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Starwood Reports Net Income 3rd Qtr 2012 of $170 million Compared to
$163 million
Same Period 2011; Worldwide System-wide RevPAR Up 4.7%

Systemwide Hotel Statistics

STAMFORD, Conn.--October 25, 2012-Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported third quarter 2012 financial results.

Third Quarter 2012 Highlights

  • Excluding special items, EPS from continuing operations was $0.58. Including special items, EPS from continuing operations was $0.75.
  • Adjusted EBITDA was $275 million, which included $12 million of EBITDA from the St. Regis Bal Harbour residential project.
  • Excluding special items, income from continuing operations was $114 million. Including special items, income from continuing operations was $147 million.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.7% in constant dollars (1.3% in actual dollars) compared to 2011. Systemwide REVPAR for Same-Store Hotels in North America increased 5.3% in constant dollars (4.8% in actual dollars).
  • Management fees, franchise fees and other income increased 8.4% compared to 2011.
  • Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 100 basis points compared to 2011.
  • Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 2.3% in constant dollars (decreased 2.2% in actual dollars) compared to 2011.
  • Margins at Starwood branded Same-Store Owned Hotels Worldwide increased approximately 10 basis points compared to 2011.
  • Earnings from Starwood’s vacation ownership and residential business increased approximately $19 million compared to 2011, including $12 million of earnings from the St. Regis Bal Harbour residential project.
  • During the quarter, the Company signed 25 hotel management and franchise contracts, representing approximately 4,800 rooms, and opened 20 hotels and resorts with approximately 6,500 rooms.
  • Starwood’s Board of Directors has declared the Company’s annual cash dividend of $1.25 per share, an increase of 150% from the prior year.
  • On October 24, 2012, the Company completed a securitization involving the issuance of $165.7 million of fixed rate notes. Starwood is contributing approximately $174.4 million in timeshare mortgages resulting in an advance rate of 95% with an effective note yield of 2.02%.

Third Quarter 2012 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the third quarter of 2012 of $0.75 compared to $0.85 in the third quarter of 2011. Excluding special items, EPS from continuing operations was $0.58 for the third quarter of 2012 compared to $0.60 in the third quarter of 2011. Special items in the third quarter of 2012, which totaled a benefit of $33 million (after-tax), primarily related to an income tax benefit on the sale of two wholly-owned hotels. Special items in the third quarter of 2011, which totaled a benefit of $47 million (after-tax), primarily related to a gain on an asset exchange transaction. Excluding special items, the effective income tax rate in the third quarter of 2012 was 30.8% compared to a benefit of 4.8% in the third quarter of 2011. The effective income tax rate in the third quarter of 2011 included a favorable settlement of an IRS audit.

Income from continuing operations was $147 million in the third quarter of 2012, compared to $165 million in the third quarter of 2011. Excluding special items, income from continuing operations was $114 million in the third quarter of 2012. Excluding special items, income from continuing operations was $118 million in the third quarter of 2011 and included a $35 million benefit associated with the favorable settlement of an IRS audit.

Net income was $170 million and $0.87 per share in the third quarter of 2012, compared to $163 million and $0.84 per share in the third quarter of 2011. Net income in the third quarter of 2012 benefited from a $23 million (net of tax) reversal of reserves, following the favorable settlement, in the quarter, of certain liabilities associated with a former ITT subsidiary.

Frits van Paasschen, CEO, said, “We delivered another solid quarter of EBITDA and EPS growth led by continued gains in both room rates and occupancy. Global RevPAR grew nearly 5% in constant currency, despite a deceleration in the global economy. In fact, occupancy rose in all regions and is now reaching or exceeding peak levels in many markets around the world.”

“Looking ahead, our results will be driven by two things: first, the trajectory of the global recovery and whether it regains its momentum in 2013; and second, our ability to use our high-end, global brands, to get more than our fair share of the long-term growth in global travel.”

Nine Months Ended September 30, 2012 Earnings Summary

Income from continuing operations was $405 million in the nine months ended September 30, 2012 compared to $344 million in the same period in 2011. Excluding special items, income from continuing operations was $376 million in the nine months ended September 30, 2012, compared to $273 million in the same period in 2011.

Net income was $420 million and $2.14 per share in the nine months ended September 30, 2012 compared to $322 million and $1.66 per share in the same period in 2011.

Adjusted EBITDA was $895 million in the nine months ended September 30, 2012, which includes $125 million of EBITDA from the St. Regis Bal Harbour Resort residential project (“Bal Harbour”), compared to $711 million in the same period in 2011.

Third Quarter 2012 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.7% in constant dollars (1.3% in actual dollars) compared to the third quarter of 2011. International Systemwide REVPAR for Same-Store Hotels increased 3.9% in constant dollars (decreased 3.0% in actual dollars).

Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by region:








REVPAR
Region





Constant

Dollars




Actual

Dollars

North America





5.3 %


4.8 %
Europe





3.1 %


(9.1 )%
Asia Pacific





4.3 %


0.7 %
Africa and the Middle East





7.0 %


3.2 %
Latin America





3.0 %


3.0 %




























Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by brand:








REVPAR
Brand





Constant
Dollars




Actual

Dollars

St. Regis/Luxury Collection





5.7 %


(1.9 )%
W Hotels





6.7 %


4.6 %
Westin





6.2 %


3.4 %
Sheraton





2.8 %


0.6 %
Le Méridien





3.8 %


(4.0 )%
Four Points by Sheraton





5.4 %


3.3 %
Aloft





8.7 %


7.8 %




























Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 100 basis points compared to 2011. International gross operating profit margins for Same-Store Company-Operated properties increased 80 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 140 basis points, driven by REVPAR increases and cost controls.

Management fees, franchise fees and other income were $219 million, up $17 million, or 8.4% (10.1% in constant dollars) compared to the third quarter of 2011. Management fees increased 7.0% to $122 million and franchise fees increased 10.4% to $53 million.

Development

During the third quarter of 2012, the Company signed 25 hotel management and franchise contracts, representing approximately 4,800 rooms, of which 18 are new builds and seven are conversions from other brands. At September 30, 2012, the Company had approximately 370 hotels in the active pipeline representing approximately 95,000 rooms.

During the third quarter of 2012, 20 new hotels and resorts (representing approximately 6,500 rooms) entered the system, including Sheraton Macao Hotel (China, 1,796 rooms), ITC Grand Chola – a Luxury Collection Hotel (India, 600 rooms), W Singapore – Sentosa Cove (Singapore, 240 rooms), Sheraton Vitoria Hotel (Brazil, 234 rooms), and Sheraton Tampa East Hotel (Florida, 265 rooms). Additionally, during the quarter, the Company reopened its owned Aloft San Francisco Airport which was converted from an unbranded hotel. Four properties (representing approximately 800 rooms) were removed from the system during the quarter.

Owned, Leased and Consolidated Joint Venture Hotels

Worldwide REVPAR at Starwood branded Same-Store Owned Hotels increased 2.3% in constant dollars (decreased 2.2% in actual dollars) when compared to 2011. REVPAR at Starwood branded Same-Store Owned Hotels in North America increased 0.6% in constant dollars (decreased 0.5% actual dollars). Internationally, Starwood branded Same-Store Owned Hotel REVPAR increased 3.8% in constant dollars (decreased 3.7% in actual dollars).

Revenues at Starwood branded Same-Store Owned Hotels Worldwide increased 1.5% in constant dollars (decreased 2.9% in actual dollars) while costs and expenses increased 1.0% in constant dollars (decreased 3.1% in actual dollars) when compared to 2011. Margins at these hotels increased approximately 10 basis points.

