Hotel Online  Special Report
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Starwood Net Income for 3rd Qtr 2005 Drops Sharply to $39 million Compared
to Net Income of $107 million in the3rd Qtr 2004; Plans to Sell Up
to $4 billion of Assets within the Next Year
Hotel Operating Statistics
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Third Quarter 2005 Highlights: 
  • EPS from continuing operations for the third quarter of 2005 was $0.18, compared to $0.49 in the third quarter of 2004. Excluding special items which primarily relate to tax expense on the adoption of a plan to repatriate foreign earnings in accordance with the American Jobs Creation Act of 2004 and additional tax expense related to the 1998 disposition of ITT World Directories, EPS from continuing operations was $0.58 for the third quarter of 2005 compared to $0.40 for the third quarter of 2004.
  • REVPAR at Same-Store Owned Hotels in North America and worldwide increased 13.2% and 11.9%, respectively, when compared to the third quarter of 2004. ADR increased 10.1% and 8.5% in North America and worldwide, respectively.
  • Margins at Starwood branded Same-Store Owned Hotels in North America improved approximately 280 basis points when compared to the third quarter of 2004.
  • Globally, REVPAR for Same-Store Owned Hotels grew for W Hotels (24.5%), followed by St. Regis/Luxury Collection (11.2%), Westin (10.3%), and Sheraton (10.3%), with each of these brands experiencing both ADR and occupancy gains.
  • Third-party management and franchise fees in the quarter increased 11.4% when compared to 2004.
  • Vacation ownership and residential revenues, which exclude gains on sales of notes receivable, increased 33.1%. Excluding the fractional sales at the St. Regis Aspen and residential sales at the St. Regis in San Francisco, contract sales at vacation ownership properties were up 14.4% when compared to 2004.
  • Net income for the third quarter of 2005 was $39 million, compared to net income of $107 million in the third quarter of 2004. Excluding special items, income from continuing operations was $131 million in the third quarter of 2005 compared to $85 million in the same period of 2004.
  • Total Company Adjusted EBITDA, including the impact of Hurricanes Dennis, Katrina and Rita, increased 19.2% to $347 million when compared to $291 million in 2004. The Company's two owned hotels and one joint venture hotel in New Orleans and its owned hotel in Key West were negatively impacted by Hurricanes Dennis, Katrina and Rita. In addition to the loss of business from these storms, $4 million of insurance deductible expenses and cleanup and associate relocation costs are reflected in these results.
  • According to Smith Travel Research system-wide market share in North America increased 50 basis points when compared to 2004. 
WHITE PLAINS, N.Y. - Oct. 26, 2005 - Starwood Hotels & Resorts Worldwide, Inc. ("Starwood" or the "Company") today reported EPS from continuing operations for the third quarter of 2005 of $0.18 compared to $0.49 in the third quarter of 2004. Excluding special items of $91 million, which primarily relate to tax expense on the adoption of a plan to repatriate foreign earnings in accordance with the American Jobs Creation Act of 2004 and additional tax expense related to the 1998 disposition of ITT World Directories, EPS from continuing operations was $0.58 for the third quarter of 2005 compared to $0.40 in the third quarter of 2004. Income from continuing operations was $40 million in the third quarter of 2005 compared to $105 million in 2004. Excluding special items, income from continuing operations was $131 million for the third quarter of 2005 compared to $85 million in 2004. Net income (after discontinued operations) was $39 million and EPS was $0.17 in the third quarter of 2005 compared to $107 million and EPS of $0.50 in the third quarter of 2004. The effective tax rate for the third quarter of 2005, including the two special tax items discussed above, was 72.3%. 

Steven J. Heyer, CEO, said "Our Third Quarter performance was outstanding. Our operators remain committed to industry leading top line growth, while at the same time driving industry leading margin expansion through productivity initiatives. We remain focused on developing differentiated brand specific service excellence and emotional content. With strong brands comes significant opportunity to expand our footprint - particularly given that our brands are currently underrepresented versus our competitive set. 

At the same time, we are working hard to unlock the inherent value of our owned real estate portfolio through aggressive portfolio management. We believe there will always be an important role for real estate if that real estate has significant upside development potential via timeshare, residential or repositioning. 

Assets that do not fit our strategic criteria will be marketed for sale and we are in various stages of discussions with numerous interested parties. We expect that between today and twelve months from now we will likely enter into agreements for the sale of $2 - $4 billion of assets. In most cases we expect to retain long term management or franchise contracts, maintaining our footprint while unlocking value for reinvestment in the business and for share repurchase - a core strategic principle. 

Our core lodging businesses remain strong. The time is right to harvest previously unrecognized assets, build on our innovative culture, build world class brands, drive related growth and secure our position as the premier owned, management and franchise hotel and resort company." 

Operating Results:  Third Quarter Ended September 30, 2005 

Cash flow from operations was $588 million compared to $195 million in 2004. Total Company Adjusted EBITDA was $347 million compared to $291 million in 2004. 

Owned, Leased and Consolidated Joint Venture Hotels 

REVPAR for Same-Store Owned Hotels in North America and worldwide increased 13.2% and 11.9%, respectively, when compared to 2004. REVPAR at Same-Store Owned Hotels in North America increased 24.5% at W, 21.6% at St. Regis/Luxury Collection, 10.8% at Sheraton, and 10.5% at Westin. REVPAR growth was particularly strong at the Company's owned hotels in New York, Seattle, Chicago, Los Angeles, Maui, Toronto, San Diego, San Francisco, and Atlanta. Revenue from transient travel was up 17.4% in North America when compared to 2004. Internationally, Same-Store Owned Hotel REVPAR increased 8.4%, with Latin America up 18.2% (REVPAR in owned hotels in Argentina, Brazil, Peru and resort areas in Mexico was particularly strong), Europe up 6.9%, and Asia Pacific up 5.6%. Excluding the favorable effects of foreign exchange, REVPAR increased 6.4% internationally. 

Total revenues at Same-Store Owned Hotels worldwide increased 10.3% to $848 million when compared to $769 million in 2004 while costs and expenses at the hotels increased 7.0% to $624 million in 2005 compared to $583 million in 2004. Total revenues at Same-Store Owned Hotels in North America increased 10.9% to $613 million in 2005 when compared to $553 million in 2004 while costs and expenses at these hotels increased 7.4% to $454 million when compared to $423 million in 2004. 

System-wide REVPAR; Management/Franchise Fees 

System-wide (owned, managed and franchised) REVPAR for Same-Store Hotels in North America increased 11.7%; W Hotels 23.8%, St. Regis/Luxury Collection 18.2%, Sheraton 11.5%, Four Points by Sheraton 10.7%, and Westin 9.3%. For the twelfth quarter in a row, total Company market share in North America increased for the Company's owned and managed hotels as well as for system-wide hotels. Total third-party management and franchise fees were $91 million, up $9 million, or 11.4%, from last year. 

Distribution 

Starwood's central distribution systems gross bookings during the third quarter of 2005 increased approximately 7.7% when compared to 2004. Gross online bookings through proprietary branded websites increased 19.8% as compared to 2004, with gross dollar bookings from the proprietary branded sites increasing 32.3%. Gross online dollar bookings represented approximately 11.6% of the overall gross dollar bookings, with 76.1% of that coming from our proprietary branded websites, as compared to 10.3% of overall gross dollar bookings, with 73.3% of that from proprietary branded websites in 2004. 

Vacation Ownership and Residential 

Vacation ownership and residential revenue, which excludes gains on sales of notes receivable (there were no sales of notes receivable in the third quarter of 2005), was up $58 million, or 33.1% to $233 million when compared to 2004 primarily due to residential sales at the St. Regis Museum Tower in San Francisco. Vacation ownership sales increased at our resorts in Orlando, Scottsdale and Maui and decreased at our resort in Rancho Mirage, California, where substantially all of the available inventory has been sold. Contract sales, excluding fractional sales at the St. Regis Aspen and residential sales at the St. Regis in San Francisco, were up 14.4% when compared to 2004. The average price per timeshare unit sold increased approximately 7.7% to $21,595, and the number of contracts signed increased approximately 6.2% when compared to 2004. 

In the third quarter of 2005, the Company continued selling condominiums at the St. Regis Museum Tower which is in the final stages of construction in San Francisco, and recognized revenues of approximately $57 million. This mixed-use project (hotel and residential) received a temporary certificate of occupancy earlier this month, and is expected to open in early November. 

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

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

In addition to the expansion at the existing properties above, Starwood Vacation Ownership is in the predevelopment phase of several new vacation ownership resorts including one in Princeville on the island of Kauai, Hawaii. The Company is also working on a third St. Regis-branded fractional resort in Punta Mita, Mexico. 

As mentioned earlier, the Company did not sell any notes receivable and thereby did not recognize any gains during the third quarter of 2005 compared to gains of $3 million in the same period of 2004. 

