs, primarily related to severance costs incurred in prior quarters. 

  

For the three months ended December 31, 2007, the charge primarily relates to additional costs associated with the Sheraton Bal Harbour Resort, which was demolished and is being converted into a St. Regis Hotel with residences and fractional units. 

  

The full year ended December 31, 2007 includes the accelerated depreciation of fixed assets at the Sheraton Bal Harbour, partially offset by a $2 million refund of insurance proceeds related to a retired executive. 

  

(b) During the three months ended December 31, 2008, the Company recorded impairment charges of $64 million on five owned hotels in which the carrying values exceeded their estimated fair values and a $22 million impairment charge to write down its retained economic interests in securitized vacation ownership notes receivable. 

  

The net loss for the full year ended December 31, 2008 also includes an impairment charge of $11 million associated with the Company’s equity interest in a joint venture that owns land that it no longer intends to develop. 

  

During the three months ended December 31, 2007, the charge primarily reflects losses of $20 million related to four hotels which were sold in fourth quarter of 2007. 

  

The loss for the full year ended December 31, 2007 also includes an $18 million loss on the sale of four additional hotels and a $23 million impairment on two hotels sold in the fourth quarter, offset by a $15 million gain on the sale of assets in which the Company held minority interest and insurance proceeds of $6 million related to owned hotels damaged by hurricanes and floods in prior years. 

  

(c) In 2008 and 2007, the benefit relates to the favorable impact of capital loss utilization and tax benefits at the statutory rate for the special items. 

  

(d) Income tax benefit relates to adjustments to deferred taxes associated with deferred gains on hotel sales. 

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 will be conducting a conference call to discuss the fourth quarter financial results at 10:30 a.m. (EST) today at (913) 312-0422. The conference call will be available through simultaneous web cast in the Investor Relations/Press Releases section of the Company’s website at http://www.starwoodhotels.com. A replay of the conference call will also be available from 1:30 p.m. (EST) today through February 5, 2009 at 12:00 midnight (EST) on both the Company’s website and via telephone replay at (719) 457-0820 (access code 6866584).

Definitions

All references to EPS, unless otherwise noted, reflect earnings per diluted share from continuing operations. All references to “net capital expenditures” mean gross capital expenditures for timeshare and fractional inventory net of cost of sales. EBITDA represents net income before interest expense, taxes, depreciation and amortization. The Company believes that EBITDA is a useful measure of the Company’s operating performance due to the significance of the Company’s long-lived assets and level of indebtedness. EBITDA is a commonly used measure of performance in its industry which, when considered with GAAP measures, the Company believes gives a more complete understanding of the Company’s operating performance. It also facilitates comparisons between the Company and its competitors. The Company’s management has historically adjusted EBITDA (i.e., “Adjusted EBITDA”) when evaluating operating performance for the total Company as well as for individual properties or groups of properties because the Company believes that the inclusion or exclusion of certain recurring and non-recurring items, such as revenues and costs and expenses from hotels sold, restructuring and other special charges and gains and losses on asset dispositions and impairments, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results. The Company’s management also uses Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions and it is used in the annual budget process. Due to guidance from the Securities and Exchange Commission, the Company now does not reflect such items when calculating EBITDA; however, the Company continues to adjust for these special items and refers to this measure as Adjusted EBITDA. The Company has historically reported this measure to its investors and believes that the continued inclusion of Adjusted EBITDA provides consistency in its financial reporting and enables investors to perform more meaningful comparisons of past, present and future operating results and provides a means to evaluate the results of its core on-going operations. EBITDA and Adjusted EBITDA are not intended to represent cash flow from operations as defined by GAAP and such metrics should not be considered as an alternative to net income, cash flow from operations or any other performance measure prescribed by GAAP. The Company’s calculation of EBITDA and Adjusted EBITDA may be different from the calculations used by other companies and, therefore, comparability may be limited.

All references to Same-Store Owned Hotels reflect the Company’s owned, leased and consolidated joint venture hotels, excluding condo hotels, hotels sold to date and hotels undergoing significant repositionings or for which comparable results are not available (i.e., hotels not owned during the entire periods presented or closed due to seasonality or hurricane damage). References to Company Operated Hotel metrics (e.g. REVPAR) reflect metrics for the Company’s owned and managed hotels. References to System-Wide metrics (e.g. REVPAR) reflect metrics for the Company’s owned, managed and franchised hotels. REVPAR is defined as revenue per available room. ADR is defined as average daily rate.

All references to contract sales or originated sales reflect vacation ownership sales before revenue adjustments for percentage of completion accounting methodology.

All references to management and franchise revenues represent base and incentive fees, franchise fees, amortization of deferred gains resulting from the sales of hotels subject to long-term management contracts and termination fees offset by payments by Starwood under performance and other guarantees.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with approximately 940 properties in more than 100 countries and 155,000 employees at its owned and managed properties. Starwood® Hotels is a fully integrated owner, operator and franchisor of hotels and resorts with the following internationally renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, aloft(SM), and element(SM). Starwood Hotels also owns Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, please visit www.starwoodhotels.com.
** Please contact Starwood’s new, toll-free media hotline at (866) 4-STAR-PR
(866-478-2777) for photography or additional information.** 

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties and other factors that may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Further results, performance and achievements may be affected by general economic conditions including the impact of war and terrorist activity, business and financing conditions, foreign exchange fluctuations, cyclicality of the real estate (including residential) and the hotel and vacation ownership businesses, operating risks associated with the hotel, vacation ownership and residential businesses, relationships with associates and labor unions, customers and property owners, the impact of the internet reservation channels, our reliance on technology, domestic and international political and geopolitical conditions, competition, governmental and regulatory actions (including the impact of changes in U.S. and foreign tax laws and their interpretation), travelers’ fears of exposure to contagious diseases, risk associated with the level of our indebtedness, risk associated with potential acquisitions and dispositions and the introduction of new brand concepts and other risks and uncertainties. These risks and uncertainties are presented in detail in our filings with the Securities and Exchange Commission. Future vacation ownership units indicated in this press release include planned units on land owned by the Company or by joint ventures in which the Company has an interest that have received all major governmental land use approvals for the development of vacation ownership resorts. There can also be no assurance that such units will in fact be developed and, if developed, the time period of such development (which may be more than several years in the future). Some of the projects may require additional third-party approvals or permits for development and build out and may also be subject to legal challenges as well as a commitment of capital by the Company. The actual number of units to be constructed may be significantly lower than the number of future units indicated. There can also be no assurance that agreements will be entered into for the hotels in the Company’s pipeline and, if entered into, the timing of any agreement and the opening of the related hotel. Although we believe the expectations reflected in forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
  
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)


  
  