Revenues at Starwood branded Same-Store Owned Hotels in North America decreased 1.5% in constant dollars (2.5% in actual dollars) while costs and expenses decreased 0.2% in constant dollars (1.1% in actual dollars) when compared to 2011. Margins at these hotels decreased approximately 130 basis points.

Internationally, revenues at Starwood branded Same-Store Owned Hotels increased 4.1% in constant dollars (decreased 3.1% in actual dollars) while costs and expenses increased 2.3% in constant dollars (decreased 5.0% in actual dollars) when compared to 2011. Margins at these hotels increased approximately 140 basis points.

Revenues at owned, leased and consolidated joint venture hotels were $425 million, compared to $441 million in 2011. Expenses at owned, leased and consolidated joint venture hotels were $348 million compared to $361 million in 2011. Third quarter results were negatively impacted by four asset sales that took place since the third quarter of 2011.

Vacation Ownership

Total vacation ownership revenues increased 2.2% to $141 million in the third quarter of 2012 when compared to 2011, primarily due to the increased revenues from resort operations. Originated contract sales of vacation ownership intervals and numbers of contracts signed decreased 1.2% and 3.8%, respectively, primarily due to lower tour flow partially offset by a slight increase in the average price of vacation ownership units sold. The average price per vacation ownership unit sold increased 1.8% to approximately $14,300, driven by inventory mix.

Residential

The Company’s residential revenues were $67 million compared to $2 million in 2011. The Company realized residential revenues from Bal Harbour during the third quarter of 2012 of $62 million and generated EBITDA of $12 million. During the third quarter of 2012, the Company closed sales of 14 units at Bal Harbour and realized incremental cash proceeds of $59 million associated with these units. From project inception through September 30, 2012, the Company has closed contracts on approximately 64% of the total residential units available at Bal Harbour.

Selling, General, Administrative and Other

Selling, general, administrative and other expenses decreased 1.1% to $87 million compared to $88 million in 2011. The Company is now targeting a 3% to 4% increase for the full year.

Capital

Gross capital spending during the quarter included approximately $37 million of maintenance capital and $78 million of development capital.

Asset Sales

During the quarter, the Company completed the sales of two wholly-owned hotels, the W Chicago - Lakeshore and W Los Angeles - Westwood, for cash proceeds of approximately $244 million. These hotels were sold subject to long-term management contracts.

Timeshare Securitization

On October 24, 2012, the Company completed a securitization involving the issuance of $165.7 million of fixed rate notes. Starwood is contributing approximately $174.4 million in timeshare mortgages resulting in an advance rate of 95% with an effective note yield of 2.02%. The proceeds from the transaction will be used for general corporate purposes and the pay down of the securitized vacation ownership debt related to its 2005 securitization.

Dividend

The Board of Directors has declared the Company’s annual cash dividend of $1.25 per share, an increase of 150% from the prior year. The dividend will be paid on December 28, 2012 to shareholders of record on December 14, 2012.

Share Repurchase

In the third quarter of 2012, the Company repurchased 1.6 million shares at a total cost of approximately $78.7 million. Year to date, the Company has repurchased 2.8 million shares at a total cost of approximately $140 million. As of September 30, 2012, approximately $360 million remained available under the Company’s share repurchase authorization.

Balance Sheet

At September 30, 2012, the Company had gross debt of $1.654 billion, cash and cash equivalents of $795 million (including $144 million of restricted cash) and net debt of $859 million, compared to net debt of $1.242 billion as of June 30, 2012, in each case, excluding debt and restricted cash associated with securitized vacation ownership notes receivable. Net debt at September 30, 2012, including $410 million of debt and $17 million of restricted cash associated with securitized vacation ownership notes receivables, was $1.252 billion.

At September 30, 2012, debt was approximately 88% fixed rate and 12% floating rate and its weighted average maturity was 4.1 years with a weighted average interest rate of 7.03%, excluding the securitized debt. The Company had cash (including current restricted cash) and availability under the domestic and international revolving credit facility of approximately $2.297 billion.

Outlook

For the Full Year 2012:

  • Including Bal Harbour, which is expected to contribute approximately $135 million of EBITDA, adjusted EBITDA is expected to be approximately $1.190 billion to $1.195 billion.
  • Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $1.055 billion to $1.060 billion, assuming:
    • REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 5% to 6% in constant dollars (approximately 200 basis points lower in dollars at current exchange rates).
    • REVPAR increases at Same-Store Owned Hotels Worldwide of 3% to 4% in constant dollars (approximately 250 basis points lower in dollars at current exchange rates).
    • Margins at Same-Store Owned Hotels Worldwide increase 50 to 100 basis points.
    • Management fees, franchise fees and other income increase approximately 9% to 10%.
    • Earnings from the Company’s vacation ownership and residential business of approximately $158 million.
    • Selling, general and administrative expenses increase approximately 3% to 4%.
  • Full year earnings are negatively impacted by approximately $10 million due to recent asset sales.
  • Depreciation and amortization is expected to be approximately $280 million.
  • Interest expense is expected to be approximately $185 million, excluding the $15 million of redemption premiums and other costs associated with the Senior Notes redemption in the second quarter of 2012.
  • Including Bal Harbour, full year effective tax rate is expected to be approximately 31%, and cash taxes are expected to be approximately $100 million.
  • Including Bal Harbour, EPS before special items is expected to be approximately $2.55 to $2.57.
  • Full year capital expenditures (excluding vacation ownership and residential inventory) is expected to be approximately $150 million for maintenance, renovation and technology. In addition, in-flight investment projects and prior commitments for joint ventures and other investments are expected to total approximately $325 million.
  • Vacation ownership (excluding Bal Harbour) is expected to generate approximately $200 million in positive cash flow. Bal Harbour is expected to generate at least $400 million in net cash flow.

For the three months ended December 31, 2012:

  • Including Bal Harbour, which is expected to contribute approximately $10 million of EBITDA, adjusted EBITDA is expected to be approximately $295 million to $300 million.
  • Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $285 million to $290 million, assuming:
    • REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 4% to 6% in constant dollars (approximately 50 basis points lower in dollars at current exchange rates).
    • REVPAR increases at Same-Store Company Owned Hotels Worldwide of 3% to 4% in constant dollars (approximately 50 basis points lower in dollars at current exchange rates).
    • Management fees, franchise fees and other income increase approximately 4% to 5%.
    • Earnings from the Company’s vacation ownership and residential business are down approximately $5 million year over year.
  • Fourth quarter earnings are negatively impacted by approximately $8 million due to recent asset sales.
  • Depreciation and amortization is expected to be approximately $70 million.
  • Interest expense is expected to be approximately $43 million.
  • Including Bal Harbour, income from continuing operations is expected to be approximately $126 million to $129 million, reflecting an effective tax rate of approximately 31%.
  • Including Bal Harbour, EPS is expected to be approximately $0.64 to $0.66.

For the Full Year 2013:

At this point, the Company expects REVPAR at Same-Store Company-Operated Hotels Worldwide to increase 4% to 7% in constant dollars. The Company also expects Bal Harbour to contribute approximately $30 million to $40 million in EBITDA, which is approximately $100 million lower than 2012. Asset sales completed to date will reduce 2013 EBITDA by approximately $20 million year over year and approximately $30 million on an annualized basis. The Company will provide more details on its 2013 expectations in February.

Special Items

The Company’s special items netted to a benefit of $1 million ($33 million after-tax) in the third quarter of 2012 compared to a benefit of $45 million ($47 million after-tax) in the same period of 2011.