Brand Development/Unit Growth 

During the third quarter, the Company signed 17 hotel management and franchise contracts (representing approximately 4,000 rooms) including the Westin Paris (Paris, France, 438 rooms), Sheraton Maitland (Maitland, Florida, 396 rooms), Sheraton Carlsbad (Carlsbad, California, 350 rooms) and Four Points by Sheraton Shanghai Pudong (Shanghai, China, 340 rooms). Nine new hotels and resorts (representing approximately 1,500 rooms) entered the system, including the Sheraton Myrtle Beach Convention Center Hotel (Myrtle Beach, South Carolina, 402 rooms), and the Sheraton Oran Hotel & Towers (Oran, Algeria, 321 rooms). Ten properties (representing approximately 2,300 rooms) were removed from the system during the quarter (4 Sheratons, 3 Four Points, 2 Luxury Collection and 1 unbranded). The Company had approximately 200 hotels and approximately 53,000 rooms in its active global development pipeline at September 30, 2005, with roughly half of that number in international locations. 

In September 2005, the Company opened its second Remede Spa in the St. Regis hotel in New York, and in October 2005 opened a new Bliss spa, its sixth overall, in the W Lakeshore hotel in Chicago. 

In the fourth quarter of 2005 and in 2006, the Company plans to open 2 new Bliss spas in W hotels in Dallas and Los Angeles, and a new Remede Spa in the St. Regis hotel in San Francisco with several others in various planning stages. 

Results for the Nine Months Ended September 30, 2005: 

EPS from continuing operations was $1.18 compared to $1.21 in 2004. Excluding special items, EPS from continuing operations was $1.63 compared to $1.05 in 2004. Income from continuing operations was $264 million compared to $258 million in 2004. Excluding special items, income from continuing operations was $364 million compared to $225 million in 2004. Net income (after discontinued operations) was $263 million and EPS was $1.18 compared to $295 million and $1.38, respectively, in 2004. 

Cash flow from operations was $818 million compared to $377 million in 2004. Total Company Adjusted EBITDA was $1.026 billion compared to $823 million in 2004. 

Capital: 

Gross capital spending during the quarter included approximately $57 million in renovations of hotel assets including construction capital at the St. Regis in New York, New York, the Westin Long Beach in Long Beach, California, and the Sheraton Centre Toronto Hotel in Toronto, Canada. Investment spending on gross VOI inventory was $27 million, which was more than offset by cost of sales of $43 million tied to VOI sales during the quarter. The inventory spend included VOI construction at the Westin Ka'anapali Ocean Resort Villas in Maui, Hawaii, the Sheraton Vistana Villages in Orlando, Florida, and the Westin Kierland Villas in Scottsdale, Arizona. Additionally during the quarter, further investment spending of $85 million included the ongoing development of the St. Regis Museum Tower in San Francisco which will consist of 260 hotel rooms and 102 condominium units. Through September 30, 2005, the Company has invested $294 million in the St. Regis Museum Tower project, which, as discussed earlier, is expected to open in early November 2005. The Company expects to realize gross proceeds of approximately $245 million from the sale of the project's condominiums and has recognized approximately $156 million in revenues to date. 

Balance Sheet: 

At September 30, 2005, the Company had total debt of $4.307 billion and cash and cash equivalents (including $262 million of restricted cash) of $1.171 billion, or net debt of $3.136 billion, compared to net debt of $3.460 billion at the end of the second quarter of 2005. In addition, the Company continues to have an investment in the senior debt of Le Meridien hotels and at September 30, 2005 the balance of that investment including accrued interest was $225 million. 

At September 30, 2005, debt was approximately 78% fixed rate and 22% floating rate and its weighted average maturity was 4.4 years with a weighted average interest rate of 6.15%. The Company had cash (including total restricted cash) and availability under domestic and international revolving credit facilities of approximately $2.172 billion. 

2005 Asset Sales 

In the nine months ended September 30, 2005, in addition to the sale of three hotels in joint ventures that we hold minority interest in, the Company sold six wholly owned hotels for total cash proceeds of $132 million. In addition, the Company signed purchase and sale agreements for another three hotels for gross proceeds of approximately $334 million. These sales are expected to close before the end of 2005. The Company's guidance for 2006 includes only management or franchise fees expected from these sold hotels. 

Outlook: 

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

For the fourth quarter of 2005, if REVPAR at Same-Store Owned Hotels in North America increases approximately 10% -12% versus the same period in 2004: 

  • Adjusted EBITDA would be expected to be approximately $384 million, an increase of 17.4% when compared to $327 million in the same period of 2004.
  • Net income would be expected to be approximately $143 million, an increase of 16.3% when compared to income from continuing operations before special items in the fourth quarter of 2004.
  • EPS would be expected to be $0.64, an increase of 12.3% when compared to EPS from continuing operations before special items in the fourth quarter of 2004. 
For the full year 2005, based on the fourth quarter 2005 assumptions above: 
  • Full year revenues, including other revenues from managed and franchised properties, would be expected to be approximately $6.0 billion.
  • Full year Adjusted EBITDA would be expected to increase approximately 22.6% to approximately $1.410 billion, when compared to 2004 Adjusted EBITDA of $1.150 billion.
  • Full year net income before special items would be expected to be approximately $506 million at approximately a 24% effective tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2006), when compared to 2004 income from continuing operations before special items of approximately $348 million at a 13.9% effective tax rate.
  • Full year EPS before special items would be expected to increase approximately 40.1% to $2.27 when compared to 2004 EPS from continuing operations before special items of $1.62.
  • Full year capital expenditures (excluding timeshare inventory) would be approximately $550 million, including $300 million for maintenance, renovation and technology, approximately $100 million for the completion of the St. Regis San Francisco multi-use project under construction, and $150 million for other growth initiatives. Additionally, net capital expenditures for timeshare inventory would be approximately $100 million.
  • For the full year the Company expects cash interest expense of approximately $284 million and cash taxes of approximately $462 million. 
For the full year 2006, if REVPAR at Same-Store Owned Hotels in North America increases approximately 8% - 10% versus the full year 2005: 
  • Full year Adjusted EBITDA, after adjusting for 2005 asset sales that we believe would have contributed approximately $30 million of EBITDA in 2006, is expected to be approximately $1.560 billion, when compared to 2005 Adjusted EBITDA of $1.410 billion. The Adjusted EBITDA estimate includes margin improvement of approximately 200 basis points.
  • Full year income from continuing operations would be expected to be approximately $611 million at a 27% effective tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2007), when compared to 2005 net income before special items of approximately $506 million at a 24% effective tax rate.
  • Full year EPS would be expected to increase approximately 19% to $2.70 when compared to 2005 EPS before special items of $2.27.
  • The Company's guidance for 2006 above excludes the impact of SFAS 123R which requires the Company to begin expensing options in 2006. Stock option expense is expected to be approximately $40 to $45 million on a pre-tax basis or $0.13 to $0.15 of EPS. While the Board of Directors has not made final decisions on stock based compensation for 2006, the guidance assumes a shift to more restricted stock which adds $10 to $15 million to restricted stock expense in the 2006 EBITDA guidance with a commensurate reduction in option expense.
  • The 2006 guidance also excludes the impact of the adoption of SFAS 152, Accounting for Real Estate Time-Sharing Transactions, which is expected to result in a one-time pre-tax charge of approximately $100 to $120 million in the first quarter of 2006.
  • The 2006 guidance also excludes transition costs associated with the Meridien transaction which is assumed to close by year end 2005. 
Special Items: 

The Company recorded net charges of $91 million (after-tax) for special items in the third quarter of 2005 compared to $20 million of net credits (after-tax) in the same period of 2004. 

Special items in the third quarter of 2005 primarily relate to tax expense on the adoption of a plan to repatriate foreign earnings in accordance with the American Jobs Creation Act of 2004, additional tax expense related to the Company's 1998 disposition of ITT World Directories and losses on the sale of two hotels. 
 