Three Months Ended


Year Ended
December 31,


December 31,

  
   %



  
   %
   2008   
   2007   
Variance


   2008   
   2007   
Variance






Revenues





504 

631 

(20.1 
Owned, leased and consolidated joint venture hotels 
2,259 

2,429 

(7.0 

136 


265 

(48.7 
Vacation ownership and residential sales and services 

749 


1,025 

(26.9 

215 


235 

(8.5 
Management fees, franchise fees and other income 

857 


834 

2.8 
   478    
   479    
(0.2 
Other revenues from managed and franchised properties (a)
   2,042    
   1,865    
9.5    

1,333 


1,610 

(17.2 



5,907 


6,153 

(4.0 






Costs and Expenses






393 


460 

14.6 

Owned, leased and consolidated joint venture hotels 

1,722 


1,805 

4.6 

111 


195 

43.1 

Vacation ownership and residential 

583 


758 

23.1 

96 


149 

35.6 

Selling, general, administrative and other 

477 


508 

6.1 

109 




n/m 

Restructuring and other special charges, net 

141 


53 

n/m 

75 


74 

(1.4 
Depreciation 

291 


280 

(3.9 






― 
Amortization 

32 


26 

(23.1 
   478    
   479    
0.2    
Other expenses from managed and franchised properties (a)
   2,042    
   1,865    
(9.5 

1,268 


1,368 

7.3 




5,288 


5,295 

0.1 

65 


242 

(73.1 
Operating income 

619 


858 

(27.9 




12 

(83.3 
Equity earnings and gains and losses from unconsolidated ventures, net 

16 


66 

(75.8

(57 

(39 
(46.2 
Interest expense, net of interest income of $0, $9, $3 and $21 

(207 

(147 
(40.8 
   (86 
   (24 
n/m    
Loss on asset dispositions and impairments, net 
   (98 
   (44 
n/m    

(76 

191 

n/m 

(Loss)/income from continuing operations before taxes and minority equity 

330 


733 

(55.0 

30 


(44 
n/m 

Income tax benefit (expense) 

(76 

(189 
59.8 
     
   (1 
n/m    
Minority equity in net income 
― 
   (1 
n/m    

(45 

146 

n/m 

(Loss)/income from continuing operations 

254 


543 

(53.2 
  
  


124 

  
  


― 


  


n/m 

  
Discontinued operations: 

Net gain/(loss) on dispositions 


   ( 75    
   ( (1 
n/m    
79    
146    
(45.9 
Net income 
329    
542    
(39.3 






Earnings (Loss) Per Share – Basic





(0.25 
0.77 

n/m 

Continuing operations 
1.40 

2.67 

(47.6 
   0.69    
   —    
n/m    
Discontinued operations 
   0.41    
   —    
n/m    
0.44    
0.77    
(42.9 
Net income 
1.81    
2.67    
(32.2 






Earnings (Loss) Per Share – Diluted





(0.25 
0.74 

n/m 

Continuing operations 
1.37 

2.57 

(46.7 
   0.68    
   —    
n/m    
Discontinued operations 
   0.40    
   —    
n/m    
0.43    
0.74    
(41.9 
Net income 
1.77    
2.57    
(31.1 












  
   178    
   192    


Weighted average number of Shares 
   181    
   203    

   181    
   198    


Weighted average number of Shares assuming dilution 
   185    
   211    













  
(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. 
  
n/m = not meaningful 
  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
  
CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

  


  
  


December 31,
December 31,


   2008   
   2007   


(unaudited) 

Assets



Current assets: 



Cash and cash equivalents 
389 

151 
Restricted cash 

96 


196 
Accounts receivable, net of allowance for doubtful accounts of $49 and $50 

552 


627 
Inventories 

986 


714 
Prepaid expenses and other 
   143    
   136    
Total current assets 

2,166 


1,824 
Investments 

372 


423 
Plant, property and equipment, net 

3,599 


3,850 
Assets held for sale (a)

10 


— 
Goodwill and intangible assets, net 

2,235 


2,302 
Deferred tax assets 

553 


729 
Other assets (b)
   768    
   494    


9,703    
9,622    
Liabilities and Stockholders’ Equity



Current liabilities: 



Short-term borrowings and current maturities of long-term debt (c)
506 


Accounts payable 

171 


201 
Accrued expenses 

1,274 


1,175 
Accrued salaries, wages and benefits 

346 


405 
Accrued taxes and other 
   391    
   315    
Total current liabilities 

2,688 


2,101 
Long-term debt (c)

3,502 


3,590 
Deferred tax liabilities 

26 


28
Other liabilities 
   1,843    
   1,801    



8,059 


7,520 
Minority interest 

23 


26 
Commitments and contingencies 



Stockholders’ equity: 



Corporation common stock; $0.01 par value; authorized 1,000,000,000 shares; outstanding 183,005,332 and 190,998,585 shares at December 31, 2008 and December 31, 2007, respectively 





Additional paid-in capital 

493 


868 
Accumulated other comprehensive loss 

(391 

(147 
Retained earnings 
   1,517    
   1,353    
Total stockholders’ equity 
   1,621    
   2,076    


9,703    
9,622    




  
(a) Includes one hotel expected to be sold in 2009. 
  
(b) Includes restricted cash of $6 million and $8 million at December 31, 2008 and December 31, 2007, respectively. 

  

(c) Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $642 million and $572 million at December 31, 2008 and December 31, 2007, respectively. 

  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
  
Non-GAAP to GAAP Reconciliations – Historical Data

(in millions) 


  
  
Three Months Ended


Year Ended
December 31,


December 31,

  
   %





  

  
%
2008
2007
Variance


   2008   
   2007
Variance












  






Reconciliation of Net Income to EBITDA and Adjusted EBITDA





$ 79 
$ 146 
(45.9 
Net income 
329 

542 
(39.3 
64 
54 
18.5 

Interest expense(a)

233 


188 
23.9 
(24) 
44 
n/m 

Income tax expense(b)

131 


190 
(31.1 
83 
81 
2.5 

Depreciation(c)

321 


309 
3.9 


(14.3 
Amortization (d)
   34    
   30 
13.3    
208 
332 
(37.3 
EBITDA 

1,048 


1,259 
(16.8 
86 
24 
n/m 

Loss on asset dispositions and impairments, net 

98 


44 
n/m 
(130) 
― 
n/m 

Discontinued operations 

(130 
― 
n/m 
109 

n/m    
Restructuring and other special charges, net 
   141    
   53
n/m    
$ 273 
$ 361 
(24.4 
Adjusted EBITDA 
1,157    
1,356 
(14.7 












  
(a) Includes $7 million and $6 million of interest expense related to unconsolidated joint ventures for the three months ended December 31, 2008 and 2007, respectively, and $23 million and $20 million for the year ended December 31, 2008 and 2007, respectively. 
  
(b) Includes $6 million and $0 million of tax expense recorded in discontinued operations for the three months ended December 31, 2008 and 2007, respectively, and $55 million and $1 million for the year ended December 31, 2008 and 2007, respectively. 

