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For the Full Year 2007 Strategic Hotels & Resorts Net Income Fell 59%
to $39.1 million from $95.6 million in the Previous Year
.
Not Expecting to Acquire Any Hotels in 2008


 
 
CHICAGO, Feb. 27, 2008 - Strategic Hotels & Resorts (NYSE: BEE) today reported results for the fourth quarter and year ended December 31, 2007.

Fourth Quarter Financial Highlights

    -- Comparable funds from operations (FFO) was $0.43 per diluted share, an
       increase of 43.3 percent compared with $0.30 in the prior year.

    -- Quarterly Comparable EBITDA was $68.3 million, an increase of 23.5
       percent compared with $55.3 million in the prior year.

    -- Total North American total revenue per available room (Total RevPAR)
       increased 7.5 percent and revenue per available room (RevPAR) increased
       7.2 percent driven by a 5.2 percent increase in average daily rate
       (ADR) and a 1.4 percentage-point increase in occupancy.  Non-rooms
       revenues grew by 8.4 percent.  The company's North American Same Store
       and Total North American portfolios were the same in the fourth
       quarter.

    -- European Same Store Total RevPAR increased 17.2 percent and RevPAR
       increased 21.4 percent driven by a 22.6 percent increase in ADR.  Non-
       rooms revenues grew by 9.9 percent.

    -- Total North American gross operating profit margins expanded 270 basis
       points.  Total North American EBITDA margins expanded 420 basis points.

    -- Total North American gross operating profit per room increased 16.0
       percent.  Total North American EBITDA per room increased 27.3 percent.

    -- Residential activity contributed $2.3 million in EBITDA and $1.4
       million of Comparable FFO, or $0.02 per diluted share.
 

Full-Year 2007 Financial Highlights

    -- Comparable FFO was $1.64 per diluted share, an increase of 17.1 percent
       compared with $1.40 in the prior year.  Management estimates 2007
       results were reduced by $2.4 million, or $0.03 per diluted share,
       related to disruption caused by capital project activity.

    -- Comparable EBITDA was $273.5 million, an increase of 38.7 percent
       compared with $197.1 million in the prior year.

    -- Excluding the impact of residential sales and the Hyatt Regency New
       Orleans (which had a net negligible impact on full year results),
       Comparable FFO would have been $1.54 per diluted share, a 10.0 percent
       increase over the prior year, and Comparable EBITDA would have been
       $259.3 million, a 31.6 percent increase over the prior year.

    -- Total RevPAR increased 9.9 percent and RevPAR increased 9.5 percent in
       the North American Same Store portfolio for the year ending December
       31, 2007. Growth was driven by a 6.1 percent increase in ADR and a 2.3
       percentage-point increase in occupancy. Non-rooms revenues grew by 11.0
       percent.

    -- Total RevPAR increased 7.4 percent and RevPAR increased 7.4 percent in
       the Total North American portfolio for the year ending December 31,
       2007. Growth was driven by a 5.6 percent increase in average daily rate
       (ADR) and a 1.3 percentage-point increase in occupancy. Non-rooms
       revenues grew by 7.8 percent.

    -- European Same Store Total RevPAR increased 12.6 percent and RevPAR
       increased 13.6 percent driven by a 16.1 percent increase in ADR.  Non-
       rooms revenues grew by 10.1 percent.

    -- Total North American hotel gross operating profit margins expanded 190
       basis points. North American same store property EBITDA margins
       expanded 140 basis points.

    -- Total North American gross operating profit per room increased 13.1
       percent.  North American same store EBITDA per room increased 15.6
       percent.

    -- Residential activity contributed $14.4 million in EBITDA and $7.6
       million of Comparable FFO, or $0.10 per diluted share.
 

Fourth Quarter Events

    -- On December 28, 2007, the company closed on an agreement to sell the
       Hyatt Regency New Orleans to Poydras Properties Hotel Holdings Co., LLC
       for a gross sales price of $32.0 million.

    -- On December 10, 2007, the company announced that it had entered into a
       partnership with Sunstone Hotel Investors, Inc. (NYSE: SHO - News)
       ("Sunstone") to own and operate BuyEfficient LLC, an electronic
       purchasing platform that allows members to procure food, operating
       supplies, furniture, fixtures and equipment. Under the terms of the
       agreement, the company acquired a 50.0 percent interest in
       BuyEfficient, from Sunstone for a gross sales price of $6.3 million.

    -- The company purchased approximately 60 acres of oceanfront land near
       the Four Seasons Punta Mita Resort in Nayarit, Mexico for a mixed-use
       development. The effective purchase price of $45.8 million will be paid
       in installments through 2009.
 

Laurence Geller, chief executive officer said, "2007 was a year in which Strategic Hotels & Resorts made great strides. At the beginning of the year, we tasked ourselves with the execution of an ambitious set of objectives. We delivered on each of these promises -- exceptional operating results and the achievement of key measurement metrics, settlement of the insurance claim at the Hyatt Regency New Orleans and its subsequent sale, recycling of capital through our joint venture with the Government of Singapore, successful sale of our residential units at the Hotel del Coronado and their return to our rental pool, completion of the majority of our master planning objectives, execution of our programmed capital projects, implementation of additional significant operating programs and systems, and early and efficient implementation of our property level-contingency plans as needed.