 
 
 

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

   Three Months Ended                            Nine Months Ended
     September 30,                                 September 30,
------------------------                     -------------------------
                   %                                            %
  2005    2004  Variance                       2005    2004   Variance
 ------  ------ --------                      ------  ------ ---------
                         Revenues
                         Owned, leased and
                          consolidated joint
$  871  $  811      7.4   venture hotels     $2,623  $2,448       7.1
                         Vacation ownership
                          and residential
   233     175     33.1   sales and services    697     443      57.3
                         Management fees,
                          franchise fees and
   126     105     20.0   other income          349     299      16.7
                         Other revenues from
                          managed and
                          franchised
   266     245      8.6   properties (a)        792     736       7.6
 ------  ------ --------                      ------  ------ ---------
 1,496   1,336     11.9                       4,461   3,926      13.6

                         Costs and Expenses
                         Owned, leased and
                          consolidated joint
   646     617     (4.7)  venture hotels      1,962   1,864      (5.3)
                         Vacation ownership
   169     132    (28.0)  and residential       503     334     (50.6)
                         Selling, general,
                          administrative and
    98      74    (32.4)  other                 274     244     (12.3)
     -                   Restructuring and
                          other special
           (37)  (100.0)  credits, net            -     (37)   (100.0)
    99     103      3.9  Depreciation           305     306       0.3
     4       4        -  Amortization            13      13         -
                         Other expenses from
                          managed and
                          franchised
   266     245     (8.6)  properties (a)        792     736      (7.6)
 ------  ------ --------                      ------  ------ ---------
 1,282   1,138    (12.6)                      3,849   3,460     (11.2)
   214     198      8.1  Operating income       612     466      31.3
                         Gain on sale of VOI
     -       3   (100.0)  notes receivable        -      11    (100.0)
                         Equity earnings
                          from
                          unconsolidated
     9       6     50.0   ventures, net          40      22      81.8
                         Interest expense,
                          net of interest
                          income of $6, $1,
   (59)    (64)     7.8   $11 and $2           (181)   (193)      6.2
                         Loss on asset
                          dispositions and
   (16)     (4)     n/m   impairments, net      (32)     (8)      n/m
 ------  ------ --------                      ------  ------ ---------
                         Income from
                          continuing
                          operations before
                          taxes and minority
   148     139      6.5   equity                439     298      47.3
   (60)    (34)   (76.5) Income tax expense    (128)    (41)      n/m
                         Tax expense on
                          repatriation of
   (47)      -      n/m   foreign earnings      (47)      -       n/m
                         Minority equity in
    (1)      -      n/m   net (income) loss       -       1    (100.0)
 ------ ------- --------                     -------  ------ ---------
                         Income from
                          continuing
    40     105    (61.9)  operations            264     258       2.3
                         Discontinued
                          operations:
                          Loss from
    (1)      -      n/m    operations (b)        (1)      -       n/m
                          Gain on
     -       2   (100.0)   disposition (c)        -      37    (100.0)
-------  ------ --------                     -------  ------ ---------
$   39  $  107    (63.6) Net income          $  263  $  295     (10.8)
 ======  ====== ========                      ======  ====== =========

                         Earnings Per
                          Share - Basic
                         Continuing
$ 0.19  $ 0.51    (62.7)  operations         $ 1.22  $ 1.25      (2.4)
                         Discontinued
 (0.01)   0.01      n/m   operations              -    0.18    (100.0)
 ------  ------ --------                     -------  ------ ---------
$ 0.18  $ 0.52    (65.4) Net income          $ 1.22  $ 1.43     (14.7)
 ======  ====== ========                      ======  ====== =========

                         Earnings Per Share
                          - Diluted
                         Continuing
$ 0.18  $ 0.49    (63.3)  operations         $ 1.18  $ 1.21      (2.5)
                         Discontinued
 (0.01)   0.01      n/m   operations              -    0.17    (100.0)
 ------  ------ --------                     -------  ------ ---------
$ 0.17  $ 0.50    (66.0) Net income          $ 1.18  $ 1.38     (14.5)
 ======  ====== ========                      ======  ====== =========

                         Weighted average
   218     208            number of Shares      216     207
 ======  ======                               ======  ======
                         Weighted average
                          number of Shares
   226     215            assuming dilution     223     214
 ======  ======                               ======  ======

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

(b) 2005 activity represents a sales and use tax assessment related to
    the Company's gaming business disposed of in 1999 for periods
    prior to its disposition.

(c) 2004 activity represents the reversal of reserves that are no
    longer required as the related contingencies have been resolved
    and the favorable resolution of certain tax matters related to the
    1999 divestiture of the Company's gaming business.

n/m = not meaningful
 
 
 

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

                                            September 30, December 31,
                                                2005          2004
                                            ------------- ------------
Assets                                       (unaudited)
                                            -------------
Current assets:
 Cash and cash equivalents                   $       909  $       326
 Restricted cash                                     251          347
 Accounts receivable, net of allowance for
  doubtful accounts of $58 and $58                   642          482
 Inventories                                         281          371
 Prepaid expenses and other                          187          157
                                              -----------  -----------
 Total current assets                              2,270        1,683
Investments                                          408          453
Plant, property and equipment, net                 6,777        6,997
Goodwill and intangible assets, net                2,539        2,544
Other assets (a)                                     745          621
                                              -----------  -----------
                                             $    12,739  $    12,298
                                              ===========  ===========
Liabilities and Stockholders' Equity
Current liabilities:
 Short-term borrowings and current
  maturities of long-term debt (b)           $       604  $       619
 Accounts payable                                    149          200
 Accrued expenses                                    802          872
 Accrued salaries, wages and benefits                262          299
 Accrued taxes and other                             471          138
                                              -----------  -----------
   Total current liabilities                       2,288        2,128
Long-term debt (b)                                 3,703        3,823
Deferred income taxes                                611          880
Other liabilities                                    682          652
                                              -----------  -----------
                                                   7,284        7,483
Minority interest                                     25           27
Exchangeable units and Class B preferred
 shares, at redemption value of $38.50                 -            -

Commitments and contingencies
Stockholders' equity:
  Class A exchangeable preferred shares of
   the Trust; $0.01 par value; authorized
   30,000,000 shares; outstanding 562,222
   and 597,825 shares at September 30, 2005
   and December 31, 2004, respectively                 -            -
  Corporation common stock; $0.01 par value;
   authorized 1,050,000,000 shares;
   outstanding 219,272,686 and 208,730,800
   shares at September 30, 2005 and December
   31, 2004, respectively                              2            2
  Trust Class B shares of beneficial
   interest; $0.01 par value; authorized
   1,000,000,000 shares; outstanding
   219,272,686 and 208,730,800 shares at
   September 30, 2005 and December 31, 2004,
   respectively                                        2            2
Additional paid-in capital                         5,593        5,121
Deferred compensation                                (64)         (14)
Accumulated other comprehensive loss                (298)        (255)
Retained earnings (accumulated deficit)              195          (68)
                                              -----------  -----------
  Total stockholders' equity                       5,430        4,788
                                              -----------  -----------
                                             $    12,739  $    12,298
                                              ===========  ===========

(a) Includes restricted cash of $11 million and $10 million at
    September 30, 2005 and December 31, 2004, respectively.

(b) Excludes Starwood's share of unconsolidated joint venture debt
    aggregating approximately $421 million and $438 million at
    September 30, 2005 and December 31, 2004, respectively.
 
 
 

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

  Three Months Ended                             Nine Months Ended
     September 30,                                 September 30,
-----------------------                      -------------------------
                  %                                              %
 2005   2004   Variance                        2005    2004   Variance
 -----  ----- ---------                       ------  ------ ---------
                        Reconciliation of
                         Net Income to
                         EBITDA and
                         Adjusted EBITDA
$  39  $ 107     (63.6) Net income           $  263  $  295     (10.8)
   70     68      (2.9) Interest expense(a)     207     209       1.0
                        Income tax
  106     35       n/m   expense(b)             174       8       n/m
  108    111       2.7  Depreciation(c)         330     330         -
    6      6         -  Amortization(d)          18      18         -
 -----  ----- ---------                       ------  ------ ---------
  329    327       0.6  EBITDA                  992     860      15.3
                        Adjustment to costs
                         associated with
                         construction
    -      -         -   remediation              -      (4)   (100.0)
                        Loss on asset
                         dispositions and
   16      4       n/m   impairments, net        32       8       n/m
                        Restructuring and
                         other special
    -    (37)   (100.0)  credits, net             -     (37)   (100.0)
                        Discontinued
    2     (3)      n/m   operations(e)            2      (4)      n/m
 -----  ----- ---------                       ------  ------ ---------
$ 347  $ 291      19.2  Adjusted EBITDA      $1,026  $  823      24.7
 =====  ===== =========                       ======  ====== =========

(a) Includes $5 and $3 million of interest expense related to
    unconsolidated joint ventures for the three months ended September
    30, 2005 and 2004, respectively, and $15 and $14 million for the
    nine months ended September 30, 2005 and 2004, respectively.

(b) Includes $47 million of tax expense on the repatriation of foreign
    earnings for the three and nine months ended September 30, 2005.
    Also includes $(1) and $1 million of tax expense (benefit)
    recorded in discontinued operations for the three months ended
    September 30, 2005 and 2004, respectively, and $(1) and $(33)
    million for the nine months ended September 30, 2005 and 2004,
    respectively.

(c) Includes $9 and $8 million of Starwood's share of depreciation
    expense of unconsolidated joint ventures for the three months
    ended September 30, 2005 and 2004, respectively, and $25 and $24
    million for the nine months ended September 30, 2005 and 2004,
    respectively.

(d) Includes $2 and $2 million of Starwood's share of amortization
    expense of unconsolidated joint ventures for the three months
    ended September 30, 2005 and 2004, respectively, and $5 and $5
    million for the nine months ended September 30, 2005 and 2004,
    respectively.

(e) Excludes the taxes already added back as noted in (b) above.
 