  

(c) Includes $8 million and $7 million of Starwood’s share of depreciation expense of unconsolidated joint ventures for the three months ended December 31, 2008 and 2007, respectively, and $30 million and $29 million for the year ended December 31, 2008 and 2007, respectively. 

  

(d) Includes $0 million and $1 million of Starwood’s share of amortization expense of unconsolidated joint ventures for the three months ended December 31, 2008 and 2007, respectively, and $2 million and $4 million for the year ended December 31, 2008 and 2007, respectively. 

  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
  
Non-GAAP to GAAP Reconciliations – Future Performance

(In millions)

  
  
  

Low Case


High Case

Three Months Ended


Three Months Ended

March 31, 2009


March 31, 2009



  




Net income
13 


52 
Interest expense 

52 


— 
Income tax expense 


   90 
Depreciation and amortization 
   90 

145 

EBITDA 

160 







  
  




Year Ended
December 31, 2009





  
  


Net income

200 
  


Interest expense 


232 
  


Income tax expense 


88 
  


Depreciation and amortization 

   355 
  


EBITDA 

875 






  

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

(In millions)



  
  

  
  
  
  

Three Months Ended




Year Ended

December 31,




December 31,





%

Same-Store Owned Hotels ((1))




%
2008
2007
Variance   
Worldwide
2008
2007
Variance   














  







Revenue 






$ 462 
$ 565 
(18.2 
Same-Store Owned Hotels 
2,015 
2,046 
(1.5 

26 
(76.9 
Hotels Sold or Closed in 2008 and 2007 (19 hotels) 

77 

216 
(64.4 
36 
40 
(10.0 
Hotels Without Comparable Results (10 hotels) 

158 

160 
(1.3 
― 
― 
―    
Other ancillary hotel operations 
  
  
28.6    
$ 504 
$ 631 
(20.1 
Total Owned, Leased and Consolidated Joint Venture Hotels Revenue 
2,259 
2,429 
(7.0 














  







Costs and Expenses 






$ 351 
$ 400 
12.3 

Same-Store Owned Hotels 
1,511 
1,492 
(1.3 

27 
70.4 

Hotels Sold or Closed in 2008 and 2007 (19 hotels) 

70 

180 
61.1 
33 
33 
― 

Hotels Without Comparable Results (10 hotels) 

135 

128 
(5.5 

― 
n/m    
Other ancillary hotel operations 
  
  
(20.0 
$ 393 
$ 460 
14.6    
Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses 
1,722 
1,805 
4.6    














  














  
Three Months Ended



Year Ended
December 31,
  

December 31,   




%

Same-Store Owned Hotels




%
2008
2007
Variance   
North America
   2008
   2007
Variance   














  







Revenue 






$ 298 
$ 358 
(16.8 
Same-Store Owned Hotels 
1,279 
1,308 
(2.2 
― 
17 
n/m 

Hotels Sold or Closed in 2008 and 2007 (15 hotels) 

17 

148 
(88.5 
29 
31 
(6.5 
Hotels Without Comparable Results (8 hotels) 
   131 
   131 
―    
$ 327 
$ 406 
(19.5 
Total Owned, Leased and Consolidated Joint Venture Hotels Revenue 
1,427 
1,587 
(10.1 














  







Costs and Expenses 






$ 230 
$ 254 
9.4 

Same-Store Owned Hotels 
968 
961 
(0.7 

15 
80.0 

Hotels Sold or Closed in 2008 and 2007 (15 hotels) 

17 

121 
86.0 
26 
26 
―    
Hotels Without Comparable Results (8 hotels) 
   111 
   104 
(6.7 
$ 259 
$ 295 
12.2    
Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses 
1,096 
1,186 
7.6    














  





  
Three Months Ended


Year Ended
December 31,   

December 31,   




%

Same-Store Owned Hotels




%
2008
2007
Variance   
International
   2008
   2007
Variance   














  







Revenue 






$ 164 
$ 207 
(20.8 
Same-Store Owned Hotels 
736 
738 
(0.3 


(33.3 
Hotels Sold or Closed in 2008 and 2007 (4 hotels) 

60 

68 
(11.8 


(22.2 
Hotels Without Comparable Results (2 hotels) 

27 

29 
(6.9 
― 
― 
―    
Other ancillary hotel operations 
  
  
28.6    
$ 177 
$ 225 
(21.3 
Total Owned, Leased and Consolidated Joint Venture Hotels Revenue 
832 
842 
(1.2 














  







Costs and Expenses 






$ 121 
$ 146 
17.1 

Same-Store Owned Hotels 
543 
531 
(2.3 

12 
58.3 

Hotels Sold or Closed in 2008 and 2007 (4 hotels) 

53 

59 
10.2 


― 

Hotels Without Comparable Results (2 hotels) 

24 

24 
― 

― 
n/m    
Other ancillary hotel operations 
  
  
(20.0 
$ 134 
$ 165 
18.8    
Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses 
626 
619 
(1.1 














  
(1) Same-Store Owned Hotel Results exclude 19 hotels sold or closed in 2008 and 2007 and 10 hotels without comparable results. 


  
  
Starwood Hotels & Resorts Worldwide, Inc.
Systemwide(1) Statistics - Same Store
For the Three Months Ended December 31,
UNAUDITED


  
  
  
  
  
  
  
  
  



Systemwide - Worldwide
Systemwide - North America
Systemwide - International



2008
2007
Var.
2008
2007
Var.
2008
2007
Var.



















  



















  
TOTAL HOTELS


















REVPAR ($) 
110.11 

125.25 

-12.1 
104.23 

120.07 

-13.2 
117.79 

132.02 

-10.8 

ADR ($) 
176.98 

187.05 

-5.4 
168.96 

179.84 

-6.0 
187.23 

196.38 

-4.7 

Occupancy (%) 
62.2 
67.0 
-4.8 

61.7 
66.8 
-5.1 

62.9 
67.2 
-4.3 



















  



















  
SHERATON


















REVPAR ($) 
96.72 

107.00 

-9.6 
89.27 

102.39 

-12.8 
105.76 

112.62 

-6.1 

ADR ($) 
157.15 

160.92 

-2.3 
147.31 

154.97 

-4.9 
168.67 

168.05 

0.4 

Occupancy (%) 
61.5 
66.5 
-5.0 

60.6 
66.1 
-5.5 

62.7 
67.0 
-4.3 



















  



















  
WESTIN



















REVPAR ($) 
118.61 

133.87 

-11.4 
115.36 

129.22 

-10.7 
127.84 

147.09 

-13.1 

ADR ($) 
187.59 

199.90 

-6.2 
182.80 

192.16 

-4.9 
201.07 

222.23 

-9.5 

Occupancy (%) 
63.2 
67.0 
-3.8 

63.1 
67.2 
-4.1 

63.6 
66.2 
-2.6 



















  



