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
September 30,





Nine Months Ended
September 30,

2012


2011





2012


2011











$ 114
$ 118

Income from continuing operations before special items
$ 376

$ 273
$ 0.58
$ 0.60

EPS before special items


$ 1.91

$ 1.40





Special Items








Restructuring, goodwill impairment, and other special (charges) credits, net(a)

11



1

45

Gain (loss) on asset dispositions and impairments, net(b)

(7 )

14





Debt extinguishment(c)

(15 )


1

45

Total special items – pre-tax

(11 )

14

32

2

Income tax benefit (expense) for special items(d)

40


57

33

47

Total special items – after-tax

29


71










$ 147
$ 165

Income from continuing operations
$ 405

$ 344
$ 0.75
$ 0.85

EPS including special items
$ 2.06

$ 1.77






























(a)


During the nine months ended September 30, 2012, the Company recorded a favorable adjustment of $11 million to reverse a portion of a
litigation reserve.




(b)


During the nine months ended September 30, 2012, the net loss primarily relates to the sale of one wholly-owned hotel.



During the three months ended September 30, 2011, the net gain primarily relates to an asset exchange transaction. During the nine months
ended September 30, 2011, the gain from the asset exchange transaction was partially offset by the impairment of a minority investment in a joint
venture hotel located in Japan.




(c)


During the nine months ended September 30, 2012, the net charges are associated with the redemption of approximately $495 million of senior
notes.




(d)


During the three and nine months ended September 30, 2012, the tax benefit primarily relates to the sale of two hotels with high tax bases.



During the three months ended September 30, 2011, the benefit relates primarily to a tax benefit on the asset exchange transaction described
above and the utilization of capital loss carry forwards, partially offset by tax expense as the result of a settlement of an IRS audit. During the
nine months ended September 30, 2011, in addition to the activity in the third quarter, the tax benefit primarily relates to the sale of two wholly-
owned hotels with high tax bases as a result of a previous transaction.







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 third quarter financial results at 10:30 a.m. EDT today at (866) 921-0636 with conference ID 28294184. The conference call will be available through a simultaneous webcast in the News & Events section of the Company’s website at http://www.starwoodhotels.com/corporate/investor_relations.html. A replay of the conference call will also be available from 1:30 p.m. EDT today through Thursday, November 1, 2012 at 12:00 midnight EDT by telephone at (855) 859-2056 with conference ID 28294184. A webcast replay will be active beginning at 1:30 p.m. EDT today and will run for one year.

Definitions

All references to EPS, unless otherwise noted, reflect earnings per diluted share from continuing operations attributable to Starwood’s common stockholders. All references to continuing operations, discontinued operations and net income reflect amounts attributable to Starwood’s common stockholders (i.e. excluding amounts attributable to noncontrolling interests). 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 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 restructuring, goodwill impairment 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. 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 natural disasters). References to Company-Operated Hotel metrics (e.g. REVPAR) reflect metrics for the Company’s owned, leased and managed hotels. References to Systemwide 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 revenues in constant dollars represent revenues, excluding the impact of the movement of foreign exchange rates. The Company calculates revenues in constant dollars by calculating revenues for the current year using the prior year’s exchange rates. The Company uses this revenue measure to better understand the underlying results and trends of the business, excluding the impact of movements in foreign exchange rates.

All references to contract sales or originated sales reflect vacation ownership sales before revenue adjustments for percentage of completion accounting methodology. All references to earnings from vacation ownership and residential represents operating income before depreciation expense. 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.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with 1,128 properties in nearly 100 countries and 154,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences with the following internationally renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, Aloft®, and ElementSM. The Company boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG), allowing members to earn and redeem points for room stays, room upgrades and flights, with no blackout dates. Starwood also owns Starwood Vacation Ownership, Inc., a premier provider of world-class vacation experiences through villa-style resorts and privileged access to Starwood brands. For more information, including reconciliations of non-GAAP financial measures to GAAP financial measures, please visit www.starwoodhotels.com or contact Investor Relations at (203) 351-3500.

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, natural disasters, business and financing conditions (including the condition of credit markets in the U.S. and internationally), 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

September 30,







Nine Months Ended

September 30,

2012



2011



%
Variance







2012



2011



%
Variance











Revenues








$ 425


$ 441


(3.6 )


Owned, leased and consolidated joint venture hotels

$ 1,280


$ 1,329


(3.7 )

208



140


48.6



Vacation ownership and residential sales and services


1,038



439


n/m

219



202


8.4



Management fees, franchise fees and other income


642



580


10.7

603



589


2.4



Other revenues from managed and franchised
properties(a)




1,828



1,745


4.8

1,455



1,372


6.0







4,788



4,093


17.0










Costs and Expenses









348



361


3.6



Owned, leased and consolidated joint venture hotels


1,057



1,103


4.2

156



107


(45.8 )


Vacation ownership and residential


790



330


n/m

87



88


1.1



Selling, general, administrative and other


269



256


(5.1 )












Restructuring, goodwill impairment and other special
charges (credits), net




(11 )





n/m

55



57


3.5



Depreciation


168



177


5.1

6



8


25.0



Amortization


18



23


21.7

603



589


(2.4 )


Other expenses from managed and franchised
properties(a)




1,828



1,745


(4.8 )

1,255



1,210


(3.7 )






4,119



3,634


(13.3 )

200



162


23.5



Operating income


669



459


45.8

4



(5 )

n/m



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




19



6


n/m

(39 )


(45 )

13.3



Interest expense, net of interest income of $0, $1, $1 and
$2




(149 )


(151 )

1.3

1



45


(97.8 )


Gain (loss) on asset dispositions and impairments, net


(7 )


14


n/m

166



157


5.7



Income from continuing operations before taxes and
noncontrolling interests




532



328


62.2

(19 )


8


n/m



Income tax benefit (expense)


(127 )


14


n/m

147



165


(10.9 )


Income (loss) from continuing operations


405



342


18.4










Discontinued Operations:











23



(2 )

n/m



Gain (loss) on dispositions, net of tax


15



(22 )

n/m

170



163


4.3



Net income (loss)


420



320


31.3












Net loss (income) attributable to noncontrolling interests






2


(100.0 )
$ 170


$ 163


4.3



Net income (loss) attributable to Starwood

$ 420


$ 322


30.4










Earnings (Losses) Per Share – Basic








$ 0.76


$ 0.88


(13.6 )


Continuing operations

$ 2.10


$ 1.83


14.8

0.12



(0.01 )

n/m



Discontinued operations


0.08



(0.12 )

n/m
$ 0.88


$ 0.87


1.1



Net income (loss)

$ 2.18


$ 1.71


27.5










Earnings (Losses) Per Share – Diluted








$ 0.75


$ 0.85


(11.8 )


Continuing operations

$ 2.06


$ 1.77


16.4

0.12



(0.01 )

n/m



Discontinued operations


0.08



(0.11 )

n/m
$ 0.87


$ 0.84


3.6



Net income (loss)

$ 2.14


$ 1.66


28.9










Amounts attributable to Starwood’s Common
Stockholders










$ 147


$ 165


(10.9 )


Continuing operations

$ 405


$ 344


17.7

23



(2 )

n/m



Discontinued operations


15



(22 )

n/m
$ 170


$ 163


4.3



Net income (loss)

$ 420


$ 322


30.4





















193



190






Weighted average number of shares


193



189




196



195






Weighted average number of shares assuming dilution


197



195



























































(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)











September 30,
2012




December 31,
2011




(unaudited)



Assets






Current assets:






Cash and cash equivalents

$

651





$ 454
Restricted cash


158




232
Accounts receivable, net of allowance for doubtful accounts of $50 and $46


575




569
Inventories


414




812

Securitized vacation ownership notes receivable, net of allowance for doubtful
accounts of $8 and $10




58




64
Current deferred tax asset


256




278
Prepaid expenses and other


138




125

Total current assets




2,250




2,534
Investments


261




259
Plant, property and equipment, net


3,134




3,175
Assets held for sale, net


118




127
Goodwill and intangible assets, net


2,013




2,025
Deferred tax assets


624




639
Other assets(a)


461




355
Securitized vacation ownership notes receivable


348




446
Total assets

$ 9,209



$ 9,560
Liabilities and Stockholders’ Equity






Current liabilities:






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

$ 1



$ 3
Accounts payable


111




144
Current maturities of long-term securitized vacation ownership debt


111




130
Accrued expenses


1,140




1,177
Accrued salaries, wages and benefits


363




375
Accrued taxes and other


156




163
Total current liabilities


1,882




1,992
Long-term debt(b)


1,653




2,194
Long-term securitized vacation ownership debt


299




402
Deferred income taxes


46




46
Other liabilities


1,951




1,971
Total liabilities


5,831




6,605
Commitments and contingencies






Stockholders’ equity:






Common stock; $0.01 par value; authorized 1,000,000,000 shares; outstanding
195,939,892 and 195,913,400 shares at September 30, 2012 and December
31, 2011, respectively




2




2
Additional paid-in capital


951




963
Accumulated other comprehensive loss


(337 )



(348 )
Retained earnings


2,757




2,337
Total Starwood stockholders’ equity


3,373




2,954
Noncontrolling interest


5




1
Total stockholders’ equity


3,378




2,955
Total liabilities and stockholders’ equity

$ 9,209



$ 9,560
























(a)


Includes restricted cash of $3 million and $2 million at September 30, 2012 and December 31, 2011, respectively.




(b)


Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $415 million and $432 million at
September 30, 2012 and December 31, 2011, respectively.







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









Three Months Ended
September 30,








Nine Months Ended
September 30,

2012



2011



%
Variance








2012



2011



%
Variance

































Reconciliation of Net Income (Loss) to EBITDA and
Adjusted EBITDA










$ 170

$ 163

4.3



Net income (loss)

$ 420

$ 322

30.4
41

57

(28.1)



Interest expense(a)

157

170

(7.6)
35

(7)

n/m



Income tax (benefit) expense(b)

142

(11)

n/m
63

65

(3.1)



Depreciation(c)

190

200

(5.0)
6

8

(25.0)



Amortization(d)

20

26

(23.1)
315

286

10.1



EBITDA

929

707

31.4
(1)

(45)

97.8



(Gain) loss on asset dispositions and impairments, net

7

(14)

n/m
(39)



n/m



Discontinued operations (gain) loss on dispositions(e)



(30)

18

n/m








Restructuring, goodwill impairment and other special
charges (credits), net



(11)



n/m
$ 275

$ 241

14.1



Adjusted EBITDA

$ 895

$ 711

25.9










































(a)


Includes $2 million and $11 million of Starwood’s share of interest expense of unconsolidated joint ventures for the three months ended
September 30, 2012 and 2011, respectively, and $7 million and $17 million for the nine months ended September 30, 2012 and 2011,
respectively.




(b)


Includes $16 million and $2 million of tax expense recorded in discontinued operations dispositions for the three months ended September 30,
2012 and 2011, respectively, and $15 million and $4 million for the nine months ended September 30, 2012 and 2011, respectively. Also
includes $1 million of tax benefit recorded in discontinued operations for the three and nine months ended September 30, 2011.




(c)


Includes $8 million of Starwood’s share of depreciation expense of unconsolidated joint ventures for each of the three months ended September
30, 2012 and 2011, and $22 million and $23 million for the nine months ended September 30, 2012 and 2011, respectively.




(d)


Includes $2 and $3 million of Starwood’s share of amortization expense of unconsolidated joint ventures for the nine months ended September
30, 2012 and 2011, respectively.




(e)


Excludes the amount of income tax expense (benefit) included within (b) above.







Non-GAAP to GAAP Reconciliations – Branded Same-Store Owned Hotels Worldwide
(In millions)

























Three Months Ended
September 30, 2012













$ Change


% Variance

Revenue













Revenue increase/(decrease) (GAAP)










$ (9.8 )
(2.9 )%
Impact of changes in foreign exchange rates











15.0

4.4 %
Revenue increase/(decrease) in constant dollars










$ 5.2

1.5 %















Expense













Expense increase/(decrease) (GAAP)










$ (8.4 )
(3.1 )%
Impact of changes in foreign exchange rates











11.2

4.1 %
Expense increase/(decrease) in constant dollars










$ 2.8

1.0 %




































STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliation – Earnings from Vacation Ownership and Residential Business
(In millions)










Three Months Ended

September 30,



Nine Months Ended

September 30,




2012


2011


$

Variance



2012


2011


$

Variance
















Earnings from vacation ownership and residential

$ 52

$ 33

$ 19

$ 248

$ 109

$ 139
Depreciation expense


(5 )

(5 )




(15 )

(17 )

2
Operating income from vacation ownership and residential

$ 47

$ 28

$ 19

$ 233

$ 92

$ 141


















































Non-GAAP to GAAP Reconciliation – Earnings from Bal Harbour

(In millions)










































Three Months Ended

September 30,



Nine Months Ended

September 30,




















2012


2011


$

Variance



2012


2011


$

Variance
































Earnings from Bal Harbour

















$ 12
$ (2 )
$ 14

$ 125
$ (7 )
$ 132
Depreciation expense































Operating income from Bal Harbour

















$ 12
$ (2 )
$ 14

$ 125
$ (7 )
$ 132















































































STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Future Performance

(In millions, except per share data)



Low Case













Three Months Ended
December 31, 2012









Year Ended

December 31, 2012


$

126





Net income



$ 546


43



Interest expense




200


56



Income tax expense(a)




198


70



Depreciation and amortization




280


295



EBITDA




1,224






Restructuring, goodwill impairment and other special charges (credits), net




(11 )






(Gain) loss on asset dispositions and impairments, net




7






Discontinued operations (gain) loss on dispositions




(30 )

$ 295



Adjusted EBITDA



$ 1,190































Three Months Ended
December 31, 2012





















Year Ended

December 31, 2012


$ 126



Income from continuing operations before special items
















$ 502

$ 0.64



EPS before special items
















$ 2.55






Special Items























Restructuring and other special credits

















11






Gain (loss) on asset dispositions and impairments, net

















(7 )






Debt extinguishment

















(15 )






Total special items – pre-tax

















(11 )






Income tax benefit associated with special items

















40






Total special items – after-tax

















29

$ 126



Income from continuing operations
















$ 531

$ 0.64



EPS including special items
















$ 2.70
























































High Case















Three Months Ended
December 31, 2012










Year Ended

December 31, 2012


$ 129




Net income




$ 549


43




Interest expense





200


58




Income tax expense(a)





200


70




Depreciation and amortization





280


300




EBITDA





1,229







Restructuring, goodwill impairment and other special charges (credits), net





(11 )







(Gain) loss on asset dispositions and impairments, net





7







Discontinued operations (gain) loss on dispositions





(30 )

$ 300




Adjusted EBITDA




$ 1,195



































Three Months Ended
December 31, 2012





















Year Ended

December 31, 2012


$ 129



Income from continuing operations before special items
















$ 505

$ 0.66



EPS before special items
















$ 2.57






Special Items























Restructuring and other special credits

















11






Gain (loss) on asset dispositions and impairments, net

















(7 )






Debt extinguishment

















(15 )






Total special items – pre-tax

















(11 )






Income tax benefit associated with special items

















40






Total special items – after-tax

















29

$ 129



Income from continuing operations
















$ 534

$ 0.66



EPS including special items
















$ 2.72
























































(a)


The full year amounts include a $15 million tax expense recorded in discontinued operations.







STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations –
Future Earnings from Vacation Ownership and Residential Business
Excluding Bal Harbour
(In millions)









Three Months Ended

December 31,





2012


2011


$

Variance










Earnings from vacation ownership and residential


$

35



$ 40

$ (5 )
Depreciation expense



(5 )

(5 )


Operating income from vacation ownership and residential


$ 30

$ 35

$ (5 )

















































Year Ended

December 31, 2012





















Earnings from vacation ownership and residential

















$

158


Depreciation expense


















(20 )
Operating income from vacation ownership and residential

















$ 138












































STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations –
Future Earnings from Bal Harbour
(In millions)









Three Months Ended

December 31,





2012


2011


$

Variance










Earnings from Bal Harbour


$

10


$ 33
$ (23 )
Depreciation expense








Operating income from Bal Harbour


$ 10
$ 33
$ (23 )














































Year Ended

December 31, 2012






















Earnings from Bal Harbour


















$

135

Depreciation expense



















Operating income from Bal Harbour


















$ 135












































Low Case










































Year Ended

December 31, 2013






















Earnings from Bal Harbour


















$

30

Depreciation expense



















Operating income from Bal Harbour


















$ 30












































High Case










































Year Ended

December 31, 2013






















Earnings from Bal Harbour


















$

40

Depreciation expense



















Operating income from Bal Harbour


















$ 40












































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








Three Months Ended

September 30,







Nine Months Ended

September 30,

2012


2011


%

Variance



Same-Store Owned Hotels

Worldwide




2012


2011


%

Variance
























Revenue







$ 359
$ 367
(2.2 )

Same-Store Owned Hotels(a)


$ 1,055
$ 1,054
0.1

12

27
(55.6 )

Hotels Sold or Closed in 2012 and 2011



48

117
(59.0 )

48

40
20.0


Hotels Without Comparable Results



157

137
14.6

6

7
(14.3 )

Other ancillary hotel operations



20

21
(4.8 )
$ 425
$ 441
(3.6 )

Total Owned, Leased and Consolidated Joint Venture Hotels
Revenue




$ 1,280
$ 1,329
(3.7 )























Costs and Expenses







$ 288
$ 296
2.7


Same-Store Owned Hotels(a)


$ 846
$ 855
1.1

8

20
60.0


Hotels Sold or Closed in 2012 and 2011



35

98
64.3

46

38
(21.1 )

Hotels Without Comparable Results



157

130
(20.8 )

6

7
14.3


Other ancillary hotel operations



19

20
5.0
$ 348
$ 361
3.6


Total Owned, Leased and Consolidated Joint Venture Hotels Costs
and Expenses




$ 1,057
$ 1,103
4.2
















Three Months Ended

September 30,




Nine Months Ended

September 30,

2012
2011
%

Variance



Same-Store Owned Hotels

North America




2012
2011
%

Variance
























Revenue







$ 181
$ 183
(1.1 )

Same-Store Owned Hotels(a)


$ 576
$ 571
0.9

12

23
(47.8 )

Hotels Sold or Closed in 2012 and 2011



48

104
(53.8 )

34

24
41.7


Hotels Without Comparable Results



103

75
37.3







Other ancillary hotel operations







$ 227
$ 230
(1.3 )

Total Owned, Leased and Consolidated Joint Venture Hotels
Revenue




$ 727
$ 750
(3.1 )























Costs and Expenses







$ 157
$ 158
0.6


Same-Store Owned Hotels(a)


$ 483
$ 482
(0.2 )

8

16
50.0


Hotels Sold or Closed in 2012 and 2011



35

85
58.8

35

25
(40.0 )

Hotels Without Comparable Results



106

73
(45.2 )







Other ancillary hotel operations



1


n/m
$ 200
$ 199
(0.5 )

Total Owned, Leased and Consolidated Joint Venture Hotels Costs
and Expenses




$ 625
$ 640
2.3
















Three Months Ended

September 30,




Nine Months Ended

September 30,

2012
2011
%

Variance



Same-Store Owned Hotels

International




2012
2011
%

Variance
























Revenue







$ 178
$ 184
(3.3 )

Same-Store Owned Hotels(a)


$ 479
$ 483
(0.8 )



4
(100.0 )

Hotels Sold or Closed in 2012 and 2011





13
(100.0 )

14

16
(12.5 )

Hotels Without Comparable Results



54

62
(12.9 )

6

7
(14.3 )

Other ancillary hotel operations



20

21
(4.8 )
$ 198
$ 211
(6.2 )

Total Owned, Leased and Consolidated Joint Venture Hotels
Revenue




$ 553
$ 579
(4.5 )























Costs and Expenses







$ 131
$ 138
5.1


Same-Store Owned Hotels(a)


$ 363
$ 373
2.7



4
100.0


Hotels Sold or Closed in 2012 and 2011





13
100.0

11

13
15.4


Hotels Without Comparable Results



51

57
10.5

6

7
14.3


Other ancillary hotel operations



18

20
10.0
$ 148
$ 162
8.6


Total Owned, Leased and Consolidated Joint Venture Hotels Costs
and Expenses




$ 432
$ 463
6.7












































(a)


Same-Store Owned Hotel results exclude four hotels sold and 11 hotels without comparable results for the three months ended September 30, 2012
and seven hotels sold and 12 hotels without comparable results for the nine months ended September 30, 2012.




n/m = not meaningful







STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Systemwide(1) Statistics - Same Store
For the Three Months Ended September 30,
UNAUDITED











































Systemwide - Worldwide


Systemwide - North America


Systemwide - International








2012



2011



Variance




2012



2011



Variance




2012



2011



Variance







































































TOTAL HOTELS

































REVPAR ($)





120.02


118.47


1.3 %


119.40


113.90


4.8 %


120.84


124.62


(3.0 %)

ADR ($)





168.31


169.07


(0.4 %)


158.71


153.65


3.3 %


182.96


192.84


(5.1 %)

Occupancy (%)





71.3%



70.1%



1.2



75.2%



74.1%



1.1



66.0%



64.6%

1.4






































































SHERATON

































REVPAR ($)





100.60


100.01


0.6 %


102.83


99.02


3.8 %


97.73


101.29


(3.5 %)

ADR ($)





144.66


145.47


(0.6 %)


139.09


135.62


2.6 %


152.91


160.05


(4.5 %)

Occupancy (%)





69.5%

68.8%

0.7



73.9%

73.0%

0.9



63.9%

63.3%

0.6






































































WESTIN


































REVPAR ($)





130.68


126.36


3.4 %


127.20


121.02


5.1 %


139.31


139.57


(0.2 %)

ADR ($)





175.54


172.73


1.6 %


167.78


160.98


4.2 %


196.03


204.77


(4.3 %)

Occupancy (%)





74.4%

73.2%

1.2



75.8%

75.2%

0.6



71.1%

68.2%

2.9






































































ST. REGIS/LUXURY COLLECTION
































REVPAR ($)





222.25


226.46


(1.9 %)