 Three Months                                            Nine Months
    Ended                                                   Ended
 September 30,                                          September 30,
--------------                                          --------------
 2005   2004                                              2005   2004
------ ------                                            ------ ------
              Cash Flow Data
$  39  $ 107  Net income                                $  263  $ 295
              Exclude:
    1     (2)  Discontinued operations, net                  1    (37)
 -----  -----                                            -----  -----
   40    105  Income from continuing operations            264    258
  258    (67) (Increase) decrease in restricted cash        97   (197)
              Adjustments to income from continuing
               operations, changes in working capital,
  290    157   and other                                   457    315
                                                         -----  -----
  588    195   Cash from continuing operations             818    376
    -     -    Cash from discontinued operations             -      1
-----  -----                                             -----  -----
$ 588  $ 195  Cash from operating activities            $   818 $ 377
 =====  =====                                            =====  =====
$(103) $ (80) Cash used for investing activities        $ (254) $(324)
 =====  =====                                            =====  =====
              Cash from (used for) financing
$  45  $ (50)   activities                              $   34  $(251)
 =====  =====                                            =====  =====
 
 
 
 

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

                                                        Year Ended
                                                     December 31, 2005
                                                     -----------------
Net income before special items                       $           506
Special items (see page 8)                                       (100)
                                                       ---------------
Net income                                            $           406
                                                       ===============

EPS before special items                              $          2.27
Special items (see page 8)                                      (0.45)
                                                       ---------------
EPS                                                   $          1.82
                                                       ===============
 

  Three Months                                    Year Ended December
      Ended                                               31,
December 31, 2005                                   2005       2006
-----------------                                 ---------  ---------
$          143    Net Income                      $     406  $     611
            77    Interest expense                      284        270
            48    Income tax expense                    222        226
           116    Depreciation and amortization         464        453
 --------------                                   ---------  ---------
           384    EBITDA                              1,376      1,560
                  Loss on asset dispositions and
             -     impairments, net                      32          -
             -    Discontinued operations                 2          -
---------------                                   --------- ----------
$          384    Adjusted EBITDA                 $   1,410  $   1,560
 ==============                                   =========  =========

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

$            100   Net income                         $           395
              66   Interest expense                               275
              26   Income tax expense                              34
             115   Depreciation                                   445
               8   Amortization                                    26
 ----------------                                      ---------------
             315   EBITDA                                       1,175
                   Loss on asset dispositions and
              25    impairments, net                               33
             (13)  Discontinued operations                        (17)
                   Restructuring and other special
               -    credits, net                                  (37)
                   Adjustment to costs associated
               -    with construction remediation                  (4)
 ----------------                                      ---------------
$            327   Adjusted EBITDA                    $         1,150
 ================                                      ===============
 
 

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

  Three Months Ended                             Nine Months Ended
    September 30,                                  September 30,
----------------------                       -------------------------
                          Same-Store Owned
                 %           Hotels (1)                          %
 2005   2004  Variance       Worldwide         2005    2004   Variance
 -----  ----- --------                        ------  ------ ---------
                       Revenue
                        Same-Store Owned
$ 848  $ 769     10.3    Hotels              $2,498  $2,299       8.7
                        Hotels Sold or
                         Closed in 2005 and
    3     17    (82.4)   2004 (7 hotels)         27      52     (48.1)
                        Hotels Without
                         Comparable Results
   15     20    (25.0)   (7 hotels)              92      91       1.1
                        Other ancillary
    5      5        -    hotel operations         6       6         -
 -----  ----- --------                        ------  ------ ---------
                       Total Owned, Leased
                        and Consolidated
                        Joint Venture Hotels
$ 871  $ 811      7.4   Revenue              $2,623  $2,448       7.1
 =====  ===== ========                        ======  ====== =========

                       Costs and Expenses
                        Same-Store Owned
$ 624  $ 583     (7.0)   Hotels              $1,864  $1,750      (6.5)
                        Hotels Sold or
                         Closed in 2005 and
    2     15     86.7    2004 (7 hotels)         23      44      47.7
                        Hotels Without
                         Comparable Results
   18     17     (5.9)   (7 hotels)              72      66      (9.1)
                        Other ancillary
    2      2        -    hotel operations         3       4      25.0
 -----  ----- --------                        ------  ------ ---------
                       Total Owned, Leased
                        and Consolidated
                        Joint Venture Hotels
$ 646  $ 617     (4.7)  Costs and Expenses   $1,962  $1,864      (5.3)
 =====  ===== ========                        ======  ====== =========
 

  Three Months Ended                             Nine Months Ended
    September 30,                                  September 30,
----------------------                       -------------------------
                 %       Same-Store Owned                       %
 2005   2004  Variance  Hotels North America   2005    2004   Variance
------ ------ --------                        ------  ------ ---------
                       Revenue
                        Same-Store Owned
$ 613  $ 553     10.9    Hotels              $1,799  $1,665       8.0
                        Hotels Sold or
                         Closed in 2005 and
    3     12    (75.0)   2004 (6 hotels)         23      38     (39.5)
                        Hotels Without
                         Comparable Results
   14     16    (12.5)   (6 hotels)              80      78       2.6
 -----  ----- --------                        ------  ------ ---------
                       Total Owned, Leased
                        and Consolidated
                        Joint Venture Hotels
$ 630  $ 581      8.4   Revenue              $1,902  $1,781       6.8
 =====  ===== ========                        ======  ====== =========

                       Costs and Expenses
                        Same-Store Owned
$ 454  $ 423     (7.4)   Hotels              $1,342  $1,272      (5.5)
                        Hotels Sold or
                         Closed in 2005 and
    2     11     81.8    2004 (6 hotels)         18      32      43.8
                        Hotels Without
                         Comparable Results
   17     14    (21.4)   (6 hotels)              65      57     (14.0)
 -----  ----- --------                        ------  ------ ---------
                       Total Owned, Leased
                        and Consolidated
                        Joint Venture Hotels
$ 473  $ 448     (5.6)  Costs and Expenses   $1,425  $1,361      (4.7)
 =====  ===== ========                        ======  ====== =========

  Three Months Ended                             Nine Months Ended
    September 30,                                  September 30,
----------------------                       -------------------------
                           Same-Store
                 %        Owned Hotels                           %
 2005   2004  Variance    International        2005   2004    Variance
------ ------ --------                        ------ ------- ---------

                       Revenue
                        Same-Store Owned
$ 235  $ 216      8.8    Hotels              $  699  $  634      10.3
    -                   Hotels Sold or
                         Closed in 2005 and
           5   (100.0)   2004 (1 hotel)           4      14     (71.4)
                        Hotels Without
                         Comparable Results
    1      4    (75.0)   (1 hotel)               12      13      (7.7)
                        Other ancillary
    5      5        -    hotel operations         6       6         -
 -----  ----- --------                        ------  ------ ---------
                       Total Owned, Leased
                        and Consolidated
                        Joint Venture Hotels
$ 241  $ 230      4.8   Revenue              $  721  $  667       8.1
 =====  ===== ========                        ======  ====== =========

                       Costs and Expenses
                        Same-Store Owned
$ 170  $ 160     (6.3)   Hotels              $  522  $  478      (9.2)
    -                   Hotels Sold or
                         Closed in 2005 and
           4    100.0    2004 (1 hotel)           5      12      58.3
                        Hotels Without
                         Comparable Results
    1      3     66.7    (1 hotel)                7       9      22.2
                    -   Other ancillary
    2      2             hotel operations         3       4      25.0
 -----  ----- --------                        ------  ------ ---------
                       Total Owned, Leased
                        and Consolidated
                        Joint Venture Hotels
$ 173  $ 169     (2.4)  Costs and Expenses   $  537  $  503      (6.8)
 =====  ===== ========                        ======  ====== =========

(1) Same-Store Owned Hotel Results exclude 7 hotels sold or closed in
    2005 and 2004 and 7 hotels without comparable results.
 
 
 

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

                                 WORLDWIDE           NORTH AMERICA
                           --------------------- ---------------------
                            2005    2004   Var.   2005    2004   Var.
                           ------- ------- ----- ------- ------- -----

                                 128 Hotels            85 Hotels
                           --------------------- ---------------------
 SAME STORE OWNED HOTELS
         REVPAR ($)        126.76  113.29  11.9% 127.00  112.22  13.2%
         ADR ($)           171.69  158.17   8.5% 165.65  150.49  10.1%
         OCCUPANCY (%)       73.8%   71.6%  2.2    76.7%   74.6%  2.1

                                    56                    34
                           --------------------- ---------------------
 SHERATON
         REVPAR ($)        105.60   95.78  10.3% 114.87  103.72  10.8%
         ADR ($)           147.38  136.40   8.0% 151.26  138.35   9.3%
         OCCUPANCY (%)       71.6%   70.2%  1.4    75.9%   75.0%  0.9

                                    36                    22
                           --------------------- ---------------------
 WESTIN
         REVPAR ($)        132.48  120.07  10.3% 117.49  106.35  10.5%
         ADR ($)           177.29  164.36   7.9% 154.43  141.36   9.2%
         OCCUPANCY (%)       74.7%   73.1%  1.6    76.1%   75.2%  0.9

                                    9                     3
                           --------------------- ---------------------
 ST. REGIS/LUXURY
  COLLECTION
         REVPAR ($)        239.32  215.30  11.2% 201.11  165.34  21.6%
         ADR ($)           372.22  363.58   2.4% 318.04  292.31   8.8%
         OCCUPANCY (%)       64.3%   59.2%  5.1    63.2%   56.6%  6.6

