Hotel Online  Special Report
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 Starwood Reports 2003 Full Year Net Income Down 13%
to $309 million from $355 million in 2002; 
Worldwide 4th Qtr RevPAR Up 6.6% and
4.7% in North America
Hotel Operating Statistics
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WHITE PLAINS, N.Y - Feb. 5, 2004 -- Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT):

Fourth quarter 2003 Highlights:

  • REVPAR at Same-Store Owned Hotels worldwide and in North America increased 6.6% and 4.7%, respectively, when compared to the fourth quarter of 2002. ADR increased 3.5% and 1.3% worldwide and in North America, respectively. Globally, W Hotels REVPAR grew 9.9%, followed by Sheraton (+8.1%), St. Regis/Luxury Collection (+6.1%), and Westin (+4.0%), with each of these brands experiencing both ADR and occupancy gains.
  • Total Company Adjusted EBITDA margins improved during the quarter despite significant unanticipated increases in workers compensation and other healthcare related costs.
  • Total Company market share increased during the quarter. At proprietary branded owned hotels in North America, according to Smith Travel Research, market share increased 230 basis points when compared to 2002.
  • Management and franchise fees increased approximately 12% when compared to the fourth quarter of 2002.
  • Starwood Vacation Ownership revenues, which exclude gains on sales of notes receivables, increased 21.5% as the number of contracts sold increased approximately 13.5% and price per vacation ownership unit increased approximately 21.2%. 
Starwood Hotels & Resorts Worldwide, Inc. ("Starwood" or the "Company") today reported EPS from continuing operations for the fourth quarter of 2003 of $0.42 compared to $0.44 in 2002. Excluding special items, EPS from continuing operations was $0.42 for the fourth quarter of 2003 compared to $0.24 in 2002. Income from continuing operations was $88 million in 2003 compared to $89 million in 2002. Excluding special items, income from continuing operations was $87 million for the fourth quarter of 2003 compared to $48 million in 2002. Net income (including discontinued operations) was $87 million and EPS was $0.42 in 2003 compared to net income of $91 million and EPS of $0.45 in 2002. Fourth quarter results reflect a 2.8% tax benefit as compared to a 5.0% tax benefit forecast at the end of the third quarter of 2003.

EPS from continuing operations for the full year ended December 31, 2003 was $0.51 compared to $1.22 in 2002. Excluding special items, EPS from continuing operations was $0.86 in 2003 compared to $1.00 in 2002. Income from continuing operations was $105 million in 2003 compared to $251 million in 2002. Excluding special items, income from continuing operations was $176 million in 2003 compared to $206 million in 2002. Net income (including discontinued operations) was $309 million and EPS was $1.50 in 2003 compared to net income of $355 million and EPS of $1.73 in 2002. The full year 2003 results reflect a 3.9% tax benefit as compared to a 14.2% tax expense for the full year 2002.

Barry S. Sternlicht, Chairman and CEO said, "The positive trends we saw emerge in September continued through the fourth quarter as the weakness in group business was more than offset by continued strength in business transient, powered by significant market share gains in nearly every brand in our system. These trends, combined with very strong results in our timeshare operations and in our management and franchise fees, are encouraging and we are generally pleased with our performance. While we carefully pruned major capital investments the past two years in the face of the recession, war and SARS, our relative performance and growth into 2004 is, we believe, attributable to investments in our product innovations, like our suite of Heavenly products for Westin, the Sheraton Sweet Sleeper and Service Promise, our aggressive PR campaigns (such as Starwood Love That Dog), critical technology investments in CRM, database management, call center technology, and sales, in other operational areas, and to our very committed team. These initiatives have won share and increased guest satisfaction and loyalty. Indeed, without the major unanticipated increases in workers compensation, our performance and margin growth in the fourth quarter would have been much better."

"Moving into 2004, we anticipate a full slate of new innovations both on the technology and product side, as well as core investments in productivity enhancements at the functional level which will drive significant increases in profitability in '04 and '05. The W brand will build upon its superior performance with the introduction of Bliss Spas while our new product line extensions for St. Regis into fractional and residential markets will add new avenues of growth globally."

Concluding, Mr. Sternlicht said, "It is indeed remarkable that given the long war and SARS impact on our global enterprise, that revenue for the year was actually up (excluding asset sales). The combination of this factor, the momentum apparent in our brand strength, the benefit of the strategic investments we have made the last several years including our recent investment in Meridien Hotels, Bliss Spas and our sales pace in Starwood Vacation Ownership, allow us to increase 2004 expectations for earnings and cash flow significantly. Our global pipeline has perhaps never been deeper or of higher quality. We are in a position to more actively manage our asset base to significantly increase our return on invested capital."

Operating Results:

Fourth quarter ended December 31, 2003:

Cash flow from operations in the fourth quarter of 2003 was $245 million compared to $145 million in 2002. Total Company Adjusted EBITDA in the fourth quarter of 2003 was $271 million compared to $266 million in 2002. EBITDA in 2002 included approximately $11 million from assets sold during the first three quarters of 2003. Total management and franchise fees in the fourth quarter were $73 million, up $7.7 million, or 12%, from last year and vacation ownership revenue, which exclude gains on sales of notes receivables, was up $19.9 million in the fourth quarter of 2003 when compared to 2002.

REVPAR for Same-Store Owned Hotels worldwide and in North America increased 6.6% and 4.7%, respectively, when compared to 2002. Transient travel was up more than 11% in North America when compared to 2002, more than offsetting weakness in group travel. For the fifth quarter in a row, total Company market share in North America increased for the Company's owned and managed hotels as well as system-wide (owned, managed and franchised) hotels. REVPAR at Same-Store Owned Hotels in North America increased 9.9% at W, 5.4% at Sheraton, 4.8% at St. Regis/Luxury Collection, and 3.2% at Westin. REVPAR was particularly strong at the Company's owned hotels in New York, San Diego, Toronto, Washington D.C., Maui, Philadelphia and Chicago. REVPAR was weaker at owned hotels in San Francisco, Seattle and Boston. Internationally, Same-Store Owned Hotel REVPAR increased 12.6%, with Europe up 8.8%, Asia Pacific up 53.9%, and Latin America up 5.6%. Excluding the favorable effects of foreign exchange, REVPAR decreased 2.7% internationally.

Systemwide branded REVPAR for Same-Store Hotels in North America increased 3.4%: W Hotels +9.6%, St. Regis/Luxury Collection +6.3%, Westin +4.2%, Sheraton +2.1%, and Four Points by Sheraton +1.9%.

Year Ended December 31, 2003:

Cash flow from operations for the year ended 2003 was $771 million compared to $706 million in the year ended 2002. Total Company Adjusted EBITDA for the year ended 2003 was $938 million compared to $1.078 billion in 2002. Total management and franchise fees were $250 million for the year ended December 31, 2003, up $18.3 million from last year. Vacation ownership revenues, which exclude gains on sales of notes receivables, were up $85.4 million in 2003 when compared to 2002. REVPAR for Same-Store Owned Hotels worldwide increased 1.3% for 2003 when compared to 2002. REVPAR for Same-Store Owned Hotels in North America was flat in 2003 when compared to 2002.