"With this strong foundation solidly in place, we are well positioned to quickly and thoughtfully adapt to the current changing and volatile economic environment. As we move into 2008, our seasoned management team is poised to continue its disciplined and systematic execution of our operating, marketing and physical master planned activities, while being constantly sensitive to any changes in the economy and marketplace."

Financial Results

The company reported net income available to common shareholders of $5.4 million, or $0.07 per diluted share for the fourth quarter of 2007, compared with a net loss available to common shareholders of $6.1 million, or $0.08 per diluted share for the fourth quarter of 2006.

For the year ending December 31, 2007, the company reported net income available to common shareholders of $39.1 million, or $0.52 per diluted share, compared with net income available to common shareholders of $95.6 million, or $1.39 per diluted share in the prior period.

Adjusted EBITDA for the fourth quarter of 2007 was $69.4 million compared with $52.1 million for the fourth quarter of 2006. Comparable EBITDA for the fourth quarter of 2007 was $68.3 million compared with $55.3 million in the fourth quarter of 2006. Comparable EBITDA for the fourth quarter of 2007 excludes a $1.1 million adjustment to deduct the minority interest partner's share of Hyatt Regency La Jolla EBITDA.

Adjusted EBITDA for the year ending December 31, 2007 was $295.5 million compared with $270.6 million in the prior year. Comparable EBITDA for the year ending December 31, 2007 was $273.5 million compared with $197.1 million in the prior year period. Comparable EBITDA for the year ending December 31, 2007 excludes:

    -- $84.7 million in gain on sale of minority interests in hotel
       properties,

    -- Impairment losses related to the Hyatt Regency New Orleans of $37.7
       million,

    -- Loss on early extinguishment of debt of $15.1 million,

    -- $7.4 million write-off of previously deferred costs related to a
       contemplated European offering,

    -- Loss on foreign currency exchange of $3.7 million, and

    -- $1.1 million adjustment to deduct the minority interest partner's share
       of the Hyatt Regency La Jolla EBITDA.
 

FFO for the fourth quarter of 2007 was $32.6 million, or $0.43 per diluted share, compared with $20.3 million, or $0.26 per diluted share in the fourth quarter of 2006. Comparable FFO for the fourth quarter of 2007 was $32.9 million, or $0.43 per diluted share, compared with $22.7 million, or $0.30 per diluted share in the fourth quarter of 2006.

FFO for the year ending December 31, 2007 was $60.9 million, or $0.80 per diluted share, compared with $87.3 million, or $1.25 per diluted share in the prior period. Comparable FFO for the year ending December 31, 2007 was $124.8 million, or $1.64 per diluted share, compared with $98.1 million, or $1.40 per diluted share for year ending December 31, 2006. Comparable FFO for the year ending December 31, 2007 excludes:

    -- Impairment losses related to the Hyatt Regency New Orleans of $37.7
       million,

    -- Loss on early extinguishment of debt of $15.1 million,

    -- $7.4 million write-off of previously deferred costs related to a
       contemplated European offering, and

    -- Loss on foreign currency exchange of $4.1 million.
 

Capital Deployment

During 2007, the company delivered capital projects representing approximately $122 million of spending designed to redevelop, reposition and upgrade the company's portfolio. Capital project completions include:

    -- $65.5 million at the Hotel del Coronado for the 78-key condominium
       hotel Beach Village development and $26.8 million for a new spa and
       fitness center, a 311-room guestroom renovation, a restaurant
       renovation and the addition of the company's branded ENO wine tasting
       room;

    -- $16.6 million at the Four Seasons Punta Mita for the addition of 28
       keys and an expansion of the spa and fitness center;

    -- $3.7 million at the Ritz-Carlton Laguna Niguel for the addition of an
       ENO wine room, conversion of one Presidential suite into three
       oceanfront guestrooms and a meeting space renovation;

    -- $3.1 million at the Westin St. Francis for a partial guestroom
       renovation;

    -- $2.9 million at the InterContinental Chicago for the addition of a
       Michigan Avenue fronting Starbucks and a partial guestroom renovation;

    -- $1.6 million at the Ritz-Carlton Half Moon Bay for the renovation of
       guestroom suites;

    -- $1.1 million at the Marriott Hamburg for the renovation of the lobby
       and lobby bar; and

    -- $0.8 million at the Paris Marriott Champs-Elysees for a restaurant
       renovation.
 

Subsequent to year-end, the company delivered capital projects representing $26.4 million of spending, including:

    -- $20.8 million at the Fairmont Scottsdale Princess for the addition of
       the Michael Mina operated Bourbon Steak restaurant, Midnight Oil
       operated Stone Rose bar, conversion of 79 villas to Fairmont Gold
       rooms, and conversion of the general manager's house into a super
       suite; and

    -- $5.6 million at the Fairmont Chicago for the addition of a spa and
       fitness center.
 