  
ST. REGIS/LUXURY COLLECTION

















REVPAR ($) 
185.59 

242.09 

-23.3 
211.65 

253.07 

-16.4 
169.10 

235.16 

-28.1 

ADR ($) 
331.39 

376.33 

-11.9 
366.05 

391.05 

-6.4 
308.27 

366.96 

-16.0 

Occupancy (%) 
56.0 
64.3 
-8.3 

57.8 
64.7 
-6.9 

54.9 
64.1 
-9.2 



















  



















  
LE MERIDIEN


















REVPAR ($) 
143.61 

162.29 

-11.5 
220.47 

265.22 

-16.9 
136.79 

153.14 

-10.7 

ADR ($) 
218.31 

232.41 

-6.1 
297.78 

350.03 

-14.9 
210.28 

220.98 

-4.8 

Occupancy (%) 
65.8 
69.8 
-4.0 

74.0 
75.8 
-1.8 

65.1 
69.3 
-4.2 



















  



















  
W



















REVPAR ($) 
197.57 

250.33 

-21.1 
195.49 

251.14 

-22.2 
217.53 

242.53 

-10.3 

ADR ($) 
301.80 

337.90 

-10.7 
296.03 

333.38 

-11.2 
362.79 

390.51 

-7.1 

Occupancy (%) 
65.5 
74.1 
-8.6 

66.0 
75.3 
-9.3 

60.0 
62.1 
-2.1 



















  



















  
FOUR POINTS


















REVPAR ($) 
67.09 

75.78 

-11.5 
62.76 

70.60 

-11.1 
77.09 

87.76 

-12.2 

ADR ($) 
108.91 

114.85 

-5.2 
103.57 

108.44 

-4.5 
120.63 

129.04 

-6.5 

Occupancy (%) 
61.6 
66.0 
-4.4 

60.6 
65.1 
-4.5 

63.9 
68.0 
-4.1 



















  



















  
OTHER



















REVPAR ($) 
98.32 

117.68 

-16.5 
98.32 

117.68 

-16.5 






ADR ($) 
163.39 

186.01 

-12.2 
163.39 

186.01 

-12.2 






Occupancy (%) 
60.2 
63.3 
-3.1 

60.2 
63.3 
-3.1 

























  



















  



















  
(1) Includes same store owned, leased, managed, and franchised hotels 
  
  
Starwood Hotels & Resorts Worldwide, Inc.
Worldwide Hotel Results - Same Store
For the Three Months Ended December 31,
UNAUDITED


  
  
  
  
  
  



Systemwide (1)

Company Operated (2)



2008
2007
Var.
2008
2007
Var.













  













  
TOTAL WORLDWIDE












REVPAR ($) 
110.11 

125.25 

-12.1 
126.75 

143.24 

-11.5 

ADR ($) 
176.98 

187.05 

-5.4 
198.03 

208.52 

-5.0 

Occupancy (%) 
62.2 
67.0 
-4.8 

64.0 
68.7 
-4.7 













  













  
NORTH AMERICA












REVPAR ($) 
104.23 

120.07 

-13.2 
131.14 

152.49 

-14.0 

ADR ($) 
168.96 

179.84 

-6.0 
201.82 

216.83 

-6.9 

Occupancy (%) 
61.7 
66.8 
-5.1 

65.0 
70.3 
-5.3 













  













  
EUROPE













REVPAR ($) 
125.75 

153.03 

-17.8 
135.95 

167.17 

-18.7 

ADR ($) 
207.87 

232.03 

-10.4 
220.62 

248.80 

-11.3 

Occupancy (%) 
60.5 
66.0 
-5.5 

61.6 
67.2 
-5.6 













  













  
AFRICA & MIDDLE EAST












REVPAR ($) 
154.85 

142.61 

8.6 
158.11 

143.37 

10.3 

ADR ($) 
219.96 

204.85 

7.4 
224.01 

205.92 

8.8 

Occupancy (%) 
70.4 
69.6 
0.8 

70.6 
69.6 
1.0 













  













  
ASIA PACIFIC












REVPAR ($) 
103.56 

120.96 

-14.4 
98.90 

112.78 

-12.3 

ADR ($) 
165.46 

178.88 

-7.5 
162.08 

170.30 

-4.8 

Occupancy (%) 
62.6 
67.6 
-5.0 

61.0 
66.2 
-5.2 













  













  
LATIN AMERICA












REVPAR ($) 
87.02

90.01 

-3.3 
97.98 

98.21 

-0.2 

ADR ($) 
144.96 

136.18 

6.4 
160.49 

146.34 

9.7 

Occupancy (%) 
60.0 
66.1 
-6.1 

61.1 
67.1 
-6.0 













  













  













  
(1) Includes same store owned, leased, managed, and franchised hotels 
(2) Includes same store owned, leased, and managed hotels 
  
  
Starwood Hotels & Resorts Worldwide, Inc.
Owned Hotel Results - Same Store (1)
For the Three Months Ended December 31,
UNAUDITED
  
  
  
  
  
  
  
  
  
  



















  



WORLDWIDE
NORTH AMERICA
INTERNATIONAL



2008
2007
Var.
2008
2007
Var.
2008
2007
Var.



















  
TOTAL HOTELS
59 Hotels
31 Hotels
28 Hotels

REVPAR ($) 
148.99 

184.97 

-19.5 
160.47 

196.69 

-18.4 
131.16 

166.76 

-21.3 

ADR ($) 
226.42 

256.36 

-11.7 
238.54 

269.32 

-11.4 
206.47 

235.57 

-12.4 

Occupancy (%) 
65.8 
72.2 
-6.4 

67.3 
73.0 
-5.7 

63.5 
70.8 
-7.3 



















  

Total Revenue 
461,938 

564,785 

-18.2 
297,895 

358,052 

-16.8 
164,043 

206,733 

-20.6 

Total Expenses 
350,809 

399,972 

-12.3 
230,086 

253,870 

-9.4 
120,723 

146,102 

-17.4 



















  



















  



















  



















  
BRANDED HOTELS
53 Hotels
25 Hotels
28 Hotels

REVPAR ($) 
154.21 

191.88 

-19.6 
171.73 

210.97 

-18.6 
131.16 

166.76 

-21.3 

ADR ($) 
232.30 

262.61 

-11.5
250.50 

282.05 

-11.2 
206.47 

235.57 

-12.4 

Occupancy (%) 
66.4 
73.1 
-6.7 

68.6 
74.8 
-6.2 

63.5 
70.8 
-7.3 



















  

Total Revenue 
431,741 

530,687 

-18.6 
267,698 

323,954 

-17.4 
164,043 

206,733 

-20.6 

Total Expenses 
323,300 

371,958 

-13.1 
202,577 

225,856 

-10.3 
120,723 

146,102 

-17.4 



















  



















  



















  
(1) Hotel Results exclude 19 hotels sold or closed and 10 hotels without comparable results during 2007 & 2008 
  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended December 31,
UNAUDITED ($ millions)
  
  
  
  
  









  



Worldwide



2008
2007
$ Variance
% Variance









  
Management Fees: 








Base Fees 
71 
75 
-4 
-5.3 

Incentive Fees 
48 
51 
-3 
-5.9 
Total Management Fees
119 
126 
-7 
-5.6 









  
Franchise Fees
36 
41 
-5 
-12.2 









  
Total Management & Franchise Fees
155 
167 
-12 
-7.2 









  
Other Management & Franchise Revenues (1) 
26 
23 

13.0 









  
Total Management & Franchise Revenues
181 
190 
-9 
-4.7 









  
Other (2) 
34 
45 
-11 
-24.4 









  
Management Fees, Franchise Fees & Other Income
215 
235 
-20 
-8.5 









  









  
(1) Other Management & Franchise Revenues primarily includes the amortization of deferred gains of approximately $20 million in 2008 and $21 million in 2007 resulting from the sales of hotels subject to long-term management contracts and termination fees. 