Starwood Vacation Ownership:

Revenues from the vacation ownership business increased 21.5% to $112.0 million in the fourth quarter of 2003 when compared to 2002 as contract sales were up 37.6% reflecting strong demand at our resorts in Maui, Scottsdale and Orlando. The average price per timeshare unit sold increased approximately 21.2% to $19,683, and the number of contracts sold increased approximately 13.5% in the fourth quarter of 2003 when compared to 2002. During the fourth quarter of 2003, the Company sold $60 million of vacation ownership notes receivables recognizing gains of $9 million as compared to gains of $3 million in the same period of 2002 (for the year ended December 31, 2003, gains on vacation ownership notes receivables were approximately $15 million, comparable with the prior year). During the quarter, the Company held the grand opening of the Westin Ka'anapali vacation ownership resort. The first phase of the resort (103 units) was sold out prior to opening. Also during the quarter, the Company announced a brand extension and fractional product with the St. Regis Aspen Residence Club (25 units).

Development:

During the fourth quarter, the Company signed 25 hotel management and franchise contracts (representing approximately 5,800 rooms), including the St. Regis Resort and Residences in Anguilla, and the St. Regis in Singapore (400 rooms), and opened seven new hotels and resorts including: the Sheraton Porto (Porto, Portugal, 269 rooms), and the W Mexico City (Mexico City, Mexico, 237 rooms). The Company expects to open 25 new full service hotels and resorts (approximately 8,200 rooms) around the world in 2004. The Company had approximately 115 hotels and approximately 34,000 rooms in its active global development pipeline at December 31, 2003 with roughly one half of that number in international locations.

Dispositions:

As part of its disposition strategy for non-core domestic hotels, the Company completed the sale of the Sheraton North Charleston in October 2003. The Company incurred a $178 million (pre-tax) charge in the first three quarters of 2003 related to an impairment charge on 18 non-core domestic hotels that were held for sale, 16 of which have been sold. During the fourth quarter of 2003, an additional $3 million (pre-tax) charge was incurred, related to post-closing adjustments to the sales price of 16 non-core domestic hotels. The remaining 2 hotels not sold are not being marketed for sale at this time. The Company realized approximately $1.1 billion in cash proceeds in 2003 from the sale of these 16 hotels with 4,754 rooms, and the sales in the second quarter of 2003 of the Hotel Principe di Savoia in Milan, Italy (404 rooms) and four hotels (382 rooms) and a 51% interest in undeveloped land in Costa Smeralda, Italy.

Capital:

Gross capital spending during the quarter included approximately $75 million in hotel assets including $6 million for the renovation of the Company's flagship Sheraton Hotel and Towers in New York; $35 million in VOI capital assets (primarily inventory build), including VOI construction at Westin Ka'anapali Ocean Resort Villas in Maui, Hawaii; Westin Mission Hills Resort Villas in Rancho Mirage, California and Westin Kierland Villas in Scottsdale, Arizona; and $60 million in other development/corporate capital, including the ongoing development of the St. Regis Museum Tower in San Francisco (269 rooms and 102 condominium units). To date, the Company has invested $146 million in the St. Regis Museum Tower Project, a mixed-use project, which is expected to open in mid-2005. The Company expects to realize gross proceeds of approximately $200 million from the sale of the project's condominiums. The Company expects to begin taking reservations for these condominiums in the second quarter of 2004.

In addition, during the fourth quarter of 2003, the Company funded its approximate $200 million share of an acquisition of the outstanding senior debt of the Le Meridien Hotels and Resorts group through a high yield junior participation agreement with a subsidiary of Lehman Brothers Holdings Inc. ("Lehman"). The total senior debt of Le Meridien was approximately $1.3 billion and was acquired by Lehman and Starwood at a discount. The Le Meridien portfolio includes more than 120 upscale hotels and resorts with significant concentration in major European cities and resort destinations. As part of this funding, Lehman and Starwood entered into an exclusive agreement to negotiate the recapitalization of Le Meridien in the coming months.

Share Repurchase

For the quarter ended December 31, 2003, the Company repurchased 818,700 shares at a total cost of approximately $27.5 million. At December 31, 2003, approximately $606 million remained available under the Company's Board authorized share repurchase program. At December 31, 2003, Starwood had approximately 204 million shares outstanding (including partnership units and exchangeable preferred shares).

Dividend:

The Company declared its annual dividend for 2003 of $0.84 per share, which was paid on January 21, 2004 to shareholders of record on December 31, 2003.

Balance Sheet:

At December 31, 2003, the Company had total debt of $4.626 billion and cash and cash equivalents (including restricted cash) of $508 million, or net debt of $4.118 billion (after the funding of the $200 million acquisition of Le Meridien debt), compared to net debt of $4.014 billion at the end of the third quarter of 2003.

At December 31, 2003, debt was approximately 65% fixed rate and 35% floating rate and its weighted average maturity was 6.0 years with a weighted average interest rate of 5.46%. The Company had cash (including restricted cash) and availability under domestic and international revolving credit facilities of approximately $1.4 billion.

Outlook:

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

For the first quarter of 2004, if REVPAR at Same-Store Owned Hotels in North America is up 5.0% to 6.0% versus the same period a year ago (in January 2004, REVPAR at Same-Store Owned Hotels in North America increased 6.6% and 8.4% worldwide and Starwood Vacation Ownership contract sales were up significantly in the month when compared to the same period in 2003):

    * EBITDA would be expected to be approximately $205 million.
    * Net income would be expected to be approximately $16 million.
    * EPS would be expected to be approximately $0.08. 

For the full year 2004, if REVPAR at Same-Store Owned Hotels in North America increases approximately 5.0% to 6.0% versus the full year 2003:

  • Full year revenues, including other revenues from managed and franchised properties, would be expected to be approximately $5.0 billion.
  • Full year EBITDA would be expected to increase approximately 12% to approximately $1.025 billion, when compared to 2003 EBITDA of $917 million, after adjusting for the 2003 asset sales.
  • Full year net income would be expected to be approximately $230 million.
  • Full year EPS, would be expected to be approximately $1.10 at a 15 percent tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2005).
  • Full year capital expenditures (excluding timeshare inventory) would be approximately $450 million, including approximately $100 million for the St. Regis San Francisco multi-use project under construction, $150 million for other growth initiatives and $200 million for maintenance capital. Net capital expenditures for timeshare inventory would be approximately $50 million focusing on projects in Aspen, Maui, Scottsdale and Orlando.
  • For full year the Company expects cash interest expense of approximately $285 million and cash taxes of approximately $75 million. 
Special Items:

The Company recorded net credits of $1 million (after-tax) for special items in the fourth quarter of 2003 compared to $41 million of net credits (after-tax) in the same period of 2002.

Special items in the fourth quarter of 2003 primarily relate to the reversal of a liability that was established in 1997 for the ITT Excess Pension Plan and is no longer required as the Company finalized the settlement of its remaining obligations associated with the plan. Special items also include a special credit associated with the successful settlement of certain litigation matters offset in part by a reserve for additional legal defense costs associated with a separate litigation matter, as well as by post-closing adjustments to the sales price of the 16 non-strategic domestic hotels.