Currently in construction are projects representing approximately $95 million of spending, including:

    -- $37.1 million at the Fairmont Chicago for the renovation of 687
       guestrooms, lobby renovation and ENO wine room addition;

    -- $20.3 million at the Marriott Grosvenor Square for a restaurant
       addition including private dining rooms, guestroom renovation,
       concierge club addition, health club addition and creation of
       incremental meeting space and for-rent office space;

    -- $17.6 million at the Four Seasons Washington, D.C. for the renovation
       of 66 guestrooms and suites and an 11-guestroom and super suite
       expansion;

    -- $7.5 million at the InterContinental Miami for the addition of a spa
       and fitness center;

    -- $5.0 million at the Ritz-Carlton Half Moon Bay for the expansion of the
       wine room, a partial guestroom renovation and related property
       enhancements;

    -- $3.9 million at the Hotel Le Parc for a repositioning and reflagging of
       the hotel to a Renaissance; and

    -- $3.3 million at the Westin St. Francis for the addition of a lobby bar.
 

Residential Activity

Residential activity contributed $2.3 million of EBITDA and $1.4 million of FFO, or $0.02 per diluted share for the fourth quarter 2007, and $14.4 million of EBITDA and $7.6 million of FFO, or $0.10 per diluted share for the year ending December 31, 2007.

The joint venture that owns the Beach Village development at the Hotel del Coronado, of which the company owns a 45.0 percent interest, closed on sales of six of the remaining seven hotel condominium units generating $15.4 million of venture sales during the fourth quarter. The sales contributed $1.9 million of EBITDA and $1.1 million of FFO, or $0.01 per diluted share to the company's results. For the year ending December 31, 2007, 34 of the 35 total hotel condominiums were sold, which generated $110.2 million of sales and $33.4 million of EBITDA to the venture contributing $15.0 million of EBITDA and $8.6 million of FFO, or $0.11 per diluted share, to the company's results.

The joint venture that is developing the Four Seasons Residence Club Punta Mita, of which the company owns a 31.0 percent interest, contributed $0.5 million of EBITDA and $0.3 million of FFO to the company's fourth quarter results. For the year ending December 31, 2007, the venture contributed $0.5 million of EBITDA and $0.2 million of FFO to the company's full year results.

2007 Portfolio Review

    -- The company closed on the acquisition of the 116-room Hotel Le Parc for
       euro 66.5 million ($91.0 million) from Accor SA.

    -- The company closed on the disposition of the Hyatt Regency New Orleans
       to Poydras Properties Hotel Holdings Co., LLC for a gross sales price
       of $32.0 million.

    -- The company closed on the purchase of approximately 60 acres of
       oceanfront land near the Four Seasons Punta Mita Resort in Nayarit,
       Mexico for a mixed-use development for an effective purchase price of
       $45.8 million.

    -- The company entered into a joint venture agreement with an affiliate of
       GIC Real Estate Pte Ltd (GIC RE) for GIC RE to acquire a 49.0 percent
       interest in the company's InterContinental Chicago and Hyatt Regency La
       Jolla hotels for a gross valuation of $450.0 million.  The joint
       venture entered into a long-term asset management agreement with
       Strategic Hotels & Resorts, under which the company earns asset
       management fees in addition to various other fees and promotes for its
       services.

    -- The company entered into a partnership with Sunstone to own and operate
       BuyEfficient, an electronic purchasing platform that allows members to
       procure food, operating supplies, furniture, fixtures and equipment.
       Under the terms of the agreement, the company acquired a 50.0 percent
       interest in BuyEfficient, LLC from Sunstone for a gross sales price of
       $6.3 million.
 

2007 Capital Market Activity Review

    -- The company completed a debt recapitalization entering into a new
       $500.0 million revolving credit facility and three property secured
       financings totaling $318.5 million.  The financings replaced the
       company's previous $225.0 million credit facility and $292.5 million of
       floating rate commercial mortgage-backed securities (CMBS) debt.

    -- The company closed on the offering of $180.0 million of 3.50 percent
       exchangeable senior notes due 2012.  In conjunction with the offering,
       the company used $9.9 million of the total net proceeds to enter into
       capped call transactions (effectively increasing the conversion premium
       from 20 to 40 percent) and $25.0 million to repurchase and retire
       shares of its common stock.

Quarterly Distribution

The Board of Directors previously declared on December 3, 2007 a quarterly dividend of $0.24 per share of common stock, payable to shareholders of record as of the close of business on December 27, 2007. The dividend was paid on January 10, 2008. Additionally, for shareholders of record as of December 17, 2007, the Board declared a quarterly dividend of $0.53125 per share of 8.50 percent Series A Cumulative Redeemable Preferred Stock, $0.51563 per share of 8.25 percent Series B Cumulative Redeemable Preferred Stock, and $0.51563 per share of 8.25 percent Series C Cumulative Redeemable Preferred Stock. The preferred stock dividends were paid on December 31, 2007.