  
(2) Amount includes revenues from the Company's Bliss spa and product business and other miscellaneous revenue. 
  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Three Months Ended December 31,
UNAUDITED ($ millions)

  
  
  






  






  


2008
2007
% Variance






  
Originated Sales Revenues (1) -- Vacation Ownership Sales 
92 

162 

(43.2  %) 
Other Sales and Services Revenues (2)
51 

47 

8.5 
Deferred Revenues -- Percentage of Completion 
18 

59 

n/m 
Deferred Revenues -- Other (3)
(27 
(9 
n/m    
Vacation Ownership Sales and Services Revenues 
134 

259 

(48.3  %) 
Residential Sales and Services Revenues 
  
  
n/m    
Total Vacation Ownership & Residential Sales and Services Revenues 
136    
265   
(48.7  %) 






  
Originated Sales Expenses (4) -- Vacation Ownership Sales 
51 

104 

51.0 
Other Expenses (5)
46 

56 

17.9 
Deferred Expenses -- Percentage of Completion 


25 

n/m 
Deferred Expenses -- Other 
  
  
n/m    
Vacation Ownership Expenses 
109 

191 

42.9 
Residential Expenses 
  
  
50.0 
Total Vacation Ownership & Residential Expenses 
111    
195    
43.1 






  






  
(1) Timeshare sales revenue originated at each sales location before deferrals of revenue for U.S. GAAP reporting purposes 
(2) Includes resort income, interest income, gain on sale of notes receivable, and miscellaneous other revenues 
(3) Includes deferral of revenue for contracts still in rescission period, contracts that do not yet meet the requirements of SFAS No. 66 or SFAS No. 152 and provision for loan loss 
(4) Timeshare cost of sales and sales & marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes 
(5) Includes resort, general and administrative, and other miscellaneous expenses 






  
Note: Deferred revenue is calculated based on the Percentage of Completion ("POC") of the project. Deferred expenses, also based on POC, include product costs and direct sales and marketing costs only. Indirect sales and marketing costs are not deferred per SFAS No. 152. 






  
n/m = not meaningful 
  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Top 40 Owned, Leased and Consolidated Joint Venture Hotels
For the Year Ended December 31, 2008
  
  
  
  
  
  











  

US Hotels    Location    Rooms
International Hotels    Location    Rooms

St. Regis Aspen 
Aspen, CO 
179 
St. Regis Grand Hotel, Rome 
Rome, Italy 
161 

St. Regis New York 
New York, NY 
229 












Grand Hotel, Florence 
Florence, Italy 
107 

The Phoenician 
Scottsdale, AZ 
643 
Hotel Alfonso XIII 
Seville, Spain 
147 







Hotel Gritti Palace 
Venice, Italy 
91 

W Chicago - City Center 
Chicago, IL 
369 
Hotel Imperial 
Vienna, Austria 
138 

W Chicago Lakeshore 
Chicago, IL 
520 
Park Tower, Buenos Aires 
Buesnos Aires, Argentina 
180 

W Los Angeles Westwood 
Los Angeles, CA 
258 






W New Orleans 
New Orleans, LA 
423 
Westin Denarau Island Resort 
Nadi, Fiji 
273 

W New York - The Court & Tuscany 
New York, NY 
318 
The Westin Excelsior, Florence 
Florence, Italy 
171 

W New York - Time Square 
New York, NY 
507 
The Westin Excelsior, Rome 
Rome, Italy 
316 

W San Francisco 
San Francisco, CA 
404 
The Westin Resort & Spa, Cancun 
Cancun, Mexico 
379 







The Westin Resort & Spa, Los Cabos 
San Jose del Cabo, Mexico 
243 

The Westin Gaslamp Quarter, San Diego 
San Diego, CA 
450 
The Westin Resort & Spa, Puerto Vallarta 
Puerta Vallarta, Mexico 
280 

Westin Maui Resort & Spa 
Lahaina, HI 
759 






Westin Peachtree Plaza 
Atlanta, GA 
1,068 
Le Centre Sheraton Hotel 
Montreal, Canada 
825 

Westin San Francisco Airport 
San Francisco, CA 
397 
Sheraton Brussels Hotel & Towers 
Brussels, Belgium 
511 







Sheraton Buenos Aires Hotel & Convention Center 
Buenos Aires, Argentina 
739 

Sheraton Kauai Resort 
Koloa, HI 
394 
Sheraton Centre Toronto Hotel 
Toronto, Canada 
1,377 

Sheraton Manhattan Hotel 
New York, NY 
665 
Sheraton Gateway Hotel in Toronto International Hotel 
Toronto, Canada 
474 

Sheraton Steamboat 
Steamboat Springs, CO 
205 
Sheraton Maria Isabel Hotel & Towers 
Mexico City, Mexico 
755 







Sheraton On The Park 
Sydney, Australia 
557 

Boston Park Plaza Hotel 
Boston, MA 
941 
Sheraton Paris Airport Hotel Charles de Gaulle 
Roissy Aerogare, France 
252 







The Park Lane Hotel 
London, England 
305 











  







Four Points by Sheraton Sydney Hotel 
Sydney, Australia 
630 











  









        









Top 40 hotels represent approximately 95% of owned, leased and consolidated joint venture earnings before depreciation









  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Top 20 Worldwide Markets - Owned
For the Twelve Months Ended December 31, 2008
UNAUDITED
  

  




% of 2008


% of 2008
US Markets Total Earnings 1
International Markets Total Earnings 1
New York, NY  14% 
Italy 
9% 
Hawaii  7% 
Mexico  9% 
Phoenix, AZ  7% 
Canada  9% 
Chicago, IL  5% 
Australia  5% 
San Francisco/San Mateo, CA  4% 
Argentina  4% 
Atlanta, GA  4% 
United Kingdom  4% 
San Diego, CA  3% 
Spain  2% 
Colorado Area  2% 
France  2% 
Los Angeles-Long Beach, CA  2% 
Austria  1% 
Boston, MA  2% 
Belgium  1% 
Total Top 10 US Markets  50% 
Total Top 10 International Markets  46% 