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

 Three Months
      Ended                                              Year Ended
  December 31,                                          December 31,
 --------------                                        ---------------
  2003    2002                                           2003    2002
 ------  ------                                         ------  ------
                Income from continuing operations
$   87  $   48   before special items                  $  176  $  206
 ------  ------                                         ------  ------
$ 0.42  $ 0.24  EPS before special items               $ 0.86  $ 1.00
 ------  ------                                         ------  ------
 

                Special Items:
                Restructuring and other special
     8       2   credits, net(a)                            9       7
                Gain (loss) on asset dispositions and
    (4)      1   impairments, net(b)                     (183)      3
    --      --  Foreign exchange gain from Argentina(c)    --      30
    --      (1) Debt extinguishment costs(d)               --     (30)
                Costs associated with construction
    (1)     (3)  remediation(e)                            (4)     (8)
                Reversal of interest on tax
    --      11   deficiencies reserve (f)                  --      11
 ------  ------                                         ------  ------
     3      10  Total special items - pre-tax            (178)     13
                Income tax benefit (expense) for
    (2)     (4)  special items(g)                          77      (7)
    --      35  Favorable settlement of tax matters(h)     30      39
 ------  ------                                         ------  ------
     1      41  Total special items - after-tax           (71)     45
 ------  ------                                         ------  ------

$   88  $   89  Income from continuing operations      $  105  $  251
 ------  ------                                         ------  ------

$ 0.42  $ 0.44  EPS including special items            $ 0.51  $ 1.22
 ------  ------                                         ------  ------

(a) During the three and twelve month periods ending December 31,
    2003, the Company received $12 million in a favorable settlement
    of a litigation matter. This credit was offset by an increase of
    $13 million in a reserve for legal defense costs associated with a
    separate litigation matter. Additionally, during the three and
    twelve month periods ending December 31, 2003, the Company
    reversed a $9 million liability that was originally established in
    1997 for the ITT Excess Pension Plan and is no longer required as
    the Company finalized the settlement of its remaining obligations
    associated with the plan. During the three and twelve months ended
    December 31, 2002, the Company sold its investments in e-business
    ventures previously deemed impaired and collected receivables
    which were previously deemed uncollectible. Accordingly, the
    previously recorded impairment reserves associated with these
    assets were reversed.

(b) Loss for the three and twelve months ended December 31, 2003
    primarily represents the impairment charges recorded due to the
    classification of a portfolio of 18 domestic non-core hotels as
    held for sale, 16 of which have been sold to date, offset in part
    by the $9 million gain on the sale of undeveloped land in
    Sardinia, Italy in the second quarter of 2003. Gain for the three
    months ended December 31, 2002 primarily represents a gain on sale
    recorded in the fourth quarter of 2002 in connection with
    Starwood's share of gains from the sale of two hotels in which the
    Company held minority interests. On a full year basis for 2002,
    this balance includes a $6 million gain on sale of the Company's
    investment in Interval International, offset, in part, by an
    impairment charge recorded in the first quarter of 2002 to reduce
    the carrying value of a hotel to its fair market value, which was
    sold in the second quarter of 2002.

(c) Amount represents net foreign exchange gains resulting from the
    initial devaluation of the Argentine Peso and subsequent exchange
    rate volatility and is reflected in selling, general and
    administrative and other expenses.

(d) In the second quarter of 2002, the Company early adopted Statement
    of Financial Accounting Standards ("SFAS") No. 145, requiring
    costs associated with the early extinguishment of debt to be
    included in income from continuing operations, rather than
    reported as an extraordinary item. This resulted in the inclusion
    of costs related to the early extinguishment of debt and the
    unwinding of the associated interest rate swaps in 2002 in
    interest expense.

(e) Represents the Company's share of costs for construction
    remediation efforts at a property owned by a vacation ownership
    unconsolidated joint venture.

(f) Reversal relates to accrued interest on estimated tax audit
    liabilities dating back to 1993 that were successfully settled
    during 2002 (see (h) below).

(g) In 2003, amount primarily represents taxes on special items at the
    Company's incremental tax rate, primarily associated with the 2003
    asset sales. In 2002, amount represents taxes on special items at
    the Company's incremental tax rate, with the exception of the
    construction remediation charge which is not tax-effected as the
    joint-venture is in a tax-exempt jurisdiction.

(h) Reversals relate to various tax matters that were successfully
    settled during 2002 and 2003 and state tax refunds received.

 
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,
 -----------------------                     -------------------------
                   %                                            %
  2003    2002  Variance                       2003    2002   Variance
 ------  ------ --------                     -------  ------ ---------
                        Revenues
                        Owned, leased and
                         consolidated joint
$  797  $  804     (0.9) venture hotels     $ 3,085  $3,190      (3.3)
                        Other hotel and
   183     166     10.2  leisure(a)             694     618      12.3
 ------  ------ --------                     -------  ------ ---------
   980     970      1.0                       3,779   3,808      (0.1)
                        Other revenues from
                         managed and
                         franchised
   217     191     13.6  properties(b)          851     780       9.1
 ------  ------ --------                     -------  ------ ---------
 1,197   1,161      3.1                       4,630   4,588       0.9
                        Costs and Expenses
                        Owned, leased and
                         consolidated joint
   611     611       --  venture hotels       2,392   2,350      (1.8)
                        Selling, general,
                         administrative and
   129     108    (19.4) other(c)               540     426     (26.8)
                        Restructuring and
                         other special
    (8)     (2)   300.0  credits, net            (9)     (7)     28.6
   101     124     18.6 Depreciation            410     473      13.3
     5       3    (66.7)Amortization             19      15     (26.7)
 ------  ------ --------                     -------  ------ ---------
   838     844      0.7                       3,352   3,257      (2.9)
                        Other expenses from
                         managed and
                         franchised
   217     191    (13.6) properties(b)          851     780      (9.1)
 ------  ------ --------                     -------  ------ ---------
 1,055   1,035     (1.9)                      4,203   4,037      (4.1)
   142     126     12.7 Operating income        427     551     (22.5)
                        Gain on sale of VOI
     9       3    200.0  notes receivable        15      16      (6.2)
                        Equity earnings from
                         unconsolidated
     2      (1)   300.0  ventures                12       8      50.0
                        Interest expense,
                         net of interest
                         income of $2, $1,
   (63)    (63)      --  $5, $2(d)             (282)   (323)     12.7
                        Gain (loss) on asset
                         dispositions and
    (4)      1      n/m  impairments, net      (183)      3       n/m
 ------  ------ --------                     -------  ------ ---------
    86      66      n/m                         (11)    255       n/m
                        Income tax benefit
    --      25      n/m  (expense)              113      (2)      n/m
                        Minority equity in
     2      (2)     n/m  net income               3      (2)      n/m
 ------  ------ --------                     -------  ------ ---------
                        Income from
                         continuing
    88      89     (0.1) operations             105     251     (58.2)
                        Discontinued
                         operations:
                            Loss from
                             operations, net
                             of taxes of $(1),
                             $2, $0 and $2(e)    (2)     (5)     60.0
                            Gain on
                             disposition,
                             net of taxes of
                             $0, $0, $40 and
    --       5      n/m      $(104)             206     109      89.0
 ------  ------ --------                     -------  ------ ---------
$   87  $   91     (4.4)Net income          $   309  $  355     (13.0)
 ======  ====== ========                     =======  ====== =========