231.67


220.41


5.1 %


217.22


229.70


(5.4 %)

ADR ($)





333.40


350.40


(4.9 %)


313.87


301.45


4.1 %


345.67


382.31


(9.6 %)

Occupancy (%)





66.7%

64.6%

2.1



73.8%

73.1%

0.7



62.8%

60.1%

2.7






































































LE MERIDIEN

































REVPAR ($)





129.10


134.45


(4.0 %)


198.93


191.02


4.1 %


120.96


127.81


(5.4 %)

ADR ($)





184.39


195.65


(5.8 %)


236.50


232.91


1.5 %


176.92


190.32


(7.0 %)

Occupancy (%)





70.0%

68.7%

1.3



84.1%

82.0%

2.1



68.4%

67.2%

1.2






































































W


































REVPAR ($)





211.39


202.03


4.6 %


197.25


189.30


4.2 %


248.76


235.68


5.5 %

ADR ($)





269.65


264.03


2.1 %


248.79


241.61


3.0 %


327.16


328.81


(0.5 %)

Occupancy (%)





78.4%

76.5%

1.9



79.3%

78.3%

1.0



76.0%

71.7%

4.3






































































FOUR POINTS

































REVPAR ($)





82.43


79.77


3.3 %


87.09


81.30


7.1 %


75.08


77.35


(2.9 %)

ADR ($)





114.52


113.41


1.0 %


113.59


109.83


3.4 %


116.26


119.93


(3.1 %)

Occupancy (%)





72.0%

70.3%

1.7



76.7%

74.0%

2.7



64.6%

64.5%

0.1






































































ALOFT


































REVPAR ($)





75.83


70.37


7.8 %


81.03


75.02


8.0 %










ADR ($)





104.88


101.79


3.0 %


110.02


104.61


5.2 %










Occupancy (%)





72.3%

69.1%

3.2



73.6%

71.7%

1.9



















































































































(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 September 30,
UNAUDITED


































Systemwide (1)



Company-Operated (2)








2012



2011



Variance





2012



2011



Variance





















































TOTAL WORLDWIDE
























REVPAR ($)





120.02


118.47


1.3 %



133.25


132.69


0.4 %

ADR ($)





168.31


169.07


(0.4 %)



188.60


190.54


(1.0 %)

Occupancy (%)





71.3%

70.1%

1.2




70.7%

69.6%

1.1




















































NORTH AMERICA
























REVPAR ($)





119.40


113.90


4.8 %



144.65


138.78


4.2 %

ADR ($)





158.71


153.65


3.3 %



189.93


183.89


3.3 %

Occupancy (%)





75.2%

74.1%

1.1




76.2%

75.5%

0.7




















































EUROPE

























REVPAR ($)





169.84


186.74


(9.1 %)



185.00


204.17


(9.4 %)

ADR ($)





232.01


258.29


(10.2 %)



245.72


273.44


(10.1 %)

Occupancy (%)





73.2%

72.3%

0.9




75.3%

74.7%

0.6




















































AFRICA & MIDDLE EAST
























REVPAR ($)





92.72


89.83


3.2 %



92.65


90.21


2.7 %

ADR ($)





163.63


163.27


0.2 %



164.11


164.55


(0.3 %)

Occupancy (%)





56.7%

55.0%

1.7




56.5%

54.8%

1.7




















































ASIA PACIFIC
























REVPAR ($)





106.31


105.55


0.7 %



107.16


104.62


2.4 %

ADR ($)





160.93


163.19


(1.4 %)



160.53


160.75


(0.1 %)

Occupancy (%)





66.1%

64.7%

1.4




66.8%

65.1%

1.7




















































LATIN AMERICA
























REVPAR ($)





92.27


89.55


3.0 %



96.03


93.67


2.5 %

ADR ($)





154.78


157.80


(1.9 %)



163.67


161.19


1.5 %

Occupancy (%)





59.6%

56.7%

2.9




58.7%

58.1%

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 Three Months Ended September 30,
UNAUDITED

































































WORLDWIDE

NORTH AMERICA

INTERNATIONAL









2012


2011


Variance



2012


2011


Variance



2012


2011


Variance





























TOTAL HOTELS







46 Hotels







21 Hotels







25 Hotels





REVPAR ($)





166.28
168.92
(1.6%)

165.15
164.42
0.4%

167.54
173.94
(3.7%)


ADR ($)





221.97
225.20
(1.4%)

212.69
208.31
2.1%

233.16
246.25
(5.3%)


Occupancy (%)





74.9%
75.0%
(0.1)

77.6%
78.9%
(1.3)

71.9%
70.6%
1.3






























Total Revenue





359,047
367,298
(2.2%)

181,018
183,494
(1.3%)

178,029
183,804
(3.1%)


Total Expenses





287,784
295,910
2.7%

156,392
157,646
0.8%

131,392

138,265

5.0%
















































































































BRANDED HOTELS







41 Hotels







16 Hotels







25 Hotels





REVPAR ($)





167.73
171.44
(2.2%)

167.94
168.74
(0.5%)

167.54
173.94
(3.7%)


ADR ($)





223.34
227.41
(1.8%)

213.65
209.55
2.0%

233.16
246.25
(5.3%)


Occupancy (%)





75.1%
75.4%
(0.3)

78.6%
80.5%
(1.9)

71.9%
70.6%
1.3






























Total Revenue





332,648
342,441
(2.9%)

154,619
158,637
(2.5%)

178,029
183,804
(3.1%)


Total Expenses





267,389
275,834
3.1%

135,997
137,569
1.1%

131,392
138,265
5.0%




















































































(1 )
Hotel Results exclude four hotels sold and 11 hotels without comparable results during 2011 & 2012
*
Revenues & Expenses above are represented in '000's






STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended September 30,
UNAUDITED ($ millions)





























Worldwide



2012



2011



$ Variance



% Variance














Management Fees:











Base Fees

83

81

2

2.5%
Incentive Fees

39

33

6

18.2%
Total Management Fees

122

114

8

7.0%













Franchise Fees

53

48

5

10.4%













Total Management & Franchise Fees

175

162

13

8.0%













Other Management & Franchise Revenues (1)

37

33

4

12.1%













Total Management & Franchise Revenues

212

195

17

8.7%













Other

7

7

-

-













Management Fees, Franchise Fees & Other Income

219

202

17

8.4%




























(1) Other Management & Franchise Revenues includes the amortization of deferred gains of approximately $21 in
2012 and $22 in 2011, resulting from the sales of hotels subject to long-term management contracts and
termination fees.