2008 Outlook

For the full year 2008, the company anticipates that Comparable EBITDA will be in the range of $263.9 million to $274.9 million, Comparable FFO will be in the range of $121.8 million to $132.8 million, and Comparable FFO per diluted share in the range of $1.60 to $1.75. The table below provides a reconciliation of comparable 2007 results to 2008 Guidance:

                                          Comparable       Comparable
                                            EBITDA             FFO
                                         (in millions)      per Share
         2007 Comparable                    $273.5            $1.64
           Residential Contribution         ($14.4)          ($0.10)
           Hyatt Regency New Orleans          $0.2            $0.00
                                            $259.3            $1.54

         2008 Guidance                 $263.9 - $274.9     $1.60 - $1.75
         Growth                          1.8% - 6.0%        3.9% - 13.6%
 

The following tables reconcile projected 2008 net income available to common shareholders to projected Comparable FFO and Comparable EBITDA (in millions, except per share data):

                                                       Low Range  High Range
    Net Income Available to Common Shareholders           $4.0      $14.8
    Depreciation and Amortization                        120.8      120.8
    Realized Portion of Deferred Gain on Sale Leasebacks  (4.6)      (4.6)
    Deferred Tax on Realized Portion of Deferred Gain      1.4        1.4
    Minority Interests                                     0.5        0.7
    Adjustments from Consolidated Affiliates              (6.3)      (6.3)
    Adjustments from Unconsolidated Affiliates             6.0        6.0
       Comparable FFO                                   $121.8     $132.8
       Comparable FFO per Diluted Share                  $1.60      $1.75
 

                                                       Low Range  High Range
    Net Income Available to Common Shareholders           $4.0      $14.8
    Depreciation and Amortization                        120.8      120.8
    Interest Expense                                      91.9       91.9
    Income Taxes                                          10.9       10.9
    Minority Interests                                     0.5        0.7
    Adjustments from Consolidated Affiliates             (14.5)     (14.5)
    Adjustments from Unconsolidated Affiliates            24.0       24.0
    Preferred Shareholder Dividends                       30.9       30.9
    Realized Portion of Deferred Gain on Sale Leasebacks  (4.6)      (4.6)
       Comparable EBITDA                                $263.9     $274.9
 

    The company's 2008 guidance includes the following assumptions:

    -- Total North American Total RevPAR and RevPAR growth in the range of 2.0
       to 5.0 percent;

    -- Total North American EBITDA and gross operating profit margin expansion
       between 0 and 50 basis points;

    -- No contribution to Comparable EBITDA or FFO from residential sales;

    -- No acquisition, disposition or capital raising activity;

    -- Capital expenditures totaling $175 million, including furniture,
       fixtures and equipment (FF&E) spending of $50 million from property
       FF&E reserves.  Construction is estimated to cause displacement in
       revenues resulting in an approximate reduction in EBITDA and FFO of
       $6.0 million or $0.08 per diluted share;

    -- Corporate expenses of $28.0 million; and

    -- In the first quarter of 2008, the company will begin consolidating the
       operations of Paris Marriott Champs-Elysees.
 

First Quarter 2008 Guidance

For the first quarter of 2008, the company anticipates that Comparable EBITDA will be in the range of $54.4 million to $57.4 million, Comparable FFO will be in the range of $22.7 million to $25.7 million, and Comparable FFO per diluted share in the range of $0.30 to $0.34. EBITDA and FFO are estimated to be reduced by $2.0 million, or $0.03 per diluted share, related to disruption caused by capital project activity.

The company expects first quarter 2008 North American Total RevPAR growth to be in the range of 0.5 percent to 1.5 percent, and first quarter 2008 RevPAR growth to be in the range of 1.5 percent to 2.5 percent.

The following tables reconcile projected first quarter 2008 net loss available to common shareholders to projected Comparable FFO and Comparable EBITDA (in millions, except per share data):

                                                       Low Range  High Range
    Net Loss Available to Common Shareholders           $(3.0)     $(0.0)
    Depreciation and Amortization                        26.4       26.4
    Realized Portion of Deferred Gain on Sale Leasebacks (1.1)      (1.1)
    Deferred Tax on Realized Portion of Deferred Gain     0.4        0.4
    Minority Interests                                    0.1        0.1
    Adjustments from Consolidated Affiliates             (1.6)      (1.6)
    Adjustments from Unconsolidated Affiliates            1.5        1.5
       Comparable FFO                                   $22.7      $25.7
       Comparable FFO per Diluted Share                 $0.30      $0.34
 

                                                       Low Range  High Range
    Net Loss Available to Common Shareholders           $(3.0)     $(0.0)
    Depreciation and Amortization                        26.4       26.4
    Interest Expense                                     21.7       21.7
    Income Taxes                                         (0.1)      (0.1)
    Minority Interests                                    0.1        0.1
    Adjustments from Consolidated Affiliates             (2.6)      (2.6)
    Adjustments from Unconsolidated Affiliates            5.3        5.3
    Preferred Shareholder Dividends                       7.7        7.7
    Realized Portion of Deferred Gain on Sale Leasebacks (1.1)      (1.1)
       Comparable EBITDA                                $54.4      $57.4
 