                        Earnings Per Share
                         -- Basic

                        Continuing
$ 0.43  $ 0.44     (2.3) operations         $  0.52  $ 1.24     (58.1)

                        Discontinued
    --    0.01      n/m  operations            1.01    0.52       n/m
 ------  ------ --------                     -------  ------ ---------
$ 0.43  $ 0.45     (4.4)Net income          $  1.53  $ 1.76     (13.1)
 ======  ====== ========                     =======  ====== =========

                        Earnings Per Share
                         -- Diluted

                        Continuing
$ 0.42  $ 0.44     (4.5) operations         $  0.51  $ 1.22     (58.2)
                        Discontinued
    --    0.01      n/m  operations            0.99    0.51       n/m
 ------  ------ --------                     -------  ------ ---------
$ 0.42  $ 0.45     (6.7)Net income          $  1.50  $ 1.73     (13.3)
 ======  ====== ========                     =======  ====== =========

                        Weighted average
   202     200           number of Shares       203     201
 ======  ======                              =======  ======
                        Weighted average
                         number of Shares
   209     203           assuming dilution      207     205
 ======  ======                              =======  ======

----------

(a) Other hotel and leisure revenues include management and franchise
    fees earned from third party hotel owners.

(b) 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.

(c) Selling, general, administrative and other expenses include the
    cost of sales of VOIs and other costs of vacation ownership
    operations.

(d) Interest expense is net of $0 and $8 million of discontinued
    operations allocations for the three and twelve month periods
    ended December 31, 2003, respectively. Interest expense is net of
    $4 million and $0 of discontinued operations allocations for the
    three and twelve month periods ended December 31, 2002,
    respectively. Interest expense for the twelve months ended
    December 31, 2002 also includes $30 million of early debt
    termination costs.

(e) For the periods presented, the Principe is reported as a
    discontinued operation as a result of the sale of this hotel with
    no continuing involvement.

n/m = not meaningful
 

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                      CONSOLIDATED BALANCE SHEETS
                   (In millions, except share data)

                                             December 31, December 31,
                                                 2003         2002
                                             ------------ ------------

Assets
Current assets:
    Cash and cash equivalents                $       427  $       108
    Restricted cash                                   81          108
    Accounts receivable, net of allowance for
     doubtful accounts of $53 and $45                418          398
    Inventories                                      215          214
    Prepaid expenses and other                       104          108
                                              -----------  -----------
       Total current assets                        1,245          936
  Investments                                        415          434
  Plant, property and equipment, net               7,123        6,911
  Assets held for sale (a)                            --          839
  Goodwill and intangible assets                   2,488        2,570
  Other assets                                       623          500
                                              -----------  -----------
                                             $    11,894  $    12,190
                                              ===========  ===========

Liabilities and Stockholders' Equity
Current liabilities:
    Short-term borrowings and current
     maturities of long-term debt (b)        $       233  $       870
    Accounts payable                                 171          171
    Accrued expenses                                 836          723
    Accrued salaries, wages and benefits             228          178
    Accrued taxes and other                          176          188
                                              -----------  -----------
      Total current liabilities                    1,644        2,130
  Long-term debt (b)                               4,393        4,449
  Deferred income taxes                              898          986
  Other liabilities                                  574          538
                                              -----------  -----------
                                                   7,509        8,103
                                              -----------  -----------
  Minority interest                                   28           39
                                              -----------  -----------
  Exchangeable units and Class B preferred
   shares, at redemption value of $38.50              31           51
                                              -----------  -----------
  Commitments and contingencies
  Stockholders' equity:
      Class A exchangeable preferred shares of
       the Trust; $0.01 par value; authorized
       30,000,000 shares; outstanding 480,880
       and 493,968 shares at December 31, 2003
       and 2002, respectively                         --           --
      Corporation common stock; $0.01 par
       value; authorized 1,050,000,000 shares;
       outstanding 201,812,126 and 199,579,542
       shares at December 31, 2003 and 2002,
       respectively                                    2            2
      Trust Class B shares of beneficial
       interest; $0.01 par value; authorized
       1,000,000,000 shares; outstanding
       201,812,126 and 199,579,542 shares at
       December 31, 2003 and 2002,
       respectively                                    2            2
  Additional paid-in capital                       4,952        4,905
  Deferred compensation                               (9)         (14)
  Accumulated other comprehensive income            (334)        (474)
  Accumulated deficit                               (287)        (424)
                                              -----------  -----------
    Total stockholders' equity                     4,326        3,997
                                              -----------  -----------
                                             $    11,894  $    12,190
                                              ===========  ===========

----------

(a) Represents the carrying value of the plant, property and equipment
    for the Principe, Sardinia Assets and the 18 non-core domestic
    hotels at December 31, 2002. Effective December 31, 2003, the
    remaining two hotels that have not been sold will no longer be
    marketed for sale. Accordingly, the carrying value was
    reclassified to Plant, property, and equipment, net at December
    31, 2003.

(b) Excludes Starwood's share of unconsolidated joint venture debt
    aggregating approximately $410 million and $355 million at
    December 31, 2003 and 2002, respectively.
 

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

          Non-GAAP to GAAP Reconciliations - Historical Data
                             (In millions)

        Three Months Ended                 Twelve Months Ended
           December 31,                       December 31,
----------------------------------------------------------------------
                      %                                         %
   2003     2002   Variance                   2003    2002   Variance
 -------- -------- ---------                 ------- ------- ---------
                            Reconciliation
                             of Net Income
                             to EBITDA and
                             Adjusted
                             EBITDA
$     87 $     91      (4.8)Net income      $   309 $   355     (13.0)
                            Interest
      70       72      (2.8) expense(a)         312     356      12.4
                            Income tax
      (1)     (23)      n/m  benefit (b)        (73)   (100)      n/m
     108      131      17.6 Depreciation(c)     438     500      12.4
       8        4    (100.0)Amortization(d)      26      20       (30)
 -------- -------- ---------                 ------- ------- ---------
     272      275      (1.1)EBITDA            1,012   1,131     (10.5)
                            (Gain) loss on
                             asset dispositions
                             and impairments,
       4       (1)      n/m  net                183      (3)      n/m
                            Discontinued
       2       (9)      n/m  operations(e)     (252)    (21)      n/m
                            Restructuring
                             and other special
      (8)      (2)    300.0  credits, net        (9)     (7)     28.6
                            Foreign exchange
                             gains from
       -        -         -  Argentina            -     (30)      n/m
                            Costs associated
                             with construction
       1        3      66.7  remediation          4       8      50.0
 -------- -------- ---------                 ------- ------- ---------
$    271 $    266       1.9 Adjusted EBITDA $   938 $ 1,078     (13.0)
 ======== ======== =========                 ======= ======= =========

(a) Includes $5 million and $18 million of interest expense related to
    unconsolidated joint ventures for the three and twelve month
    periods ended December 31, 2003 and $4 million and $16 million for
    the three and twelve month periods ended December 31, 2002. Also
    includes $0 and $7 million of interest expense allocated to
    discontinued operations for the three and twelve month periods
    ended December 31, 2003 and $4 million and $15 million of interest
    expense allocated to discontinued operations for the three and
    twelve month periods ended December 31, 2002, respectively.