                                    10                    10
                           --------------------- ---------------------
 W
         REVPAR ($)        202.21  162.38  24.5% 202.21  162.38  24.5%
         ADR ($)           246.66  214.15  15.2% 246.66  214.15  15.2%
         OCCUPANCY (%)       82.0%   75.8%  6.2    82.0%   75.8%  6.2

                                    17                    16
                           --------------------- ---------------------
 OTHER
         REVPAR ($)        106.43   95.90  11.0% 105.72   95.78  10.4%
         ADR ($)           132.95  124.84   6.5% 131.83  126.86   3.9%
         OCCUPANCY (%)       80.1%   76.8%  3.3    80.2%   75.5%  4.7
 

(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without
    comparable results during 2004 and 2005

(2) See next page for breakdown by division
 

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

                                      43 Hotels
                               ----------------------
 SAME STORE OWNED HOTELS
         REVPAR ($)            126.09  116.37    8.4%
         ADR ($)               191.79  184.02    4.2%
         OCCUPANCY (%)           65.7%   63.2%   2.5

                                        22
                               ----------------------
 SHERATON
         REVPAR ($)             85.94   79.01    8.8%
         ADR ($)               137.41  131.30    4.7%
         OCCUPANCY (%)           62.5%   60.2%   2.3

                                        14
                               ----------------------
 WESTIN
         REVPAR ($)            179.93  163.32   10.2%
         ADR ($)               255.42  246.80    3.5%
         OCCUPANCY (%)           70.4%   66.2%   4.2

                                         6
                               ----------------------
 ST. REGIS/LUXURY COLLECTION
         REVPAR ($)            293.93  290.39    1.2%
         ADR ($)               446.63  459.46  (2.8%)
         OCCUPANCY (%)           65.8%   63.2%   2.6
 

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

                                         1
                               ----------------------
 OTHER
         REVPAR ($)            110.56   96.62   14.4%
         ADR ($)               139.49  114.35   22.0%
         OCCUPANCY (%)           79.3%   84.5%  (5.2)

(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without
    comparable results during 2004 and 2005

(2) See next page for breakdown by division
 
 

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

                                EUROPE              LATIN AMERICA
                        ----------------------- ----------------------
                         2005     2004    Var.   2005     2004   Var.
                        -------- ------- ------ -------- ------- -----

                               28 Hotels               11 Hotels
                        ----------------------- ----------------------
SAME STORE OWNED HOTELS
         REVPAR ($)      175.42  164.10    6.9%   59.38   50.22  18.2%
         ADR ($)         253.15  248.43    1.9%  102.98   93.98   9.6%
         OCCUPANCY (%)     69.3%   66.1%   3.2     57.7%   53.4%  4.3

                                  11                      8
                        ----------------------- ----------------------
 SHERATON
         REVPAR ($)      112.51  105.99    6.2%   52.71   43.55  21.0%
         ADR ($)         161.66  154.75    4.5%   97.55   89.82   8.6%
         OCCUPANCY (%)     69.6%   68.5%   1.1     54.0%   48.5%  5.5

                                  11                      3
                        ----------------------- ----------------------
 WESTIN
         REVPAR ($)      216.09  196.51   10.0%   84.67   75.56  12.1%
         ADR ($)         308.36  307.66    0.2%  118.57  104.58  13.4%
         OCCUPANCY (%)     70.1%   63.9%   6.2     71.4%   72.3% (0.9)

                                  6
                        -----------------------
 ST. REGIS/LUXURY
  COLLECTION
         REVPAR ($)      293.93  290.39    1.2%
         ADR ($)         446.63  459.46  (2.8%)
         OCCUPANCY (%)     65.8%   63.2%   2.6
 

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

(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without
    comparable results during 2004 and 2005
 

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

                                     4 Hotels
                              ---------------------
 SAME STORE OWNED HOTELS
         REVPAR ($)           115.11  109.03   5.6%
         ADR ($)              156.56  139.44  12.3%
         OCCUPANCY (%)          73.5%   78.2% (4.7)

                                       3
                              ---------------------
 SHERATON
         REVPAR ($)           117.90  116.63   1.1%
         ADR ($)              168.41  156.93   7.3%
         OCCUPANCY (%)          70.0%   74.3% (4.3)
 

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

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

                                       1
                              ---------------------
 OTHER
         REVPAR ($)           110.56   96.62  14.4%
         ADR ($)              139.49  114.35  22.0%
         OCCUPANCY (%)          79.3%   84.5% (5.2)
 

(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without
    comparable results during 2004 and 2005
 
 

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

                         WORLDWIDE(2)            NORTH AMERICA(2)
                   ------------------------- -------------------------
                    2005     2004     Var.    2005     2004     Var.
                   -------- -------- ------- -------- -------- -------

                           128 Hotels                85 Hotels
                   ------------------------- -------------------------
SAME STORE OWNED
 HOTELS
        Total
         REVENUE   848,071  768,811    10.3% 612,926  552,764    10.9%
        Total
         EXPENSE   624,168  583,472   (7.0%) 454,523  423,369   (7.4%)
 

                              56                        34
                   ------------------------- -------------------------
SHERATON
        REVENUE    341,211  315,104     8.3% 238,934  221,665     7.8%
        EXPENSE    249,234  235,068   (6.0%) 173,201  164,065   (5.6%)
 

                              36                        22
                   ------------------------- -------------------------
WESTIN
        REVENUE    268,047  242,290    10.6% 177,153  160,115    10.6%
        EXPENSE    194,249  181,798   (6.8%) 130,014  121,931   (6.6%)
 

                              9                         3
                   ------------------------- -------------------------
ST. REGIS/LUXURY
 COLLECTION
        REVENUE     77,232   72,190     7.0%  44,233   39,749    11.3%
        EXPENSE     61,559   58,838   (4.6%)  40,386   37,044   (9.0%)
 

                              10                        10
                   ------------------------- -------------------------
W(2)
        REVENUE     99,977   82,683    20.9%  99,977   82,683    20.9%
        EXPENSE     72,805   65,716  (10.8%)  72,805   65,716  (10.8%)
 

                              17                        16
                   ------------------------- -------------------------
OTHER
        REVENUE     61,604   56,544     8.9%  52,629   48,552     8.4%
        EXPENSE     46,321   42,052  (10.2%)  38,118   34,613  (10.1%)
 
 
 

(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without
    comparable results during 2004 and 2005

(2) Includes lease expense of $4,288 in 2005 and 2004 related to the
    lease of the W Times Square in New York

(3) See next page for breakdown by division
 

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

                                     43 Hotels
                             -------------------------
SAME STORE OWNED HOTELS
        Total REVENUE        235,145  216,047     8.8%
        Total EXPENSE        169,644  160,103   (6.0%)
 

                                        22
                             -------------------------
SHERATON
        REVENUE              102,277   93,439     9.5%
        EXPENSE               76,033   71,003   (7.1%)
 

                                        14
                             -------------------------
WESTIN
        REVENUE               90,894   82,175    10.6%
        EXPENSE               64,235   59,867   (7.3%)
 

                                        6
                             -------------------------
ST. REGIS/LUXURY COLLECTION
        REVENUE               32,999   32,441     1.7%
        EXPENSE               21,173   21,794     2.8%
 
 

W(2)
        REVENUE
        EXPENSE
 

                                        1
                             -------------------------
OTHER
        REVENUE                8,975    7,992    12.3%
        EXPENSE                8,203    7,439  (10.3%)
 

(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without
    comparable results during 2004 and 2005

(2) Includes lease expense of $4,288 in 2005 and 2004 related to the
    lease of the W Times Square in New York

(3) See next page for breakdown by division
 
 

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

                               EUROPE               LATIN AMERICA
                      ------------------------ -----------------------
                       2005     2004     Var.   2005    2004    Var.
                      -------- -------- ------ ------- ------- -------

                              28 Hotels               11 Hotels
                      ------------------------ -----------------------
SAME STORE OWNED HOTELS
        Total REVENUE 162,546  152,450    6.6% 42,802  36,003    18.9%
        Total EXPENSE 116,316  112,547  (3.3%) 30,840  27,270  (13.1%)
 

                                11                       8
                      ------------------------ -----------------------
SHERATON
        REVENUE        52,354   49,376    6.0% 29,101  24,461    19.0%
        EXPENSE        40,686   39,985  (1.8%) 21,062  18,171  (15.9%)
 

                                11                       3
                      ------------------------ -----------------------
WESTIN
        REVENUE        77,193   70,633    9.3% 13,701  11,542    18.7%
        EXPENSE        54,457   50,768  (7.3%)  9,778   9,099   (7.5%)
 

                                 6
                      ------------------------
ST. REGIS/LUXURY
 COLLECTION
        REVENUE        32,999   32,441    1.7%
        EXPENSE        21,173   21,794    2.8%
 
 