 

                    Consolidated Statements of Operations
                      (in thousands, except per share data)

                                      Three Months Ended      Years Ended
                                         December 31,        December 31,
                                        2007      2006      2007       2006
    Revenues:
      Rooms                           $135,257  $122,247   $532,109  $381,019
      Food and beverage                 96,941    88,505    342,468   244,007
      Other hotel operating revenue     30,465    26,916    110,010    73,304
                                       262,663   237,668    984,587   698,330
      Lease revenue                      6,076     4,550     23,405    20,257

        Total revenues                 268,739   242,218  1,007,992   718,587

    Operating Costs and Expenses:
      Rooms                             33,310    31,173    130,784    94,764
      Food and beverage                 63,390    60,516    231,407   170,054
      Other departmental expenses       66,003    61,692    248,815   181,436
      Management fees                   10,133    10,485     39,264    26,774
      Other hotel expenses              17,909    16,541     67,975    44,526
      Lease expense                      4,048     3,265     15,700    13,682
      Depreciation and amortization     27,683    25,778    106,091    75,135
      Corporate expenses                 9,109     7,030     30,179    25,383
      Other charges                         14       -        7,372       -

        Total operating costs and
         expenses                      231,599   216,480    877,587   631,754

          Operating income              37,140    25,738    130,405    86,833

      Interest expense                 (23,889)  (20,766)   (88,906)  (50,973)
      Interest income                      885       645      2,775     3,961
      Loss on early extinguishment of
       debt                                -      (2,150)   (10,268)   (2,150)
      Equity in earnings (losses) of
       joint ventures                      132    (1,320)     8,344    (1,066)
      Foreign currency exchange
       (loss) gain                        (156)      627     (3,701)      756
      Other (expenses) income, net        (835)       85       (584)    3,596
      Income before income taxes,
       minority interests, gain on
       sale of minority interests
       in hotel properties and
       discontinued operations          13,277     2,859     38,065    40,957
      Income tax expense                  (179)     (627)    (9,714)   (3,946)
      Minority interest in SHR's
       operating partnership              (230)      (14)      (413)     (741)
      Minority interest in
       consolidated affiliates            (535)      (32)    (1,363)     (763)
      Income before gain on sale of
       minority interests in hotel
       properties and discontinued
       operations                       12,333     2,186     26,575    35,507
      Gain on sale of minority
       interests in hotel properties      (134)      -       84,658       -
      Income from continuing
       operations                       12,199     2,186    111,233    35,507
      Income (loss) from discontinued
       operations, net of tax and
       minority interests                  947      (850)   (42,075)   84,622

      Net income                        13,146     1,336     69,158   120,129
      Preferred shareholder dividends   (7,722)   (7,462)   (30,107)  (24,543)

      Net income (loss) available to
       common shareholders              $5,424   $(6,126)   $39,051   $95,586

      Basic Income Per Share:
        Income (loss) from continuing
         operations available to
         common shareholders per share   $0.06    $(0.07)     $1.08     $0.16
        Income (loss) from discontinued
         operations per share             0.01     (0.01)     (0.56)     1.24
        Net income (loss) available
         to common shareholders per
         share                           $0.07    $(0.08)     $0.52     $1.40
        Weighted-average common
         shares outstanding             74,803    75,713     75,075    68,286

      Diluted Income Per Share:
        Income (loss) from continuing
         operations available to
         common shareholders per share   $0.06    $(0.07)     $1.08     $0.16
        Income (loss) from discontinued
         operations per share             0.01     (0.01)     (0.56)     1.23
        Net income (loss) available
         to common shareholders per
         share                           $0.07    $(0.08)     $0.52     $1.39
        Weighted-average common
         shares outstanding             75,001    75,713     75,324    68,569
 
 

                           Consolidated Balance Sheets
                        (in thousands, except share data)

                                                   Years Ended December 31,
                                                    2007              2006
    Assets
     Investment in hotel properties, net        $2,427,273        $2,375,129
     Goodwill                                      462,536           421,516
     Intangible assets, net of accumulated
      amortization of $3,271 and $3,166             45,420            45,793
     Investment in joint ventures                   78,801            71,349
     Cash and cash equivalents                     111,494            86,462
     Restricted cash and cash equivalents           39,161            73,400
     Accounts receivable, net of allowance for
      doubtful accounts of $1,965 and $809          82,217            70,282
     Deferred financing costs, net of accumulated
      amortization of $4,809 and $2,194             14,868            10,701
     Deferred tax assets                            41,790            43,555
     Other assets                                   62,736            57,522
       Total assets                             $3,366,296        $3,255,709

    Liabilities and Shareholders' Equity
     Liabilities:
      Mortgages and other debt payable          $1,363,855        $1,442,865
      Exchangeable senior notes,
       net of discount                             179,235               -
      Bank credit facility                         109,000           115,000
      Accounts payable and accrued expenses        266,324           186,293
      Distributions payable                         18,179            18,175
      Deferred tax liabilities                      36,407            24,390
      Deferred gain on sale of hotels              114,292           107,474
      Insurance proceeds received in excess of
       insurance recoveries receivable                 -              20,794
         Total liabilities                       2,087,292         1,914,991