Other US Markets  3% 

Other International Markets  1% 
Total US Markets  53% 
Total International Markets  47% 






  
1 Represents earnings before depreciation for owned, leased and consolidated joint venture hotels
  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Total Management & Franchise Fees by Geographic Region
For the Year Ended December 31, 2008
UNAUDITED
  
  
  
  



Management
Franchise
Total Management and

Geographical Region
Fees    Fees    Franchise Fees







  

United States 
36% 
61% 
43% 

Europe 
18% 
15% 
17% 

Asia Pacific 
20% 
9% 
17% 

Middle East and Africa 
19% 
1% 
14% 

Americas (Latin America & Canada) 
7% 
14% 
9% 

Total
100%
100%
100%







  
  
Starwood Hotels & Resorts Worldwide, Inc.
Systemwide(1) Statistics - Same Store
For the Twelve Months Ended December 31,
UNAUDITED


  
  
  
  
  
  
  
  
  



Systemwide - Worldwide
Systemwide - North America
Systemwide - International



2008
2007
Var.
2008
2007
Var.
2008
2007
Var.



















  



















  
TOTAL HOTELS


















REVPAR ($) 
125.21 

123.13 

1.7 
118.89 

121.58 

-2.2 
133.70 

125.22 

6.8 

ADR ($) 
185.20 

177.03 

4.6 
172.70 

170.77 

1.1 
202.72 

185.93 

9.0 

Occupancy (%) 
67.6 
69.6 
-2.0 

68.8 
71.2 
-2.4 

66.0 
67.4 
-1.4 



















  



















  
SHERATON


















REVPAR ($) 
107.82 

105.15 

2.5 
101.11 

103.42 

-2.2 
116.30 

107.35 

8.3 

ADR ($) 
161.64 

152.91 

5.7 
148.83 

147.11 

1.2 
178.49 

160.63 

11.1 

Occupancy (%) 
66.7 
68.8 
-2.1 

67.9 
70.3 
-2.4 

65.2 
66.8 
-1.6 



















  



















  
WESTIN



















REVPAR ($) 
135.68 

136.19 

-0.4 
133.78 

135.97 

-1.6 
141.34 

136.86 

3.3 

ADR ($) 
195.22 

190.35 

2.6 
189.55 

186.43 

1.7 
213.18 

203.29 

4.9 

Occupancy (%) 
69.5 
71.5 
-2.0 

70.6 
72.9 
-2.3 

66.3 
67.3 
-1.0 



















  



















  
ST. REGIS/LUXURY COLLECTION


















REVPAR ($) 
242.93 

244.72 

-0.7 
235.32 

243.15 

-3.2 
247.92 

245.74 

0.9 

ADR ($) 
386.29 

367.67 

5.1 
362.12 

362.89 

-0.2 
403.04 

370.83 

8.7 

Occupancy (%) 
62.9 
66.6 
-3.7 

65.0 
67.0 
-2.0 

61.5 
66.3 
-4.8 



















  



















  
LE MERIDIEN


















REVPAR ($) 
152.95 

143.43 

6.6 
226.58 

231.52 

-2.1 
146.12 

135.26 

8.0 

ADR ($) 
221.67 

205.86 

7.7 
302.87 

305.27 

-0.8 
213.44 

195.74 

9.0 

Occupancy (%) 
69.0 
69.7 
-0.7 

74.8 
75.8 
-1.0 

68.5 
69.1 
-0.6 



















  



















  
W



















REVPAR ($) 
212.36 

221.69 

-4.2 
211.62 

224.25 

-5.6 
219.48 

197.13 

11.3 

ADR ($) 
296.46 

298.35 

-0.6 
290.50 

294.46 

-1.3 
365.98 

348.77 

4.9 

Occupancy (%) 
71.6 
74.3 
-2.7 

72.8 
76.2 
-3.4 

60.0 
56.5 
3.5 



















  



















  
FOUR POINTS


















REVPAR ($) 
78.85 

76.17 

3.5 
74.65 

74.28 

0.5 
91.12 

81.69 

11.5 

ADR ($) 
116.10 

109.53 

6.0 
110.54 

106.01 

4.3 
132.04 

120.13 

9.9 

Occupancy (%) 
67.9 
69.5 
-1.6 

67.5 
70.1 
-2.6 

69.0 
68.0 
1.0 



















  



















  
OTHER



















REVPAR ($) 
108.26 

111.56 

-3.0 
108.26 

111.56 

-3.0 






ADR ($) 
168.37 

173.40 

-2.9 
168.37 

173.40 

-2.9 






Occupancy (%) 
64.3 
64.3 
  


64.3 
64.3 
  


























  



















  



















 
(1) Includes same store owned, leased, managed, and franchised hotels 
  
  
Starwood Hotels & Resorts Worldwide, Inc.
Worldwide Hotel Results - Same Store
For the Twelve Months Ended December 31,
UNAUDITED




  
  
  
  
  



Systemwide (1)
Company Operated (2)



2008
2007
Var.
2008
2007
Var.













  













  
TOTAL WORLDWIDE












REVPAR ($) 
125.21 

123.13 

1.7 
141.89 

138.75 

2.3 

ADR ($) 
185.20 

177.03 

4.6 
205.92 

196.22 

4.9 

Occupancy (%) 
67.6 
69.6 
-2.0 

68.9 
70.7 
-1.8 













  













  
NORTH AMERICA












REVPAR ($) 
118.89 

121.58 

-2.2 
145.91 

150.00 

-2.7 

ADR ($) 
172.70 

170.77 

1.1 
204.26 

203.06 

0.6 

Occupancy (%) 
68.8 
71.2 
-2.4 

71.4 
73.9 
-2.5 











  















  
EUROPE













REVPAR ($) 
162.40 

154.25 

5.3 
172.85 

165.51 

4.4 

ADR ($) 
246.76 

226.85 

8.8 
256.75 

238.57 

7.6 

Occupancy (%) 
65.8 
68.0 
-2.2 

67.3 
69.4 
-2.1 













  













  
AFRICA & MIDDLE EAST











REVPAR ($) 
145.56 

125.20 

16.3 
148.32 

126.70 

17.1 

ADR ($) 
205.95 

181.15 

13.7 
208.43 

182.50 

14.2 

Occupancy (%) 
70.7 
69.1 
1.6 

71.2 
69.4 
1.8 













  













  
ASIA PACIFIC












REVPAR ($) 
115.05 

111.67 

3.0 
110.80 

106.52 

4.0 

ADR ($) 
178.44 

166.02 

7.5 
173.09 

159.01 

8.9 

Occupancy (%) 
64.5 
67.3 
-2.8 

64.0 
67.0 
-3.0 













  













  
LATIN AMERICA












REVPAR ($) 
90.78 

83.72 

8.4 
98.35 

90.23 

9.0 

ADR ($) 
142.74 

132.51 

7.7 
154.35 

142.96 

8.0 

Occupancy (%) 
63.6 
63.2 
0.4 

63.7 
63.1 
0.6 













  













  













  
(1) Includes same store owned, leased, managed, and franchised hotels 
(2) Includes same store owned, leased, and managed hotels 
  

  
Starwood Hotels & Resorts Worldwide, Inc.