OTHER
        REVENUE
        EXPENSE
 

(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without
    comparable results during 2004 and 2005
 

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

                                     4 Hotels
                             -----------------------
SAME STORE OWNED HOTELS
        Total REVENUE        29,797  27,594     8.0%
        Total EXPENSE        22,488  20,286  (10.9%)
 

                                       3
                             -----------------------
SHERATON
        REVENUE              20,822  19,602     6.2%
        EXPENSE              14,285  12,847  (11.2%)
 
 

WESTIN
        REVENUE
        EXPENSE
 
 

ST. REGIS/LUXURY COLLECTION
        REVENUE
        EXPENSE
 

                                       1
                             -----------------------
OTHER
        REVENUE               8,975   7,992    12.3%
        EXPENSE               8,203   7,439  (10.3%)
 

(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without
    comparable results during 2004 and 2005
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Hotel Results - Same Store Owned Hotels(1)
                      For the Nine Months Ended
                          September 30, 2005
                               UNAUDITED

                                 WORLDWIDE           NORTH AMERICA
                           --------------------- ---------------------
                            2005    2004   Var.   2005    2004   Var.
                           ------- ------- ----- ------- ------- -----

                                 127 Hotels            84 Hotels
                           --------------------- ---------------------
SAME STORE OWNED HOTELS
        REVPAR ($)         123.31  110.67  11.4% 122.04  109.46  11.5%
        ADR ($)            172.86  160.64   7.6% 167.10  153.41   8.9%
        OCCUPANCY (%)        71.3%   68.9%  2.4    73.0%   71.4%  1.6

                                    55                    33
                           --------------------- ---------------------
SHERATON
        REVPAR ($)         100.83   91.89   9.7% 106.15   97.43   9.0%
        ADR ($)            145.99  136.32   7.1% 149.01  136.76   9.0%
        OCCUPANCY (%)        69.1%   67.4%  1.7    71.2%   71.2%  0.0

                                    36                    22
                           --------------------- ---------------------
WESTIN
        REVPAR ($)         134.15  120.30  11.5% 119.68  107.99  10.8%
        ADR ($)            179.55  167.14   7.4% 157.31  145.59   8.1%
        OCCUPANCY (%)        74.7%   72.0%  2.7    76.1%   74.2%  1.9

                                    9                     3
                           --------------------- ---------------------
ST. REGIS/LUXURY
 COLLECTION
        REVPAR ($)         260.27  233.95  11.3% 253.39  218.74  15.8%
        ADR ($)            396.34  386.69   2.5% 362.02  344.05   5.2%
        OCCUPANCY (%)        65.7%   60.5%  5.2    70.0%   63.6%  6.4

                                    10                    10
                           --------------------- ---------------------
W
        REVPAR ($)         188.49  158.12  19.2% 188.49  158.12  19.2%
        ADR ($)            244.14  216.53  12.8% 244.14  216.53  12.8%
        OCCUPANCY (%)        77.2%   73.0%  4.2    77.2%   73.0%  4.2

                                    17                    16
                           --------------------- ---------------------
OTHER
        REVPAR ($)          89.70   80.67  11.2%  86.21   77.53  11.2%
        ADR ($)            127.81  119.78   6.7% 125.59  119.95   4.7%
        OCCUPANCY (%)        70.2%   67.3%  2.9    68.6%   64.6%  4.0

(1) Hotel Results exclude 7 hotels sold or closed and 7 hotels without
    comparable results during 2004 and 2005

(2) See next page for breakdown by division
 

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

                                    43 Hotels
                             ----------------------
SAME STORE OWNED HOTELS
        REVPAR ($)           126.92  114.13   11.2%
        ADR ($)              190.84  184.31    3.5%
        OCCUPANCY (%)          66.5%   61.9%   4.6

                                      22
                             ----------------------
SHERATON
        REVPAR ($)            89.79   80.42   11.7%
        ADR ($)              139.10  135.23    2.9%
        OCCUPANCY (%)          64.5%   59.5%   5.0

                                      14
                             ----------------------
WESTIN
        REVPAR ($)           180.86  159.73   13.2%
        ADR ($)              257.17  245.92    4.6%
        OCCUPANCY (%)          70.3%   65.0%   5.3

                                       6
                             ----------------------
ST. REGIS/LUXURY COLLECTION
        REVPAR ($)           270.11  256.82    5.2%
        ADR ($)              454.05  459.62  (1.2%)
        OCCUPANCY (%)          59.5%   55.9%   3.6
 

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

                                       1
                             ----------------------
OTHER
        REVPAR ($)           109.89   98.90   11.1%
        ADR ($)              138.95  119.00   16.8%
        OCCUPANCY (%)          79.1%   83.1%  (4.0)
 

(1) Hotel Results exclude 7 hotels sold or closed and 7 hotels without
    comparable results during 2004 and 2005

(2) See next page for breakdown by division
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Hotel Results - Same Store Owned Hotels(1)
                      For the Nine Months Ended
                          September 30, 2005
                               UNAUDITED

                                  EUROPE             LATIN AMERICA
                          ---------------------- ---------------------
                           2005    2004    Var.   2005    2004   Var.
                          ------- ------- ------ ------- ------- -----

                                 28 Hotels             11 Hotels
                          ---------------------- ---------------------
SAME STORE OWNED HOTELS
        REVPAR ($)        170.97  156.05    9.6%  68.59   57.89  18.5%
        ADR ($)           255.98  249.22    2.7% 108.50  103.53   4.8%
        OCCUPANCY (%)       66.8%   62.6%   4.2    63.2%   55.9%  7.3

                                   11                     8
                          ---------------------- ---------------------
SHERATON
        REVPAR ($)        116.41  106.52    9.3%  57.10   48.77  17.1%
        ADR ($)           169.03  164.28    2.9%  97.04   94.60   2.6%
        OCCUPANCY (%)       68.9%   64.8%   4.1    58.8%   51.6%  7.2

                                   11                     3
                          ---------------------- ---------------------
WESTIN
        REVPAR ($)        207.66  185.69   11.8% 112.21   92.53  21.3%
        ADR ($)           311.73  299.29    4.2% 140.57  127.66  10.1%
        OCCUPANCY (%)       66.6%   62.0%   4.6    79.8%   72.5%  7.3

                                    6
                          ----------------------
ST. REGIS/LUXURY
 COLLECTION
        REVPAR ($)        270.11  256.82    5.2%
        ADR ($)           454.05  459.62  (1.2%)
        OCCUPANCY (%)       59.5%   55.9%   3.6
 

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

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

                                    4 Hotels
                             ---------------------
SAME STORE OWNED HOTELS
        REVPAR ($)           116.64  105.21  10.9%
        ADR ($)              157.58  140.28  12.3%
        OCCUPANCY (%)          74.0%   75.0% (1.0)

                                      3
                             ---------------------
SHERATON
        REVPAR ($)           120.78  109.09  10.7%
        ADR ($)              170.31  155.75   9.3%
        OCCUPANCY (%)          70.9%   70.0%  0.9
 

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

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

                                      1
                             ---------------------
OTHER
        REVPAR ($)           109.89   98.90  11.1%
        ADR ($)              138.95  119.00  16.8%
        OCCUPANCY (%)          79.1%   83.1% (4.0)
 
 

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

                     WORLDWIDE(2)               NORTH AMERICA(2)
             ---------------------------- ----------------------------
               2005       2004      Var.    2005       2004      Var.
             ---------- ---------- ------ ---------- ---------- ------

                      127 Hotels                    84 Hotels
             ---------------------------- ----------------------------
SAME STORE
 OWNED HOTELS
  Total
   REVENUE   2,498,380  2,299,176    8.7% 1,798,755  1,665,250    8.0%
  Total
   EXPENSE   1,864,091  1,749,678  (6.5%) 1,342,264  1,271,410  (5.6%)
 

                         55                           33
             ---------------------------- ----------------------------
SHERATON
  REVENUE      973,977    915,620    6.4%   660,184    633,345    4.2%
  EXPENSE      731,529    689,020  (6.2%)   494,558    477,154  (3.6%)
 

                         36                           22
             ---------------------------- ----------------------------
WESTIN
  REVENUE      824,520    747,143   10.4%   555,752    506,254    9.8%
  EXPENSE      594,136    554,577  (7.1%)   397,893    373,866  (6.4%)
 

                          9                            3
             ---------------------------- ----------------------------
ST. REGIS/
 LUXURY
 COLLECTION
  REVENUE      261,899    246,837    6.1%   171,027    160,008    6.9%
  EXPENSE      197,346    189,268  (4.3%)   132,826    125,775  (5.6%)
 

                         10                           10
             ---------------------------- ----------------------------
W(3)
  REVENUE      278,331    242,083   15.0%   278,331    242,083   15.0%
  EXPENSE      211,247    196,125  (7.7%)   211,247    196,125  (7.7%)
 

                         17                           16
             ---------------------------- ----------------------------
OTHER
  REVENUE      159,653    147,493    8.2%   133,461    123,560    8.0%
  EXPENSE      129,833    120,688  (7.6%)   105,740     98,491  (7.4%)
 