(b) Includes $(1) million and $40 million of taxes/(tax benefits)
    recorded, respectively, in discontinued operations for the three
    and twelve months ended December 31, 2003 and $2 million and
    $(102) million of taxes/(tax benefits) recorded in discontinued
    operations for the three and twelve months ended December 31,
    2002, respectively.

(c) Includes $7 million and $27 million of Starwood's share of
    depreciation expense of unconsolidated joint ventures for the
    three and twelve month periods ended December 31, 2003 and $6
    million and $23 million for the three and twelve month periods
    ended December 31, 2002. Also includes $0 and $1 million of
    depreciation expense included in discontinued operations for the
    three and twelve months ended December 31, 2003 and $1 million and
    $4 million for the three and twelve month periods ended December
    31, 2002.

(d) Includes $3 million and $7 million of Starwood's share of
    amortization expense of unconsolidated joint ventures for the
    three and twelve month periods ended December 31, 2003 and $1
    million and $5 million for the three and twelve month periods
    ended December 31, 2002.

(e) Excludes the interest expense, taxes, and depreciation balances
    already added back as noted in (a), (b) and (c) above. Includes
    the reversal of a $49 million (pre-tax) liability, in the twelve
    months ended December 31, 2003, related to the 1999 divestiture of
    the Company's gaming business which is no longer deemed necessary.
 

-0-

                                           Three Months  Twelve Months
                                               Ended         Ended
                                           December 31,  December 31,
                                           ------------- -------------
                                            2003   2002   2003   2002
                                            -----  -----  -----  -----
Cash Flow Data
Net income                                 $  87  $  91  $ 309  $ 355
Exclude:
     Discontinued operations, net              1     (2)  (204)  (104)
                                            -----  -----  -----  -----
Income from continuing operations             88     89    105    251
Adjustment to income from continuing
 operations and changes in working capital   156     50    655    437
                                            -----  -----  -----  -----

     Cash from continuing operations         244    139    760    688
     Cash from discontinued operations         1      6     11     18
                                            -----  -----  -----  -----
Cash from operating activities             $ 245  $ 145  $ 771  $ 706
                                            =====  =====  =====  =====
Cash from (used for) investing activities  $(324) $ (59) $ 510  $(286)
                                            =====  =====  =====  =====
Cash used for financing activities         $(289) $(108) $(979) $(427)
                                            =====  =====  =====  =====

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

         Non-GAAP to GAAP Reconciliations - Future Performance
                             (In millions)
 

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

Net income                            $          16   $           230
Interest expense                                 71               285
Income tax expense (benefit)                      3                40
Depreciation and amortization                   115               470
EBITDA                                $         205   $         1,025
                                       =============   ===============

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                    Hotel Results - Same Store (1)
             For the Three Months Ended December 31, 2003
                               UNAUDITED
 

                                  WORLDWIDE
                       --------------------------------
                         2003       2002        Var.
                       ---------- ---------- ----------

                                  140 Hotels
                       --------------------------------
OWNED HOTELS
          REVPAR ($)      102.60      96.25        6.6%
          ADR ($)         158.97     153.66        3.5%
          OCCUPANCY (%)     64.5%      62.6%       1.9

                                     60
                       --------------------------------
SHERATON
          REVPAR ($)       85.96      79.49        8.1%
          ADR ($)         135.40     130.73        3.6%
          OCCUPANCY (%)     63.5%      60.8%       2.7

                                     36
                       --------------------------------
WESTIN
          REVPAR ($)      105.04     100.99        4.0%
          ADR ($)         157.03     151.48        3.7%
          OCCUPANCY (%)     66.9%      66.7%       0.2

                                     12
                       --------------------------------
LUXURY COLLECTION
          REVPAR ($)      212.06     199.91        6.1%
          ADR ($)         366.13     349.34        4.8%
          OCCUPANCY (%)     57.9%      57.2%       0.7

                                     12
                       --------------------------------
W
          REVPAR ($)      157.38     143.22        9.9%
          ADR ($)         219.51     215.21        2.0%
          OCCUPANCY (%)     71.7%      66.6%       5.1

                                     20
                       --------------------------------
OTHER
          REVPAR ($)       71.21      68.73        3.6%
          ADR ($)         117.59     114.27        2.9%
          OCCUPANCY (%)     60.6%      60.1%       0.5
 
 

                                NORTH AMERICA
                       --------------------------------
                          2003       2002       Var.
                       ---------- ---------- ----------

                                   95 Hotels
                       --------------------------------
OWNED HOTELS
          REVPAR ($)      102.56      97.98        4.7%
          ADR ($)         155.91     153.91        1.3%
          OCCUPANCY (%)     65.8%      63.7%       2.1

                                     37
                       --------------------------------
SHERATON
          REVPAR ($)       90.07      85.43        5.4%
          ADR ($)         138.26     136.31        1.4%
          OCCUPANCY (%)     65.1%      62.7%       2.4

                                     22
                       --------------------------------
WESTIN
          REVPAR ($)       94.95      92.02        3.2%
          ADR ($)         137.64     135.56        1.5%
          OCCUPANCY (%)     69.0%      67.9%       1.1

                                      5
                       --------------------------------
LUXURY COLLECTION
          REVPAR ($)      232.06     221.37        4.8%
          ADR ($)         389.01     385.81        0.8%
          OCCUPANCY (%)     59.7%      57.4%       2.3

                                     12
                       --------------------------------
W
          REVPAR ($)      157.38     143.22        9.9%
          ADR ($)         219.51     215.21        2.0%
          OCCUPANCY (%)     71.7%      66.6%       5.1

                                     19
                       --------------------------------
OTHER
          REVPAR ($)       66.38      69.18       -4.0%
          ADR ($)         116.79     122.00       -4.3%
          OCCUPANCY (%)     56.8%      56.7%       0.1
 

                               INTERNATIONAL(2)
                       ---------------------------------
                           2003       2002       Var.
                       ---------- ---------- -----------

                                   45 Hotels
                       ---------------------------------
OWNED HOTELS
          REVPAR ($)      102.71      91.24        12.6%
          ADR ($)         168.45     152.90        10.2%
          OCCUPANCY (%)     61.0%      59.7%        1.3

                                      23
                       ---------------------------------
SHERATON
          REVPAR ($)       77.56      67.35        15.2%
          ADR ($)         129.07     118.18         9.2%
          OCCUPANCY (%)     60.1%      57.0%        3.1

                                      14
                       ---------------------------------
WESTIN
          REVPAR ($)      138.15     131.25         5.3%
          ADR ($)         230.13     209.70         9.7%
          OCCUPANCY (%)     60.0%      62.6%       -2.6

                                      7
                       ---------------------------------
LUXURY COLLECTION
          REVPAR ($)      183.41     168.81         8.6%
          ADR ($)         330.86     296.13        11.7%
          OCCUPANCY (%)     55.4%      57.0%       -1.6
 

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

                                      1
                       ---------------------------------
OTHER
          REVPAR ($)      104.75      65.64        59.6%
          ADR ($)         121.27      78.50        54.5%
          OCCUPANCY (%)     86.4%      83.6%        2.8
 

(1)Hotel Results exclude 25 hotels sold or closed during 2002 and 2003

(2)See next page for breakdown by division
 

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                    Hotel Results - Same Store (1)
             For the Three Months Ended December 31, 2003
                               UNAUDITED
 