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Three Months Ended September 30,
UNAUDITED ($ millions)










































































2012



2011



$ Variance



% Variance






















Originated Sales Revenues (1) -- Vacation Ownership Sales




81


82


(1 )

(1.2%)
Other Sales and Services Revenues (2)






67


63


4


6.3%
Deferred Revenues -- Percentage of Completion





-


(3 )

3


100.0%
Deferred Revenues -- Other (3)







(7 )

(4 )

(3 )

(75.0%)
Vacation Ownership Sales and Services Revenues





141


138


3


2.2%
Residential Sales and Services Revenues (4)






67


2


65


n/m
Total Vacation Ownership & Residential Sales and Services Revenues




208


140


68


48.6%





















Originated Sales Expenses (5) -- Vacation Ownership Sales




53


57


4


7.0%
Other Expenses (6)








51


47


(4 )

(8.5%)
Deferred Expenses -- Percentage of Completion





-


(2 )

(2 )

(100.0%)
Deferred Expenses -- Other







2


3


1


33.3%
Vacation Ownership Expenses







106


105


(1 )

(1.0%)
Residential Expenses (4)







50


2


(48 )

n/m
Total Vacation Ownership & Residential Expenses





156


107


(49 )

(45.8%)










































(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, and miscellaneous other revenues

(3)


Includes deferral of revenue for contracts still in rescission period, contracts that do not yet meet the requirements of ASC 978-605-25
and provision for loan loss

(4)


For 2012, includes $62 million of revenues and $50 million expenses associated with the St. Regis Bal Harbour residential project

(5)


Timeshare cost of sales and sales & marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes

(6)


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 ASC 978-720-25 and ASC 978-340-25.



n/m = not meaningful
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Systemwide(1) Statistics - Same Store
For the Nine Months Ended September 30,
UNAUDITED





































Systemwide - Worldwide


Systemwide - North America


Systemwide - International





2012



2011



Variance




2012



2011



Variance




2012



2011



Variance

































































TOTAL HOTELS






























REVPAR ($)


117.27


113.48


3.3 %


117.19


110.50


6.1 %


117.37


117.49


(0.1 %)

ADR ($)


169.00


168.21


0.5 %


160.73


155.67


3.3 %


181.54


187.35


(3.1 %)

Occupancy (%)


69.4%



67.5%

1.9



72.9%

71.0%

1.9



64.7%

62.7%

2.0
































































SHERATON






























REVPAR ($)


98.39


95.46


3.1 %


98.43


93.18


5.6 %


98.35


98.29


0.1 %

ADR ($)


146.06


145.06


0.7 %


137.73


133.98


2.8 %


157.89


160.70


(1.7 %)

Occupancy (%)


67.4%

65.8%

1.6



71.5%

69.5%

2.0



62.3%

61.2%

1.1
































































WESTIN






























REVPAR ($)


131.85


125.80


4.8 %


129.32


122.57


5.5 %


138.44


134.19


3.2 %

ADR ($)


180.57


177.54


1.7 %


173.89


168.02


3.5 %


199.18


205.14


(2.9 %)

Occupancy (%)


73.0%

70.9%

2.1



74.4%

73.0%

1.4



69.5%

65.4%

4.1
































































ST. REGIS/LUXURY COLLECTION






























REVPAR ($)


199.09


200.22


(0.6 %)


226.98


211.35


7.4 %


184.27


194.29


(5.2 %)

ADR ($)


309.91


318.50


(2.7 %)


317.29


302.48


4.9 %


305.26


328.59


(7.1 %)

Occupancy (%)


64.2%

62.9%

1.3



71.5%

69.9%

1.6



60.4%

59.1%

1.3
































































LE MERIDIEN






























REVPAR ($)


127.97


127.65


0.3 %


201.21


192.02


4.8 %


119.70


120.34


(0.5 %)

ADR ($)


184.24


191.37


(3.7 %)


240.21


231.89


3.6 %


176.43


185.50


(4.9 %)

Occupancy (%)


69.5%

66.7%

2.8



83.8%

82.8%

1.0



67.8%

64.9%

2.9
































































W































REVPAR ($)


205.73


195.09


5.5 %


196.01


184.20


6.4 %


241.23


234.82


2.7 %

ADR ($)


266.44


258.86


2.9 %


251.15


242.57


3.5 %


325.16


320.48


1.5 %

Occupancy (%)


77.2%

75.4%

1.8



78.0%

75.9%

2.1



74.2%

73.3%

0.9
































































FOUR POINTS






























REVPAR ($)


80.99


77.42


4.6 %


79.96


74.78


6.9 %


82.64


81.64


1.2 %

ADR ($)


116.94


114.87


1.8 %


111.72


108.13


3.3 %


126.06


126.42


(0.3 %)

Occupancy (%)


69.3%

67.4%

1.9



71.6%

69.2%

2.4



65.6%

64.6%

1.0
































































ALOFT































REVPAR ($)


74.44


69.33


7.4 %


76.51


70.54


8.5 %










ADR ($)


105.58


104.71


0.8 %


107.44


104.47


2.8 %










Occupancy (%)


70.5%

66.2%

4.3



71.2%

67.5%

3.7










































































































(1)

Includes same store owned, leased, managed, and franchised hotels









STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Nine Months Ended September 30,
UNAUDITED



























Systemwide (1)


Company-Operated (2)





2012



2011



Variance




2012



2011



Variance













































TOTAL WORLDWIDE




















REVPAR ($)


117.27


113.48


3.3 %


131.65


127.80


3.0 %

ADR ($)


169.00


168.21


0.5 %


190.21


189.39


0.4 %

Occupancy (%)


69.4%

67.5%

1.9



69.2%

67.5%

1.7












































NORTH AMERICA




















REVPAR ($)


117.19


110.50


6.1 %


144.87


136.69


6.0 %

ADR ($)


160.73


155.67


3.3 %


194.26


186.87


4.0 %

Occupancy (%)


72.9%

71.0%

1.9



74.6%

73.1%

1.5












































EUROPE





















REVPAR ($)


145.59


156.78


(7.1 %)


157.01


168.84


(7.0 %)

ADR ($)


217.04


235.13


(7.7 %)


228.63


247.40


(7.6 %)

Occupancy (%)


67.1%

66.7%

0.4



68.7%

68.2%

0.5












































AFRICA & MIDDLE EAST




















REVPAR ($)


110.82


106.45


4.1 %


110.98


107.08


3.6 %

ADR ($)


178.47


182.61


(2.3 %)


179.49


184.42


(2.7 %)

Occupancy (%)


62.1%

58.3%

3.8



61.8%

58.1%

3.7












































ASIA PACIFIC




















REVPAR ($)


106.25


102.40


3.8 %


107.62


102.38


5.1 %

ADR ($)


164.33


164.01


0.2 %


165.26


162.80


1.5 %

Occupancy (%)


64.7%

62.4%

2.3



65.1%

62.9%

2.2












































LATIN AMERICA




















REVPAR ($)


98.18


91.66


7.1 %


105.58


96.35


9.6 %

ADR ($)


159.36


154.48


3.2 %


171.00


160.60


6.5 %

Occupancy (%)


61.6%

59.3%

2.3



61.7%

60.0%

1.7


































































(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 Nine Months Ended September 30,
UNAUDITED


































































WORLDWIDE


NORTH AMERICA


INTERNATIONAL








2012


2011


Variance




2012


2011


Variance




2012


2011


Variance






























TOTAL HOTELS







45 Hotels








21 Hotels








24 Hotels




REVPAR ($)





160.57
159.41
0.7%


166.68
163.90
1.7%


153.63
154.31
(0.4%)

ADR ($)





220.46
220.04
0.2%


219.21
214.68
2.1%


222.02
226.87
(2.1%)

Occupancy (%)





72.8%
72.4%
0.4


76.0%
76.3%
(0.3)


69.2%
68.0%
1.2






























Total Revenue





1,055,392
1,053,771
0.2%


576,479
571,181
0.9%


478,913
482,590
(0.8%)

Total Expenses





846,250
855,290
1.1%


482,735
481,761
(0.2%)


363,515
373,529
2.7%




















































































































BRANDED HOTELS







40 Hotels








16 Hotels








24 Hotels




REVPAR ($)





163.15
162.84
0.2%


173.23
171.89
0.8%


153.63
154.31
(0.4%)

ADR ($)





222.17
222.07
0.0%


222.32
217.68
2.1%


222.02
226.87
(2.1%)

Occupancy (%)





73.4%
73.3%
0.1


77.9%
79.0%
(1.1)