(1) Hotel Results exclude 7 hotels sold or closed and 7 hotels without
    comparable results during 2004 and 2005

(2) Includes lease expense of $12,863 in 2005 and 2004 related to the
    lease of the W Times Square in New York

(3) See next page for breakdown by division
 

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

                                     43 Hotels
                             -------------------------
SAME STORE OWNED HOTELS
        Total REVENUE        699,625  633,926    10.4%
        Total EXPENSE        521,827  478,267   (9.1%)
 

                                        22
                             -------------------------
SHERATON
        REVENUE              313,793  282,275    11.2%
        EXPENSE              236,971  211,866  (11.8%)
 

                                        14
                             -------------------------
WESTIN
        REVENUE              268,768  240,889    11.6%
        EXPENSE              196,243  180,711   (8.6%)
 

                                        6
                             -------------------------
ST. REGIS/LUXURY COLLECTION
        REVENUE               90,872   86,829     4.7%
        EXPENSE               64,520   63,493   (1.6%)
 
 

W(3)
        REVENUE
        EXPENSE
 

                                        1
                             -------------------------
OTHER
        REVENUE               26,192   23,933     9.4%
        EXPENSE               24,093   22,197   (8.5%)
 

(1) Hotel Results exclude 7 hotels sold or closed and 7 hotels without
    comparable results during 2004 and 2005

(2) Includes lease expense of $12,863 in 2005 and 2004 related to the
    lease of the W Times Square in New York

(3) See next page for breakdown by division
 
 

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

                             EUROPE                LATIN AMERICA
                    ------------------------ -------------------------
                     2005     2004     Var.   2005     2004     Var.
                    -------- -------- ------ -------- -------- -------

                            28 Hotels                11 Hotels
                    ------------------------ -------------------------
SAME STORE OWNED HOTELS
      Total REVENUE 470,684  435,574    8.1% 142,086  119,656    18.7%
      Total EXPENSE 362,299  337,740  (7.2%)  93,683   80,897  (15.8%)
 

                              11                        8
                    ------------------------ -------------------------
SHERATON
      REVENUE       162,646  149,568    8.7%  90,484   77,944    16.1%
      EXPENSE       132,536  121,309  (9.3%)  62,683   53,124  (18.0%)
 

                              11                        3
                    ------------------------ -------------------------
WESTIN
      REVENUE       217,166  199,177    9.0%  51,602   41,712    23.7%
      EXPENSE       165,243  152,938  (8.0%)  31,000   27,773  (11.6%)
 

                               6
                    ------------------------
ST. REGIS/LUXURY
 COLLECTION
      REVENUE        90,872   86,829    4.7%
      EXPENSE        64,520   63,493  (1.6%)
 
 

OTHER
      REVENUE
      EXPENSE
 

(1) Hotel Results exclude 7 hotels sold or closed and 7 hotels without
    comparable results during 2004 and 2005
 
 

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

                                     4 Hotels
                             -----------------------
SAME STORE OWNED HOTELS
        Total REVENUE        86,855  78,696    10.4%
        Total EXPENSE        65,845  59,630  (10.4%)
 

                                       3
                             -----------------------
SHERATON
        REVENUE              60,663  54,763    10.8%
        EXPENSE              41,752  37,433  (11.5%)
 
 

WESTIN
        REVENUE
        EXPENSE
 
 

ST. REGIS/LUXURY COLLECTION
        REVENUE
        EXPENSE
 

                                       1
                             -----------------------
OTHER
        REVENUE              26,192  23,933     9.4%
        EXPENSE              24,093  22,197   (8.5%)
 

(1) Hotel Results exclude 7 hotels sold or closed and 7 hotels without
    comparable results during 2004 and 2005
 
 

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

Floating Rate
 Debt:

Senior credit
 facility
  Revolving
   credit        Various
   facility       + 125             $9          0%    4.15%       1.0

                  LIBOR
  Term loan       + 125            475         11%    5.11%       0.9
                          ------------- ---------- -------- ----------
                                   484         11%    5.10%       0.9

Mortgages and
 other           Various           183          4%    5.27%       2.0

Interest rate     LIBOR
 swaps            + 423            300          7%    8.30%
                          ------------- ---------- --------

Total Floating                     967         22%    6.12%       1.2

Fixed Rate Debt:

  Sheraton
   Holding
   public
   debt(1)                       1,049         24%    6.00%       7.2

  Senior
   notes(2)                      1,500         35%    6.70%       4.2

  Convertible
   debt                            360          8%    3.50%       0.6

  Mortgages and
   other                           731         18%    7.26%       5.5

  Interest rate
   swaps                          (300)       (7%)    7.88%
                          ------------- ---------- --------

    Total Fixed                  3,340         78%    6.15%       5.0
                          ------------- ---------- --------

      Total Debt                $4,307        100%    6.15%       4.4
                          ============= ========== ========
 

(1) Balance consists of outstanding public debt of $1.048 billion and
    a $1 million fair value adjustment related to the unamortized gain
    on fixed to floating interest rate swaps terminated in September
    2002 and March 2004.

(2) Balance consists of outstanding public debt of $1.497 billion and
    a $22 million fair value adjustment related to the unamortized
    gain on fixed to floating interest rate swaps terminated in
    September 2002 and March 2004 and a ($19) million fair value
    adjustment related to current fixed to floating interest rate
    swaps.

                                -------------------------------------
                                               Maturities
                                -------------------------------------
                                    less than 1 year      $      604
                                           1-3 years           1,624
                                           4-5 years             480
                                greater than 5 years           1,599
                                                          -----------
                                                          $    4,307
                                                          ===========
                                -------------------------------------
 
 

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

Properties without comparable results in 2005:

Property                                     Location
--------                                     --------
Sheraton Kauai                               Koloa, HI
St. Regis Aspen                              Aspen, CO
Paradise Streams Caesars                     Mt. Pocono, PA
Sheraton Cancun                              Cancun, Mexico
W New Orleans - French Quarter               New Orleans, LA
W New Orleans                                New Orleans, LA
Sheraton Suites Key West                     Key West, FL

Properties sold or closed in 2005 and 2004:

Property                                     Location
--------                                     --------
Sheraton Denver Tech Center                  Englewood, CO
Deerfield Hilton                             Ft. Lauderdale, FL
Rancho Bernardo Four Points by Sheraton      Rancho Bernardo, CA
Sheraton Lisboa Hotel & Towers               Lisbon, Portugal
Raphael                                      Chicago, IL
Sheraton Chapel Hill                         Chapel Hill, NC
St. Regis Washington, DC                     Washington, DC
 
 

Selected Balance Sheet and Cash Flow Items:

Cash and cash equivalents
(including restricted cash of $262 million)                    $1,171
Debt                                                           $4,307
 

Revenues and Expenses Associated with Assets Sold in 2005 or Expected
 to be Sold in the Fourth Quarter(1):

                                  Q1     Q2     Q3     Q4    Full Year
                                 -------------------------------------
Hotels Sold in 2005:
2005
Revenues                          $13    $11     $3     $-        $27
Expenses                          $12     $8     $2     $-        $22

2004
Revenues                          $14    $19    $16    $16        $65
Expenses                          $13    $14    $13    $14        $54

Hotels with a Signed Purchase & Sale Agreement:
2005
Revenues                          $15    $21    $18     $-        $54
Expenses                          $11    $13    $11     $-        $35

2004
Revenues                          $15    $19    $17    $17        $68
Expenses                          $11    $12    $11    $12        $46
 

(1) Results consist of 6 hotels sold in 2005 and 3 hotels for which we
    have signed a Purchase & Sale agreement. These amounts are
    included in the revenues and expenses from owned, leased and
    consolidated joint venture hotels in 2005 and 2004.
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                         Capital Expenditures
        For the Three and Nine Months Ended September 30, 2005
                        UNAUDITED ($ millions)

                                                         Q3      YTD
                                                       ------  -------
 Capital Expenditures:
   Owned, Leased and Consolidated Joint Venture Hotels    57      183
   Corporate/IT                                           13       29
                                                       ------  -------
 Subtotal                                                 70      212

 Vacation Ownership Capital Expenditures:
   Capital expenditures (includes land acquisitions)      80       88
   Net capital expenditures for inventory (1)            (16)     (36)
                                                       ------  -------
 Subtotal                                                 64       52

 Development Capital                                      85      183
                                                       ------  -------

 Total Capital Expenditures                              219      447
                                                       ======  =======

(1) Represents gross inventory capital expenditures of $27 and $100 in
    the three and nine months ended September 30, 2005, respectively,
    less cost of sales of $43 and $136 in the three and nine months
    ended September 30, 2005, respectively.
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
              Summary of Portfolio by Properties & Rooms
                       As of September 30, 2005
                               UNAUDITED