     Minority interests in SHR's
      operating partnership                         11,512            12,463
     Minority interests in consolidated
      affiliates                                    30,653            10,965

     Shareholders' equity:
      8.50% Series A Cumulative Redeemable
       Preferred Stock ($0.01 par value;
       4,488,750 and 4,000,000 shares issued
       and outstanding; liquidation preference
       $25.00 per share)                           108,206            97,553
      8.25% Series B Cumulative Redeemable
       Preferred Stock ($0.01 par value;
       4,600,000 shares issued and outstanding;
       liquidation preference $25.00 per share)    110,775           110,775
      8.25% Series C Cumulative Redeemable
       Preferred Stock ($0.01 par value;
       5,750,000 shares issued and outstanding;
       liquidation preference $25.00 per share)    138,940           138,940
      Common shares ($0.01 par value; 150,000,000
       common shares authorized; 74,371,230 and
       75,406,727 common shares issued
       and outstanding)                                742               753
      Additional paid-in capital                 1,201,503         1,224,400
      Accumulated deficit                         (304,922)         (265,435)
      Accumulated other comprehensive
       (loss) income                               (18,405)           10,304
         Total shareholders' equity              1,236,839         1,317,290
         Total liabilities and
          shareholders' equity                  $3,366,296        $3,255,709
 
 

                               FINANCIAL HIGHLIGHTS

                           Supplemental Financial Data
                   (in millions, except per share information)

                                  Three Months Ended         Year Ended
    Results vs. Previous          December 31, 2007       December 31, 2007
     Guidance
                                  Actual    Guidance     Actual    Guidance

    North American same store
     Total RevPAR growth           7.5%    5.0% - 6.0%    9.9%    8.5% - 9.5%
    North American same store
     RevPAR growth                 7.2%    7.0% - 8.0%    9.5%    8.5% - 9.5%

    Total North American
     Total RevPAR growth           7.5%    5.0% - 6.0%    7.4%    6.5% - 7.5%
    Total North American
     RevPAR growth                 7.2%    7.0% - 8.0%    7.4%    7.0% - 8.0%

    Comparable EBITDA             $68.3   $65.0 - 68.0  $273.5  $270.3 - 273.3

    Comparable FFO per
     diluted share                $0.43   $0.40 - 0.44   $1.64    $1.60 - 1.64
 

                 (in thousands, except per share information)

                                                          December 31, 2007

                                                  Pro Rata Share  Consolidated
    Capitalization
    Common shares outstanding                              74,371      74,371
    Operating partnership units outstanding                   976         976
    Stock options outstanding                                 736         736
    Restricted stock units outstanding                      1,059       1,059

    Combined shares, options and units outstanding         77,142      77,142
    Common stock price at end of period                    $16.73      $16.73

    Common equity capitalization                       $1,290,586  $1,290,586
    Preferred equity capitalization                       370,236     370,236
    Consolidated debt                                   1,652,090   1,652,090
    Pro rata share of unconsolidated debt                 274,500         -
    Pro rata share of consolidated debt                  (107,065)        -
    Cash and cash equivalents                            (111,494)   (111,494)

      Total enterprise value                           $3,368,853  $3,201,418

    Net Debt / Total Enterprise Value                       50.7%       48.1%
    Preferred Equity / Total Enterprise Value               11.0%       11.6%
    Common Equity / Total Enterprise Value                  38.3%       40.3%

    Dividends Per Share
    Common dividends declared
     (holders of record on each of March 27,
     June 26, September 26 and December 27, 2007)                       $0.24

    Preferred Series A dividends declared
     (holders of record on March 16, June 15,
     September 14 and December 17, 2007)                             $0.53125

    Preferred Series B dividends declared
     (holders of record on March 16, June 15,
     September 14 and December 17, 2007)                             $0.51563

    Preferred Series C dividends declared
     (holders of record on March 16, June 15,
     September 14 and December 17, 2007)                             $0.51563
 
 

                             Discontinued Operations

The results of operations of hotels sold are classified as discontinued operations and segregated in the consolidated statements of operations for all periods presented. The following hotels were sold during 2006 and 2007 (in thousands):

     Hotel                              Date Sold           Net Sales Proceeds
     Hyatt Regency New Orleans          December 28, 2007        $28,047
     Hilton Burbank Airport             September 7, 2006       $123,321
     Marriott Rancho Las Palmas Resort  July 14, 2006            $54,774
 

    The following is a summary of income (loss) from discontinued operations
for the three months and years ended December 31, 2007 and 2006 (in
thousands):

                                        Three Months Ended   Years Ended
                                           December 31,      December 31,
                                           2007   2006      2007     2006

    Hotel operating revenues                 $96   $331      $384  $43,608

    Operating costs and expenses          (1,691) 1,170       307   46,331
    Depreciation and amortization            -      -         -      2,535
    Impairment losses                        -      -      37,716      -
      Total operating costs and expenses  (1,691) 1,170    38,023   48,866