Owned Hotel Results - Same Store (1)

For the Twelve Months Ended December 31,

UNAUDITED

  
  
  
  
  
  
  
  
  





















  



WORLDWIDE
NORTH AMERICA
INTERNATIONAL



2008   
2007   
Var.
2008   
2007   
Var.
2008   
2007   
Var.



















  
TOTAL HOTELS
59 Hotels
31 Hotels
28 Hotels

REVPAR ($) 
168.93 

171.01 

-1.2 
178.14 

181.68 

-1.9 
154.62 

154.40 

0.1 

ADR ($) 
237.45 

235.18 

1.0 
241.26 

242.07 

-0.3 
230.91 

223.54 

3.3 

Occupancy (%) 
71.1 
72.7 
-1.6 

73.8 
75.1 
-1.3 

67.0 
69.1 
-2.1 



















  

Total Revenue 
2,015,182 

2,046,063 

-1.5 
1,279,252 

1,307,548 

-2.2 
735,930 

738,515 

-0.4 

Total Expenses 
1,510,612 

1,492,476 

1.2 
967,626 

961,110 

0.7 
542,986 

531,366 

2.2 



















  



















  



















  



















  
BRANDED HOTELS
53 Hotels
25 Hotels
28 Hotels

REVPAR ($) 
175.17 

177.12 

-1.1 
190.78 

194.35 

-1.8 
154.62 

154.40 

0.1 

ADR ($) 
243.80 

240.73 

1.3 
252.48 

252.43 

0.0 
230.91 

223.54 

3.3 

Occupancy (%) 
71.8 
73.6 
-1.8 

75.6 
77.0 
-1.4 

67.0 
69.1 
-2.1 



















  

Total Revenue 
1,887,249 

1,917,583 

-1.6 
1,151,319 

1,179,068 

-2.4 
735,930 

738,515 

-0.4 

Total Expenses 
1,397,290 

1,383,081 

1.0 
854,304 

851,715 

0.3 
542,986 

531,366 

2.2 



















  



















  



















  
(1) Hotel Results exclude 19 hotels sold or closed and 10 hotels without comparable results during 2007 & 2008 
  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Twelve Months Ended December 31,
UNAUDITED ($ millions)
  
  
  
  
  









  



Worldwide



2008
2007
$ Variance
% Variance









  
Management Fees: 








Base Fees 
287 
280 

2.5 

Incentive Fees 
169 
155 
14 
9.0 
Total Management Fees
456 
435 
21 
4.8 









  
Franchise Fees
164 
151 
13 
8.6 









  
Total Management & Franchise Fees
620 
586 
34 
5.8 









  
Other Management & Franchise Revenues (1) 
97 
96 

1.0 









  
Total Management & Franchise Revenues
717 
682 
35 
5.1 









  
Other (2) 
140 
152 
-12 
-7.9 









  
Management Fees, Franchise Fees & Other Income
857 
834 
23 
2.8 









  









  
(1) Other Management & Franchise Revenues primarily includes the amortization of deferred gains of approximately $83 million in 2008 and $81 million in 2007 resulting from the sales of hotels subject to long-term management contracts and termination fees. 









  
(2) The amount includes revenues from the Company's Bliss spa and product business and other miscellaneous revenue. In 2007, amount includes $18 million of income earned from the Company's carried interests in the Westin Boston Waterfront Hotel which was earned when the hotel was sold by its owners in January 2007. 
  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Twelve Months Ended December 31,
UNAUDITED ($ millions)

  
  
  






  






  


2008
2007
% Variance






  
Originated Sales Revenues (1) -- Vacation Ownership Sales 
526 

711 

(26.0  %) 
Other Sales and Services Revenues (2)
207 

181 

14.4 
Deferred Revenues -- Percentage of Completion 
(9 
118 

n/m 
Deferred Revenues -- Other (3)
(24 
(3 
n/m    
Vacation Ownership Sales and Services Revenues 
700 

1,007 

(30.5  %) 
Residential Sales and Services Revenues 
49    
18    
n/m    
Total Vacation Ownership & Residential Sales and Services Revenues 
749    
1,025    
(26.9  %) 






  
Originated Sales Expenses (4) -- Vacation Ownership Sales 
356 

452 

21.2 
Other Expenses (5)
201 

209 

3.8 
Deferred Expenses -- Percentage of Completion 
(5 
53 

n/m 
Deferred Expenses -- Other 
24    
30    
n/m    
Vacation Ownership Expenses 
576 

744 

22.6 
Residential Expenses 
  
14    
50.0 
Total Vacation Ownership & Residential Expenses 
583    
758    
23.1 






  






  
(1) Timeshare sales revenue originated at each sales location before deferrals of revenue for U.S. GAAP reporting purposes 
(2) Includes resort income, interest income, gain on sale of notes receivable, and miscellaneous other revenues 
(3) Includes deferral of revenue for contracts still in rescission period, contracts that do not yet meet the requirements of SFAS No. 66 or SFAS No. 152 and provision for loan loss 
(4) Timeshare cost of sales and sales & marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes 
(5) Includes resort, general and administrative, and other miscellaneous expenses 






  
Note: Deferred revenue is calculated based on the Percentage of Completion ("POC") of the project. Deferred expenses, also based on POC, include product costs and direct sales and marketing costs only. Indirect sales and marketing costs are not deferred per SFAS No. 152. 






  
n/m = not meaningful 
  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotels without Comparable Results & Other Selected Items
As of December 31, 2008
UNAUDITED ($ millions)

  
  
  
  
  
  

  















  















  















  
Properties without comparable results in 2008:

Selected Balance Sheet and Cash Flow Items:



















  
Property
Location
Cash and cash equivalents (including restricted cash of $102 million) 
491 
Sheraton Steamboat Resort & Conference Center 
Steamboat Springs, CO 
Debt 









4,008 
Westin St. John Resort & Villas 
St. John, Virgin Islands 












Westin Peachtree 
Atlanta, GA 












Sheraton Fiji Resort 
Nadi, Fiji 












Westin Denarau Island Resort & Spa 
Nadi, Fiji 












element Lexington 
Lexington, MA 












aloft Lexington 
Lexington, MA 












aloft Philadelphia Airport 
Philadelphia, PA 
  
Park Ridge Hotel & Conference Center at Valley Forge 
King of Prussia, PA 












Four Points by Sheraton Minneapolis 
Minneapolis, MN 
















Revenues and Expenses Associated with Assets Sold or Closed in 2008 and 2007 (1):