                             NAD             EAME            LAD
                      ---------------- --------------- ---------------
Owned                  Hotels   Rooms   Hotels  Rooms   Hotels  Rooms
                      ------- -------- ------- ------- ------- -------
Sheraton                  35   16,049      11   3,074       7   3,235
Westin                    22   10,359      11   2,372       3     901
Four Points                6    1,153       -       -       -       -
W                         12    4,294       -       -       -       -
Luxury Collection          1      654       5     638       2     320
St. Regis                  3      667       1     161       -       -
Other                     11    2,634       -       -       -       -
                      ------- -------- ------- ------- ------- -------
Total Owned               90   35,810      28   6,245      12   4,456
Managed & UJV
Sheraton                  41   20,565      73  21,483      11   2,140
Westin                    37   20,893       7   1,869       -       -
Four Points                1      475       7   1,019       2     263
W                          5      904       -       -       1     237
Luxury Collection          6    1,404       6     942       8     188
St. Regis                  3      596       1      95       -       -
Other                      2    2,705       -       -       -       -
                      ------- -------- ------- ------- ------- -------
Total Managed & UJV       95   47,542      94  25,408      22   2,828
Franchised
Sheraton                 113   35,787      29   6,953       3   1,074
Westin                    18    7,289       3   1,141       3     598
Four Points               91   15,861      11   1,482       9   1,350
Luxury Collection          1      249      12   1,354       -       -
                      ------- -------- ------- ------- ------- -------
Total Franchised         223   59,186      55  10,930      15   3,022
----------------------------------------------------------------------
Systemwide
Sheraton                 189   72,401     113  31,510      21   6,449
Westin                    77   38,541      21   5,382       6   1,499
Four Points               98   17,489      18   2,501      11   1,613
W                         17    5,198       -       -       1     237
Luxury Collection          8    2,307      23   2,934      10     508
St. Regis                  6    1,263       2     256       -       -
Other                     13    5,339       -       -       -       -
                      ------- -------- ------- ------- ------- -------
Total Systemwide         408  142,538     177  42,583      49  10,306
                      ======= ======== ======= ======= ======= =======
----------------------------------------------------------------------
 

                                            ASIA            Total
                                      --------------- ----------------
Owned                                  Hotels  Rooms   Hotels   Rooms
                                      ------- ------- ------- --------
Sheraton                                   3   1,028      56   23,386
Westin                                     -       -      36   13,632
Four Points                                1     630       7    1,783
W                                          -       -      12    4,294
Luxury Collection                          -       -       8    1,612
St. Regis                                  -       -       4      828
Other                                      -       -      11    2,634
                                      ------- ------- ------- --------
Total Owned                                4   1,658     134   48,169
Managed & UJV
Sheraton                                  46  16,416     171   60,604
Westin                                    12   4,935      56   27,697
Four Points                                2     387      12    2,144
W                                          2     353       8    1,494
Luxury Collection                          -       -      20    2,534
St. Regis                                  2     591       6    1,282
Other                                      2     296       4    3,001
                                      ------- ------- ------- --------
Total Managed & UJV                       66  22,978     277   98,756
Franchised
Sheraton                                  17   6,050     162   49,864
Westin                                     5   1,226      29   10,254
Four Points                                1     126     112   18,819
Luxury Collection                          -       -      13    1,603
                                      ------- ------- ------- --------
Total Franchised                          23   7,402     316   80,540
----------------------------------------------------------------------
Systemwide
Sheraton                                  66  23,494     389  133,854
Westin                                    17   6,161     121   51,583
Four Points                                4   1,143     131   22,746
W                                          2     353      20    5,788
Luxury Collection                          -       -      41    5,749
St. Regis                                  2     591      10    2,110
Other                                      2     296      15    5,635
                                      ------- ------- ------- --------
Total Systemwide                          93  32,038     727  227,465
                                      ======= ======= ======= ========
----------------------------------------------------------------------
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                                             Nine Months
    Ended                                                    Ended
 September 30,                                           September 30,
--------------                                           -------------
 2005   2004                                              2005   2004
 -----  -----                                             -----  -----
              Income from continuing operations before
$ 131  $  85   special items                             $ 364  $ 225
 -----  -----                                             -----  -----
$0.58  $0.40  EPS before special items                   $1.63  $1.05
 -----  -----                                             -----  -----
              Special Items
              Restructuring and other special credits,
    -     37   net (a)                                       -     37
              Adjustment to costs associated with
    -      -   construction remediation (b)                  -      4
              Loss on asset dispositions and
  (16)    (4)  impairments, net (c)                        (32)    (8)
 -----  -----                                             -----  -----
  (16)    33  Total special items - pre-tax                (32)    33
              Income tax benefit (expense) for special
    6    (13)  items (d)                                    11    (12)
              Tax expense on repatriation of foreign
  (47)     -   earnings (e)                                (47)     -
              Reserves and settlements associated with
  (34)     -   tax matters (f)                             (32)    12
 ----- ------                                             -----  -----
  (91)    20  Total special items - after-tax             (100)    33
 -----  -----                                             -----  -----

$  40  $ 105  Income from continuing operations          $ 264  $ 258
 -----  -----                                             -----  -----
$0.18  $0.49  EPS including special items                $1.18  $1.21
 =====  =====                                             =====  =====

(a) During the three and nine months ended September 30, 2004, the
    Company reversed a $37 million reserve previously recorded through
    restructuring and other special credits due to a favorable
    judgment in a litigation matter.

(b) Represents adjustments to the Company's share of costs for
    construction remediation efforts at a property owned by a vacation
    ownership unconsolidated joint venture that were previously
    recorded in 2002.

(c) For the three months ended September 30, 2005, primarily reflects
    the losses recorded on the sale of two hotels. For the nine months
    ended September 30, 2005, the loss also reflects impairment
    charges associated with the Sheraton hotel in Cancun, Mexico that
    is being partially demolished in order to build vacation ownership
    units. Loss of $4 million and $8 million for the three and nine
    months ended September 30, 2004, respectively, reflects impairment
    charges primarily associated with the Company's investment in a
    joint venture that owns a hotel managed by the Company and the
    renovation of a portion of the W New York for the Bliss spa.

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

(e) Represents tax expense associated with the adoption of a plan to
    repatriate foreign earnings, in accordance with the American Jobs
    Creation Act of 2004.

(f) The Company recorded a tax charge of approximately $40 million for
    the three and nine months ended September 30, 2005 to increase its
    tax reserves relating to the Company's 1998 disposition of World
    Directories as a result of a recent United States Tax Court
    decision against another taxpayer. This amount also includes tax
    refunds of $6 million and $8 million in the three and nine months
    ended September 30, 2005, respectively, related to tax years prior
    to the 1995 split-up of ITT Corporation. Tax benefit of $12
    million in the nine months ended September 30, 2004 reflects the
    favorable results of certain changes to the Federal tax rules.

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. 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 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 (i.e., "Adjusted EBITDA") when evaluating operating performance for the total Company as well as for individual properties or groups of properties because the Company believes that the inclusion or exclusion of certain recurring and non-recurring items, such as the special items described on page 8 of this release and/or revenues and costs and expenses from hotels sold, 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 used Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions and it is used in the annual budget process. Due to guidance from the Securities and Exchange Commission, the Company now does not reflect such items when calculating EBITDA; however, the Company continues to adjust for these special items and refers to this measure as Adjusted EBITDA. The Company has historically reported this measure to its investors and believes that the continued inclusion of Adjusted EBITDA provides consistency in its financial reporting and enables investors to perform more meaningful comparisons of past, present and future operating results and provides a means to evaluate the results of its core on-going operations. EBITDA and Adjusted EBITDA are not intended to represent cash flow from operations as defined by GAAP and such metrics should not be considered as an alternative to net income, cash flow from operations or any other performance measure prescribed by GAAP. The Company's calculation of EBITDA and Adjusted EBITDA may be different from the calculations used by other companies and, therefore, comparability may be limited. 
All references to Same-Store Owned Hotels reflect the Company's owned, leased and consolidated joint venture hotels, excluding hotels sold to date, undergoing significant repositionings or for which comparable results are not available (i.e., hotels not owned during the entire periods presented or closed due to seasonality or hurricane damage.) REVPAR is defined as revenue per available room. ADR is defined as average daily rate. 
All references to contract sales reflect vacation ownership sales before revenue adjustments for percentage of completion accounting methodology. 

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with approximately 750 properties in more than 80 countries and 120,000 employees at its owned and managed properties. With internationally renowned brands, Starwood® corporation is a fully integrated owner, operator and franchisor of hotels and resorts including: St. Regis®, The Luxury Collection®, Sheraton®, Westin®, Four Points® by Sheraton, and W®, Hotels and Resorts as well as Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. 

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

.
Contact:

Starwood Hotels & Resorts Worldwide, Inc.
Alisa Rosenberg
914-640-5214
www.starwoodhotels.com

.
Also See: Steven J. Heyer Named Starwood Chief Executive Officer; Former President and COO of The Coca-Cola Company to Succeed Barry Sternlicht / September 2004
Starwood Hotels Net Income for the 3rd Qtr of 2004 Jumps to $107 million Compared to $48 million in the 3rd Qtr of 2003; REVPAR Worldwide Increased 12.3% / Hotel Operating Statistics / October 2004


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