        Operating income (loss)            1,787   (839)  (37,639)  (5,258)

    Interest expense                         -       29      (823)  (1,993)
    Interest income                          -      354       998      433
    Loss on early extinguishment of debt     -      (63)   (4,871)  (1,000)
    Other expenses, net                      -      -         -         48
    Income tax (expense) benefit            (828)    64      (289)   4,607
    (Loss) gain on sale                      -     (407)      -     88,871
    Minority interest                        (12)    12       549   (1,086)
      Income (loss) from discontinued
       operations                           $947  $(850) $(42,075) $84,622
 
 

                       Investment in the Hotel del Coronado
                                  (in thousands)

                                                                     Period
                                                                      from
                                           Three Months     Year    January 9,
                                              Ended         Ended      to
                                           December 31,    December  December
                                          2007     2006    31, 2007  31, 2006

    Total revenues (100%)                $33,409  $31,221  $141,404  $132,480
    Property EBITDA (100%)               $11,226  $10,595   $52,926   $52,073

    Equity in earnings (loss) of joint
     venture (SHR 45% ownership)
      Property EBITDA                     $5,052   $4,768   $23,817   $23,433
       Depreciation and amortization      (1,707)  (1,367)   (6,844)   (5,151)
       Loss on sale of assets                  3     (169)     (239)     (169)
       Interest expense                   (5,225)  (5,027)  (20,943)  (19,304)
       Other (expense) income, net           (99)      13      (227)     (115)
       Income taxes                          175      500      (545)     (400)
    Equity in losses of joint venture    $(1,801) $(1,282)  $(4,981)  $(1,706)

    EBITDA Contribution from investment
     in Hotel del Coronado
       Equity in losses of joint venture $(1,801) $(1,282)  $(4,981)  $(1,706)
       Depreciation and amortization       1,707    1,367     6,844     5,151
       Interest expense                    5,225    5,027    20,943    19,304
       Income taxes                         (175)    (500)      545       400
    EBITDA Contribution for investment
     in Hotel del Coronado                $4,956   $4,612   $23,351   $23,149

    FFO Contribution from investment in
     Hotel del Coronado
       Equity in losses of joint venture $(1,801) $(1,282)  $(4,981)  $(1,706)
       Depreciation and amortization       1,707    1,367     6,844     5,151
    FFO Contribution for investment in
     Hotel del Coronado                     $(94)     $85    $1,863    $3,445
 
 

                       Interest   Spread over                   Maturity
          Debt           Rate        LIBOR       Loan Amount      Date
    CMBS Mortgage and
     Mezzanine           6.68%      208 bp        $610,000    January 2011 (a)
    Revolving Credit
     Facility            7.10%      250 bp               -    January 2011 (a)
                                                   610,000

    Cash and cash
     equivalents                                    12,292

    Net Debt                                      $597,708

    (a) Includes extension options.
 

           Cap            Effective     LIBOR          Notional
                            Date       Cap Rate         Amount      Maturity

    CMBS Mortgage and      January   5.0% to           $630,000   January 2009
     Mezzanine Loan and     2006      January 2008
     Revolving Credit                5.5% January 2008
     Facility Cap                     to maturity

    CMBS Mortgage and      January   5.0%              $630,000   January 2011
     Mezzanine Loan and     2009
     Revolving Credit
     Facility Cap
 
 

                         Summary of Residential Activity
                                  (in thousands)

On January 9, 2006, we purchased a 45% interest in a joint venture that owns the North Beach Venture development adjacent to the Hotel del Coronado. We account for this investment using the equity method of accounting. We own a 31% interest in a joint venture that is developing the Four Seasons Residence Club Punta Mita (RCPM) adjacent to the Four Seasons Punta Mita Resort. We account for this investment using the equity method of accounting. In addition, we engage in certain activities related to potential development projects such as condominium-hotel units, fractional ownership units and other for-sale residential units. During the third quarter of 2007, a potential condominium-hotel project at the Fairmont Chicago was delayed indefinitely due to market conditions. We recorded a charge of $1.2 million related to the costs of this project.

                                                                      Period
                                                                       from
                                            Three Months     Year   January 9,
                                               Ended        Ended       to
                                            December 31,   December  December
    North Beach Venture                    2007     2006   31, 2007  31, 2006
    Hotel condominium sales (100%)       $15,405     $-    $110,212      $-
    Hotel condominium cost
     of sales (100%)                    $(11,575)    $-    $(77,223)     $-

    SHR's 45% share
       Hotel condominium sales            $6,932     $-     $49,595      $-
       Hotel condominium cost of sales    (5,209)     -     (34,750)      -
       Other income (expense), net           136       24       186       (70)
       Income taxes                         (775)     -      (6,475)      -
    SHR's share of net income (loss)      $1,084      $24    $8,556      $(70)