                                    EUROPE
                       --------------------------------
                          2003       2002       Var.
                       ---------- ---------- ----------

                                   29 Hotels
                       --------------------------------
OWNED HOTELS
          REVPAR ($)      135.79     124.82        8.8%
          ADR ($)         227.05     202.62       12.1%
          OCCUPANCY (%)     59.8%      61.6%      -1.8

                                      11
                       --------------------------------
SHERATON
          REVPAR ($)       97.72      90.99        7.4%
          ADR ($)         160.72     145.61       10.4%
          OCCUPANCY (%)     60.8%      62.5%      -1.7

                                      11
                       --------------------------------
WESTIN
          REVPAR ($)      164.51     149.65        9.9%
          ADR ($)         271.68     238.97       13.7%
          OCCUPANCY (%)     60.6%      62.6%      -2.0

                                      7
                       --------------------------------
LUXURY COLLECTION
          REVPAR ($)      183.41     168.81        8.6%
          ADR ($)         330.86     296.13       11.7%
          OCCUPANCY (%)     55.4%      57.0%      -1.6
 
 

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

                                LATIN AMERICA
                       --------------------------------
                          2003       2002       Var.
                       ---------- ---------- ----------

                                   12 Hotels
                       --------------------------------
OWNED HOTELS
          REVPAR ($)       55.54      52.58        5.6%
          ADR ($)          99.05     100.72       -1.7%
          OCCUPANCY (%)     56.1%      52.2%       3.9

                                       9
                       --------------------------------
SHERATON
          REVPAR ($)       51.69      46.34       11.5%
          ADR ($)          93.20      92.66        0.6%
          OCCUPANCY (%)     55.5%      50.0%       5.5

                                       3
                       --------------------------------
WESTIN
          REVPAR ($)       72.18      81.77      -11.7%
          ADR ($)         122.91     130.84       -6.1%
          OCCUPANCY (%)     58.7%      62.5%      -3.8
 

LUXURY COLLECTION
          REVPAR ($)
          ADR ($)
          OCCUPANCY (%)
 
 

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

                                 ASIA PACIFIC
                       ---------------------------------
                            2003       2002     Var.
                       ---------- ---------- -----------

                                    4 Hotels
                       ---------------------------------
OWNED HOTELS
          REVPAR ($)      111.45      72.42        53.9%
          ADR ($)         139.92      98.59        41.9%
          OCCUPANCY (%)     79.7%      73.5%        6.2

                                      3
                       ---------------------------------
SHERATON
          REVPAR ($)      115.56      76.67        50.7%
          ADR ($)         153.01     114.25        33.9%
          OCCUPANCY (%)     75.5%      67.1%        8.4
 

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

LUXURY COLLECTION
          REVPAR ($)
          ADR ($)
          OCCUPANCY (%)
 

                                      1
                       ---------------------------------
OTHER
          REVPAR ($)      104.75      65.64        59.6%
          ADR ($)         121.27      78.50        54.5%
          OCCUPANCY (%)     86.4%      83.6%        2.8

(1) Hotel Results exclude 25 hotels sold or closed during 2002 and
    2003
 

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                    Hotel Results - Same Store (1)
             For the Twelve Months Ended December 31, 2003
                               UNAUDITED
 

                                  WORLDWIDE
                       --------------------------------
                           2003       2002      Var.
                       ---------- ---------- ----------

                                  140 Hotels
                       --------------------------------
OWNED HOTELS
          REVPAR ($)       98.34      97.10        1.3%
          ADR ($)         152.12     151.69        0.3%
          OCCUPANCY (%)     64.6%      64.0%       0.6

                                     60
                       --------------------------------
SHERATON
          REVPAR ($)       80.01      80.20       -0.2%
          ADR ($)         127.94     129.42       -1.1%
          OCCUPANCY (%)     62.5%      62.0%       0.5

                                     36
                       --------------------------------
WESTIN
          REVPAR ($)      109.43     107.01        2.3%
          ADR ($)         157.70     154.38        2.2%
          OCCUPANCY (%)     69.4%      69.3%       0.1

                                     12
                       --------------------------------
LUXURY COLLECTION
          REVPAR ($)      191.27     193.48       -1.1%
          ADR ($)         336.88     333.85        0.9%
          OCCUPANCY (%)     56.8%      58.0%      -1.2

                                     12
                       --------------------------------
W
          REVPAR ($)      141.90     130.92        8.4%
          ADR ($)         203.17     203.28       -0.1%
          OCCUPANCY (%)     69.8%      64.4%       5.4

                                     20
                       --------------------------------
OTHER
          REVPAR ($)       68.99      70.69       -2.4%
          ADR ($)         111.77     112.89       -1.0%
          OCCUPANCY (%)     61.7%      62.6%      -0.9
 
 
 
 

                                NORTH AMERICA
                       --------------------------------
                           2003       2002      Var.
                       ---------- ---------- ----------

                                   95 Hotels
                       --------------------------------
OWNED HOTELS
          REVPAR ($)       98.62      98.81       -0.2%
          ADR ($)         148.03     150.84       -1.9%
          OCCUPANCY (%)     66.6%      65.5%       1.1

                                     37
                       --------------------------------
SHERATON
          REVPAR ($)       84.41      86.11       -2.0%
          ADR ($)         129.31     133.62       -3.2%
          OCCUPANCY (%)     65.3%      64.4%       0.9

                                     22
                       --------------------------------
WESTIN
          REVPAR ($)       99.37      98.45        0.9%
          ADR ($)         138.84     139.26       -0.3%
          OCCUPANCY (%)     71.6%      70.7%       0.9

                                      5
                       --------------------------------
LUXURY COLLECTION
          REVPAR ($)      202.98     211.91       -4.2%
          ADR ($)         338.95     357.78       -5.3%
          OCCUPANCY (%)     59.9%      59.2%       0.7

                                     12
                       --------------------------------
W
          REVPAR ($)      141.90     130.92        8.4%
          ADR ($)         203.17     203.28       -0.1%
          OCCUPANCY (%)     69.8%      64.4%       5.4

                                     19
                       --------------------------------
OTHER
          REVPAR ($)       67.78      72.68       -6.7%
          ADR ($)         114.44     119.84       -4.5%
          OCCUPANCY (%)     59.2%      60.7%      -1.5
 
 
 
 

                               INTERNATIONAL(2)
                       --------------------------------
                            2003       2002     Var.
                       ---------- ---------- ----------

                                   45 Hotels
                       --------------------------------
OWNED HOTELS
          REVPAR ($)       97.52      92.15        5.8%
          ADR ($)         165.37     154.37        7.1%
          OCCUPANCY (%)     59.0%      59.7%      -0.7

                                     23
                       --------------------------------
SHERATON
          REVPAR ($)       71.07      68.18        4.2%
          ADR ($)         124.74     119.75        4.2%
          OCCUPANCY (%)     57.0%      56.9%       0.1

                                     14
                       --------------------------------
WESTIN
          REVPAR ($)      142.03     135.56        4.8%
          ADR ($)         227.85     209.48        8.8%
          OCCUPANCY (%)     62.3%      64.7%      -2.4