  






Q1
Q2
Q3
Q4

Full Year




Hotels Sold or Closed in 2007:








Properties sold or closed in 2008 and 2007:

2007 














Revenues 
48 
39 
24 
10 

121 
Property
Location
Expenses (excluding depreciation) 
36 
33 
18 


96 
Westin Fort Lauderdale 
Ft. Lauderdale, FL 












Days Inn City Center 
Portland, OR 
Hotels Sold or Closed in 2008:








Sheraton Nashua Hotel 
Nashua, NH 
2008 










Four Points by Sheraton Denver Cherry Creek 
Denver, CO 
Revenues 
10 
25 
36 


77 
Sheraton Bal Harbour Beach Resort 
Bal Harbour, FL 
Expenses (excluding depreciation) 
16 
23 
23 


70 
Sheraton Edison 
Edison, NJ 












Four Points by Sheraton Hyannis 
Hyannis, MA 
2007 










Four Points by Sheraton Portland 
Portland, OR 
Revenues 
10 
30 
39 
16 

95 
Sheraton South Portland 
Portland, ME 
Expenses (excluding depreciation) 
15 
25 
26 
18 

84 
Westin Galleria 
Houston, TX 












Westin Oaks 
Houston, TX 
(1) Results consist of 8 hotels sold or closed in 2008 and 11 hotels sold or closed in 2007. These amounts are included in the revenues and expenses from owned, leased and consolidated joint venture hotels in 2008 and 2007. 
Caesar's Brookdale 
Scotrun, PA 
Sheraton Hamilton 
Hamilton, Ontario 












Days Inn Town Center 
Seattle, WA 












Sixth Avenue Inn 
Seattle, WA 












Hotel Des Bains 
Venice Lido, Italy 












The Westin Excelsior 
Venice Lido, Italy 












Hotel Villa Cipriani 
Asolo, Italy 












The Westin Turnberry 
Ayreshire, Scotland 



























  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three and Twelve Months Ended December 31, 2008
UNAUDITED ($ millions)

  
  




  


Q4
YTD
Capital Expenditures:



Owned, Leased and Consolidated Joint Venture Hotels 
89
279
Corporate/IT 
20
84
Subtotal
109
363




  
Vacation Ownership Capital Expenditures:



Capital expenditures (includes land acquisitions) 
30
110
Net capital expenditures for inventory (excluding St. Regis Bal Harbour) (1)
39
131
Net capital expenditures for inventory - St. Regis Bal Harbour (1)
47
148
Subtotal
116
389




  
Development Capital
33
65




  
Total Capital Expenditures
258
817




  
(1) Represents gross inventory capital expenditures of $98 and $402 in the three and twelve months ended December 31, 2008, respectively, less cost of sales of $12 and $123 in the three and twelve months ended December 31, 2008, respectively. 
  
  
Starwood Hotels & Resorts Worldwide, Inc.
2008 Divisional Hotel Inventory Summary by Ownership by Brand
December 31, 2008 

                                                          


NAD    EAME    LAD    ASIA    Total


Hotels     Rooms     Hotels     Rooms     Hotels     Rooms     Hotels     Rooms     Hotels     Rooms 
Owned

  
  
  
  
  
  
  
  
  

Sheraton 

4,461 

1,505 

2,713 

821 
21 
9,500 
Westin 

2,849 

650 

902 

273 
12 
4,674 
Four Points 

579 





630 

1,209 


3,172 







3,172 
Luxury Collection 

643 

828 

180 



1,651 
St. Regis 

668 

161 





829 
aloft 

272 







272 
element 
1
123 






1
123 
Other 
   2,200                          2,200 
Total Owned
39    14,967    17    3,144    9    3,795    4    1,724    69    23,630





















  
Managed & UJV



















Sheraton 
46 
30,421 
71 
20,931 
15 
2,934 
52 
19,150 
184 
73,436 
Westin 
50 
27,242 
15 
4,080 


16 
5,978 
81 
37,300 
Four Points 

646 

1,536 

427 

2,144 
20 
4,753 

12 
3,476 

134 

237 

723 
17 
4,570 
Luxury Collection 

1,803 
12 
1,804 

250 


28 
3,857 
St. Regis 

900 

95 

120 

1,008 
10 
2,123 
Le Meridien 

1,046 
64 
16,172 


24 
6,405 
93 
23,623 
aloft 







186 

186 
Other 
                          
Total Managed & UJV
129    65,534    173    44,752    27    3,968    107    35,594    436    149,848





















  
Franchised




















Sheraton 
154 
45,345 
27 
6,846 

2,500 
14 
5,651 
204 
60,342 
Westin 
54 
17,883 

2,030 

600 

1,939 
69 
22,452 
Four Points 
88 
14,335 
12 
1,670 

1,296 

235 
110 
17,536 
Luxury Collection 

908 
14 
1,829 



2,022 
25 
4,759 
Le Meridien 

1,553 

1,743 

213 

554 
14 
4,063 
aloft 
14 
2,047 






14 
2,047 
element 
   123                          123 
Total Franchised
320    82,194    64    14,118    21    4,609    32    10,401    437    111,322





















  
Systemwide




















Sheraton 
208 
80,227 
104 
29,282 
29 
8,147 
68 
25,622 
409 
143,278 
Westin 
109 
47,974 
23 
6,760 

1,502 
24 
8,190 
162 
64,426 
Four Points 
93 
15,560 
20 
3,206 
11 
1,723 
10 
3,009 
134 
23,498 

21 
6,648 

134 

237 

723 
26 
7,742 
Luxury Collection 
14 
3,354 
33 
4,461 

430 

2,022 
62 
10,267 
St. Regis 

1,568 

256 

120 

1,008 
14 
2,952 
Le Meridien 
10 
2,599 
70 
17,915 

213 
26 
6,959 
107 
27,686 
aloft 
16 
2,319 





186 
17 
2,505 
element 

246 







246 
Other 
   2,200                          2,200 
Total Systemwide
488    162,695    254    62,014    57    12,372    143    47,719    942    284,800





















  
  
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership Inventory Pipeline
As of December 31, 2008
UNAUDITED
  
  
  
  
  
  
  
  

                                            


   # Resorts    # of Units (1)





In
In Active


Pre-sales/
Future
Total at

Brand   
Total (2)
  
Operations
   Sales    Completed (3)    Development (4)    Capacity (5),(6)    Buildout















  

Sheraton 



2,934 
145 
1,394 
4,473 

Westin 
10 


1,333 
229 
756 
2,318 

St. Regis 



63 


63 

The Luxury Collection 







Unbranded              124           125 

Total SVO, Inc.    24    20    20    4,460    374    2,152    6,986















  

Unconsolidated Joint Ventures (UJV's)              198        40     238 

Total including UJV's    26    21    21    4,658    374    2,192    7,224

                                            

Total Intervals Including UJV's (7)                      242,216    19,448