69.2%
68.0%
1.2






























Total Revenue





985,096
988,341
(0.3%)


506,183
505,751
0.1%


478,913
482,590
(0.8%)

Total Expenses





787,414
797,489
1.3%


423,899
423,960
0.0%


363,515
373,529
2.7%























































































(1)

Hotel Results exclude seven hotels sold and 12 hotels without comparable results during 2011 & 2012

*

Revenues & Expenses above are represented in '000's




STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Nine Months Ended September 30,
UNAUDITED ($ millions)






































Worldwide






2012



2011



$ Variance



% Variance

















Management Fees:














Base Fees




244

227

17


7.5 %
Incentive Fees




119

95

24


25.3 %
Total Management Fees




363

322

41


12.7 %
















Franchise Fees




150

140

10


7.1 %
















Total Management & Franchise Fees




513

462

51


11.0 %
















Other Management & Franchise Revenues (1)




110

96

14


14.6 %
















Total Management & Franchise Revenues




623

558

65


11.6 %
















Other




19

22

(3 )

(13.6 %)
















Management Fees, Franchise Fees & Other Income




642

580

62


10.7 %




































(1) Other Management & Franchise Revenues includes the amortization of deferred gains of approximately $64 in
2012 and in 2011, resulting from the sales of hotels subject to long-term management contracts and termination
fees.



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Nine Months Ended September 30,
UNAUDITED ($ millions)














































































2012



2011



$ Variance



% Variance























Originated Sales Revenues (1) -- Vacation Ownership Sales






240


244


(4 )

(1.6 %)
Other Sales and Services Revenues (2)







209


199


10


5.0 %
Deferred Revenues -- Percentage of Completion






3


(3 )

6


n/m
Deferred Revenues -- Other (3)








(11 )

(11 )

-


-
Vacation Ownership Sales and Services Revenues






441


429


12


2.8 %
Residential Sales and Services Revenues (4)







597


10


587


n/m
Total Vacation Ownership & Residential Sales and Services Revenues


1,038


439


599


n/m






















Originated Sales Expenses (5) -- Vacation Ownership Sales






164


169


5


3.0 %
Other Expenses (6)









156


148


(8 )

(5.4 %)
Deferred Expenses -- Percentage of Completion






2


(2 )

(4 )

n/m
Deferred Expenses -- Other








8


9


1


11.1 %
Vacation Ownership Expenses








330


324


(6 )

(1.9 %)
Residential Expenses (4)








460


6


(454 )

n/m
Total Vacation Ownership & Residential Expenses






790


330


(460 )

n/m












































(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, and miscellaneous other revenues

(3)


Includes deferral of revenue for contracts still in rescission period, contracts that do not yet meet the requirements of ASC 978-605-25
and provision for loan loss

(4)


For 2012, includes $585 million of revenues and $460 million expenses associated with the St. Regis Bal Harbour residential project

(5)


Timeshare cost of sales and sales & marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes

(6)


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 ASC 978-720-25 and ASC 978-340-25.



n/m = not meaningful

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Hotels without Comparable Results & Other Selected Items

As of September 30, 2012
UNAUDITED ($ millions)
















































































































Properties without comparable results in 2012 and 2011:











Revenues and Expenses Associated with Assets Sold or Closed in 2012 and 2011: (1)




























Property





Location























The Westin Peachtree Plaza



Atlanta, GA









Q1



Q2



Q3

Q4
Full Year
St. Regis Bal Harbour



Bal Harbour, FL






Hotels Sold or Closed in 2011:













Sheraton Kauai Resort



Koloa, HI






2011













Grand Hotel - Florence



Florence, Italy






Revenues

$ 28

$ 23

$ 5

$ -

$ 56
W London - Leicester Square



London, England






Expenses (excluding depreciation)

$ 28

$ 19

$ 4

$ (1 )
$ 50
Aloft San Francisco (formerly Clarion Hotel)



Millbrae, CA





















W New Orleans - French Quarter



New Orleans, LA






Hotels Sold or Closed in 2012:













Sheraton Suites Philadelphia Airport



Philadelphia, PA






2012













Hotel Maria Cristina



San Sebastian, Spain






Revenues

$ 16

$ 20

$ 12

$ -

$ 48
Hotel Alfonso XIII



Seville, Spain






Expenses (excluding depreciation)

$ 14

$ 13

$ 8

$ -

$ 35
Four Points Tucson



Tucson, AZ





















Hotel Gritti Palace



Venice, Italy






2011


























Revenues

$ 16

$ 23

$ 22

$ 20

$ 81
Properties sold or closed in 2012 and 2011:











Expenses (excluding depreciation)

$ 14

$ 17

$ 16

$ 14

$ 61




























Property





Location








(1) Results consist of three hotels sold in 2012 and four hotels sold in 2011. These amounts are included in the revenues
and expenses from owned, leased and consolidated joint venture hotels in the statements of income for 2012 and 2011.

Atlanta Perimeter



Atlanta, GA







Boston Park Plaza



Boston, MA





















W Chicago - Lakeshore



Chicago, IL





















W City Center



Chicago, IL





















W Los Angeles - Westwood



Los Angeles, CA





















The Westin Gaslamp Quarter



San Diego, CA





















Hotel Bristol



Vienna, Austria













































































STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three and Nine Months Ended September 30, 2012
UNAUDITED ($ millions)
























Q3


YTD

Maintenance Capital Expenditures: (1)







Owned, Leased and Consolidated Joint Venture Hotels




20

36
Corporate/IT




17

52
Subtotal




37

88









Vacation Ownership and Residential Capital Expenditures:







Net capital expenditures for inventory (excluding St. Regis Bal Harbour) (2)




(10 )
(30 )
Capital expenditures for inventory - St. Regis Bal Harbour




3

20
Subtotal




(7 )
(10 )









Development Capital




78

198









Total Capital Expenditures




108

276






















(1) Maintenance capital expenditures include improvements that extend the useful life of the asset.


(2) Represents gross inventory capital expenditures of $6 and $25 in the three and nine months ended
September 30, 2012, respectively, less cost of sales of $16 and $55 in the three and nine months ended
September 30, 2012, respectively.



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
2012 Divisional Hotel Inventory Summary by Ownership by Brand*
As of September 30, 2012
















































































NAD

EUROPE

AME

LAD

ASIA

Total




Hotels



Rooms



Hotels



Rooms



Hotels



Rooms



Hotels



Rooms



Hotels



Rooms



Hotels



Rooms

Owned




































Sheraton


6

3,529

4

705

-

-

5

2,699

2

821

17

7,754
Westin


4

2,399

3

650

-

-

3

902

1

273

11

4,224
Four Points


2

327

-

-

-

-

-

-

-

-

2

327
W


3

1,017

2

665

-

-

-

-

-

-

5

1,682
Luxury Collection


1

643

5

584

-

-

1

181

-

-

7

1,408
St. Regis


3

732

2

261

-

-

-

-

1

160

6

1,153
Aloft


3

524

-

-

-

-

-

-

-

-

3

524
Element


1

123

-

-

-

-

-

-

-

-

1

123
Other


5

1,403

-

-

-

-

-

-

-

-

5

1,403
Total Owned


28

10,697

16

2,865

-

-

9

3,782

4

1,254

57

18,598






































Managed & UJV




































Sheraton


37

26,283

41

11,936

31

8,640

15

2,954

79

29,735

203

79,548
Westin


54

28,379

12

4,097

3

949

3

886

30

10,114

102

44,425
Four Points


1

171

6

1,013

7

1,329

4

517

19

6,178

37

9,208
W


25