                                      7
                       --------------------------------
LUXURY COLLECTION
          REVPAR ($)      173.72     165.77        4.8%
          ADR ($)         333.31     295.82       12.7%
          OCCUPANCY (%)     52.1%      56.0%      -3.9
 

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

                                      1
                       --------------------------------
OTHER
          REVPAR ($)       77.36      57.09       35.5%
          ADR ($)          97.95      75.10       30.4%
          OCCUPANCY (%)     79.0%      76.0%       3.0
 

(1) Hotel Results exclude 25 hotels sold or closed during 2002 and
    2003

(2) See next page for breakdown by division
 

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                    Hotel Results - Same Store (1)
             For the Twelve Months Ended December 31, 2003
                               UNAUDITED
 

                                    EUROPE
                       --------------------------------
                          2003       2002        Var.
                       ---------- ---------- ----------

                                   29 Hotels
                       --------------------------------
OWNED HOTELS
          REVPAR ($)      133.59     125.76        6.2%
          ADR ($)         225.01     200.90       12.0%
          OCCUPANCY (%)     59.4%      62.6%      -3.2

                                     11
                       --------------------------------
SHERATON
          REVPAR ($)       95.59      91.43        4.5%
          ADR ($)         156.55     142.72        9.7%
          OCCUPANCY (%)     61.1%      64.1%      -3.0

                                     11
                       --------------------------------
WESTIN
          REVPAR ($)      165.69     153.24        8.1%
          ADR ($)         273.83     240.45       13.9%
          OCCUPANCY (%)     60.5%      63.7%      -3.2

                                      7
                       --------------------------------
LUXURY COLLECTION
          REVPAR ($)      173.72     165.77        4.8%
          ADR ($)         333.31     295.82       12.7%
          OCCUPANCY (%)     52.1%      56.0%      -3.9
 
 

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

                                LATIN AMERICA
                       --------------------------------
                            2003       2002     Var.
                       ---------- ---------- ----------

                                   12 Hotels
                       --------------------------------
OWNED HOTELS
          REVPAR ($)       52.51      55.57       -5.5%
          ADR ($)          97.99     105.23       -6.9%
          OCCUPANCY (%)     53.6%      52.8%       0.8

                                      9
                       --------------------------------
SHERATON
          REVPAR ($)       46.18      49.09       -5.9%
          ADR ($)          91.42      98.73       -7.4%
          OCCUPANCY (%)     50.5%      49.7%       0.8

                                      3
                       --------------------------------
WESTIN
          REVPAR ($)       80.33      86.30       -6.9%
          ADR ($)         119.73     127.95       -6.4%
          OCCUPANCY (%)     67.1%      67.4%      -0.3
 

LUXURY COLLECTION
          REVPAR ($)
          ADR ($)
          OCCUPANCY (%)
 
 

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

                                 ASIA PACIFIC
                       --------------------------------
                           2003       2002     Var.
                       ---------- ---------- ----------

                                   4 Hotels
                       --------------------------------
OWNED HOTELS
          REVPAR ($)       86.07      65.33       31.7%
          ADR ($)         118.08      96.25       22.7%
          OCCUPANCY (%)     72.9%      67.9%       5.0

                                      3
                       --------------------------------
SHERATON
          REVPAR ($)       91.43      70.50       29.7%
          ADR ($)         132.27     112.29       17.8%
          OCCUPANCY (%)     69.1%      62.8%       6.3
 

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

LUXURY COLLECTION
          REVPAR ($)
          ADR ($)
          OCCUPANCY (%)
 

                                      1
                       --------------------------------
OTHER
          REVPAR ($)       77.36      57.09       35.5%
          ADR ($)          97.95      75.10       30.4%
          OCCUPANCY (%)     79.0%      76.0%       3.0
 

(1) Hotel Results exclude 25 hotels sold or closed during 2002 and
    2003
 

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                        Debt Portfolio Summary
                        As of December 31, 2003
                               UNAUDITED

                                                 Balance
                                   Interest        (in       % of
        Debt                         Terms       millions)  Portfolio
-------------------------------  -------------  ---------- ----------

Floating Rate Debt:

   Senior credit facility
       Revolving credit           CBA + 162.5
        facility                                      $15          0%
       Term loan                 LIBOR + 162.5       $300          7%
                                                ---------- ----------
                                                      315          7%

   Mortgages and other              Various           251          5%

   Interest rate swaps              Various         1,050         23%
                                                ---------- ----------

       Total Floating                               1,616         35%

Fixed Rate Debt:

   Sheraton Holding public debt(1)                  1,067         23%

   Senior notes  (2)                                1,532         33%

   Convertible debt - Series B                        326          7%

   Convertible debt - 2003                            360          8%

   Mortgages and other                                775         17%

   Interest rate swaps                             (1,050)       -23%
                                                ---------- ----------

       Total Fixed                                  3,010         65%
                                                ---------- ----------

           Total Debt                              $4,626        100%
                                                ========== ==========
 
 

                                     Interest      Avg Maturity
          Debt                         Rate         (in years)
-------------------------------  ---------------- --------------

Floating Rate Debt:

   Senior credit facility
       Revolving credit
        facility                            4.34%           2.8
       Term loan                            2.75%           2.0
                                 ---------------- --------------
                                            2.82%           2.0

   Mortgages and other                      5.08%           1.8

   Interest rate swaps                      5.07%
                                 ----------------

       Total Floating                       4.63%           1.9

Fixed Rate Debt:

   Sheraton Holding public debt(1)          6.47%           9.0

   Senior notes  (2)                        7.04%           6.0

   Convertible debt - Series B              3.25%           2.8 (3)

   Convertible debt - 2003                  3.50%           2.4

   Mortgages and other                      7.15%           8.2

   Interest rate swaps                      7.11%
                                 ----------------

       Total Fixed                          5.90%           6.6
                                 ----------------

           Total Debt                       5.46%           6.0
                                 ================

-0-

                        ----------------------------------------------
                                          Maturities
                        ----------------------------------------------
                                        less than 1 year  $       233
                                               2-3 years        1,532
                                               4-5 years          792
                                    greater than 5 years        2,069
                                                           -----------
                                                          $     4,626
                                                           ===========

                        ----------------------------------------------
 
 
 

(1) Balance consists of outstanding public debt of $1.047 billion and
a $14 million fair value adjustment related to the unamortized gain on
fixed to floating interest rate swaps terminated in September 2002 and
a $6 million fair value adjustment related to current fixed to
floating interest rate swaps

(2) Balance consists of outstanding public debt of $1.495 billion and
a $30 million fair value adjustment related to the unamortized gain on
fixed to floating interest rate swaps terminated in September 2002 and
a $7 million fair value adjustment related to current fixed to
floating interest rate swaps

(3) Average maturity reflects the maturity date of the revolving
credit facility which would be used to refinance the amount put to the
Company
 

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

       Hotels without Comparable Results & Other Selected Items
                        As of December 31, 2003
                        UNAUDITED ($ millions)
 

Properties sold or closed in 2003:

Property                                         Location
------------------------------------             ---------------------
Lenox Inn                                        Atlanta, GA
Sheraton Mofarrej                                Sao Paulo, Brazil
Hotel Cala di Volpe                              Costa Smeralda, Italy
Hotel Pitrizza                                   Costa Smeralda, Italy
Hotel Romazzino                                  Costa Smeralda, Italy
Cervo Hotel & Conference Center                  Costa Smeralda, Italy
Hotel Principe di Savoia                         Milan, Italy
Hilton Novi                                      Novi, MI
Westin Southfield                                Southfield, MI
Residence Inn Tyson's Corner                     Vienna, VA
Sheraton Buckhead                                Atlanta, GA
Sheraton College Park                            Beltsville, MD
Sheraton Chicago Northwest                       Arlington Heights, IL
Sheraton Norfolk                                 Norfolk, VA
Hilton Sonoma County                             Santa Rosa, CA
Westin Stamford                                  Stamford, CT
Wayfarer Inn                                     Bedford, NH
Sheraton Ferncroft                               Danvers, MA
Sheraton Danbury                                 Danbury, CT
Sheraton Gainesville                             Gainesville, FL
Baltimore Marriott                               Baltimore, MD
Arlington Marriott                               Arlington, VA
North Charleston Sheraton                        Charleston, SC
 

Properties sold or closed in 2002:

Property                                         Location
------------------------------------             ---------------------
Clarion Hotel Allentown                          Allentown, PA
Doubletree Hotel Minneapolis Airport             Minneapolis, MN

-0-

Selected Balance Sheet and Cash Flow Items:

Cash and cash equivalents (including restricted
 cash of $81 million)                                        $    508
Debt level                                                   $  4,626

-0-

Revenues and Expenses Associated with Assets Sold in 2003 (1):

                        Q1        Q2        Q3        Q4    Full Year
                    --------------------------------------------------
2003
Revenues            $      42 $      61 $       7 $       - $     110
Expenses            $      38 $      45 $       6 $       - $      89

2002
Revenues            $      41 $      65 $      95 $      49 $     250
Expenses            $      35 $      45 $      54 $      38 $     172

(1) Results consist of 20 hotels (excludes the Hotel Principe di
    Savoia reported in discontinued operations) that have been sold in
    2003. These amounts are included in the revenues and expenses from
    owned, leased and consolidated joint venture hotels.
 
 
 

Top Ten Metropolitan Areas as a % of Full Year 2003 Owned North
 America EBITDA:

Metropolitan Area:                                         % EBITDA
                                                           -----------
 New York, NY                                                 13.5%
 San Diego, CA                                                10.0%
 Boston, MA                                                   9.6%
 Phoenix, AZ                                                  5.9%
 Seattle, WA                                                  5.8%
 Atlanta, GA                                                  5.0%
 Maui, HI                                                     4.3%
 Los Angeles - Long Beach, CA                                 3.8%
 Indianapolis, IN                                             3.4%
 Toronto, Canada                                              3.2%
                                                           -----------
Total Top Ten Metropolitan Areas                              64.5%

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                         Capital Expenditures
        For the Three and Twelve Months Ended December 31, 2003
                        UNAUDITED ($ millions)
 

                                                     QTD        YTD
 Capital Expenditures:
 Owned, Leased and Consolidated Joint Venture
  Hotels                                          $     75   $    176
 Corporate/IT                                            8         26
                                                   --------   --------
 Subtotal                                               83        202

 Vacation Ownership Capital Expenditures:
 Capital expenditures (includes land acquisition)        8         48
 Inventory                                              27         91
                                                   --------   --------
 Subtotal                                               35        139

Development Capital (1)                                252        302
                                                   --------   --------

 Total Capital Expenditures                       $    370   $    643
                                                   ========   ========

(1) Includes the purchase of 16% of the outstanding senior debt of Le
    Meridien Hotels & Resorts Ltd for approximately $200 million in
    December 2003 and St. Regis San Francisco additions of $21 QTD and
    $57 YTD
 

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

              Summary of Portfolio by Properties & Rooms
                        As of December 31, 2003
                               UNAUDITED
 
 

                                            PROPERTIES
                                ---------------------------------
                                                       Lux. Col./
                                  Sheraton    Westin   St. Regis
                                ---------------------------------
 Ownership Type
--------------------------------
Owned, leased & consolidated JVs        58         36         14
Unconsolidated joint ventures           28         10          2
                                ---------------------------------
   Equity interest properties           86         46         16
Managed (third-party owned)            145         46         21
Franchised, represented &
 referral                              163         29         12
                                ---------------------------------
   Total                               394        121         49
                                =================================
 

                                              ROOMS
                                ---------------------------------
                                                       Lux. Col./
                                  Sheraton    Westin   St. Regis
                                ---------------------------------
 Ownership Type
--------------------------------
Owned, leased & consolidated JVs    24,079     13,638      3,056
Unconsolidated joint ventures       10,515      4,495        441
                                ---------------------------------
   Equity interest properties       34,594     18,133      3,497
Managed (third-party owned)         49,844     23,163      3,317
Franchised, represented &
 referral                           50,210     10,255      1,412
                                ---------------------------------
   Total                           134,648     51,551      8,226
                                =================================
 

                                              PROPERTIES
                                --------------------------------------
                                   Four
                                   Points     W      Other     Total
                                --------------------------------------
 Ownership Type
--------------------------------
Owned, leased & consolidated JVs        7      12        13       140
Unconsolidated joint ventures           1       1         1        43
                                --------------------------------------
   Equity interest properties           8      13        14       183
Managed (third-party owned)            22       5         4       243
Franchised, represented &
 referral                             108       -         -       312
                                --------------------------------------
   Total                              138      18        18       738
                                ======================================
 

                                                 ROOMS
                                --------------------------------------
                                   Four
                                   Points     W      Other     Total
                                --------------------------------------
 Ownership Type
--------------------------------
Owned, leased & consolidated JVs    1,769   4,371     3,250    50,163
Unconsolidated joint ventures         128     237       132    15,948
                                --------------------------------------
   Equity interest properties       1,897   4,608     3,382    66,111
Managed (third-party owned)         3,963     856     1,029    82,172
Franchised, represented &
 referral                          19,087       -         -    80,964
                                --------------------------------------
   Total                           24,947   5,464     4,411   229,247
                                ======================================

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.

Definitions:

All references to EPS, unless otherwise noted, reflect earnings per diluted share from continuing operations. 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 ability to service debt, fund capital expenditures, pay income taxes and pay cash distributions. It also facilitates comparisons between the Company and its competitors. The Company's management has historically adjusted EBITDA ("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 the special items described on page 6 and 7 of this release, 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 recent 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 accounting principles generally accepted in the United States (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 hotels sold to date and under significant renovation or for which comparable results are not available. REVPAR is defined as revenue per available room. ADR is defined as average daily rate.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with more than 740 properties in more than 80 countries and 105,000 employees at its owned and managed properties. 

This press release contains forward-looking statements within the meaning of federal securities regulations. 

 

###

Contact:
Starwood Hotels & Resorts Worldwide, Inc.
Allison Reid, 914/640-8514

 
Also See: Barry Sternlicht, Starwood CEO, Plans to Step Down; He Integrated a Disparate Collection of Hotel Assets into a Global Powerhouse / October 2003
Starwood Hotels Reports 4th Quarter RevPAR Rose 9.4% World-wide, ADR Increased 4.1% and Occupancy Rose to 61.8% from 58.7% / Hotel Operating Statistics / Jan 2003
.
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