       Net income (loss)                  $1,084      $24    $8,556      $(70)
       Income taxes                          775      -       6,475       -
    EBITDA Contribution for investment
     in North Beach Venture               $1,859      $24   $15,031      $(70)

    FFO Contribution for investment in
     North Beach Venture                  $1,084      $24    $8,556      $(70)
 

                                         Three Months Ended    Years Ended
                                            December 31,       December 31,
    Residence Club Punta Mita (RCPM)       2007     2006      2007      2006

    SHR's 31% share
    Sales                                 $1,264   $1,515    $3,366    $4,912
    EBITDA Contribution for
     investment in RCPM                     $455     $(45)     $528      $641

    FFO Contribution for
     investment in RCPM                     $281     $(62)     $232      $286
 

                                         Three Months Ended    Years Ended
                                            December 31,       December 31,
                                           2007     2006      2007      2006
    Other Residential Activity              $-       $-     $(1,184)     $-
 
 

    SHR's share of total residential
     activity:
    Sales                                 $8,196   $1,515   $52,961    $4,912
    EBITDA                                $2,314     $(21)  $14,375      $571
    FFO                                   $1,365     $(38)   $7,604      $216
 
 

                         Non-GAAP Financial Measures

In addition to REIT hotel income, six other non-GAAP financial measures are presented for the Company that we believe are useful to management and investors as key measures of our operating performance: Funds from Operations (FFO); FFO - Fully Diluted; Comparable FFO; Earnings Before Interest Expense, Taxes, Depreciation and Amortization (EBITDA); Adjusted EBITDA; and Comparable EBITDA. A reconciliation of these measures to net income (loss) available to common shareholders, the most directly comparable GAAP measure, is set forth in the following tables.

We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which adopted a definition of FFO in order to promote an industry-wide standard measure of REIT operating performance. NAREIT defines FFO as net income (or loss) (computed in accordance with GAAP) excluding (losses) or gains from sales of depreciable property plus real estate-related depreciation and amortization, and after adjustments for our portion of these items related to unconsolidated partnerships and joint ventures. We also present FFO - Fully Diluted, which is FFO plus minority interest expense on convertible minority interests. We also present Comparable FFO, which is FFO - Fully Diluted excluding the impact of any gains or losses on early extinguishment of debt, impairment losses, foreign currency exchange gains or losses and other non-recurring charges. We believe that the presentation of FFO, FFO - Fully Diluted and Comparable FFO provides useful information to management and investors regarding our results of operations because they are measures of our ability to fund capital expenditures and expand our business. In addition, FFO is widely used in the real estate industry to measure operating performance without regard to items such as depreciation and amortization. We also present Comparable FFO per diluted share as a non-GAAP measure of our performance. We calculate Comparable FFO per diluted share for a given operating period as our Comparable FFO (as defined above) divided by the weighted average of fully diluted shares outstanding. Comparable FFO per diluted share, in accordance with NAREIT, is adjusted for the effects of dilutive securities. Dilutive securities may include shares granted under share-based compensation plans, operating partnership units and exchangeable debt securities. No effect is shown for securities that are anti-dilutive.

EBITDA represents net income (loss) available to common shareholders excluding: (i) interest expense, (ii) income tax expense, including deferred income tax benefits and expenses applicable to our foreign subsidiaries and income taxes applicable to sale of assets; and (iii) depreciation and amortization. EBITDA also excludes interest expense, income tax expense and depreciation and amortization of our equity method investments. EBITDA is presented on a full participation basis, which means we have assumed conversion of all convertible minority interests of our operating partnership into our common stock and includes preferred dividends. We believe this treatment of minority interest provides more useful information for management and our investors and appropriately considers our current capital structure. We also present Adjusted EBITDA, which eliminates the effect of realizing deferred gains on our sale leasebacks. We also present Comparable EBITDA, which eliminates the effect of gains or losses on sales of assets, early extinguishment of debt, impairment losses, foreign currency exchange gains or losses and other non-recurring charges. We believe EBITDA, Adjusted EBITDA and Comparable EBITDA are useful to management and investors in evaluating our operating performance because they provide management and investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe they help management and investors meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our asset base (primarily depreciation and amortization) from our operating results. Our management also uses EBITDA, Adjusted EBITDA and Comparable EBITDA as measures in determining the value of acquisitions and dispositions.

We caution investors that amounts presented in accordance with our definitions of FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA may not be comparable to similar measures disclosed by other companies, since not all companies calculate these non-GAAP measures in the same manner. FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA should not be considered as an alternative measure of our net income or operating performance. FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA can enhance your understanding of our financial condition and results of operations, these non-GAAP financial measures, when viewed individually, are not necessarily a better indicator of any trend as compared to comparable GAAP measures such as net income (loss) available to common shareholders. In addition, you should be aware that adverse economic and market conditions might negatively impact our cash flow. Below, we have provided a quantitative reconciliation of FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA to the most directly comparable GAAP financial performance measure, which is net income (loss) available to common shareholders, and provide an explanatory description by footnote of the items excluded from FFO, FFO - Fully Diluted, EBITDA and Adjusted EBITDA.
 

   Reconciliation of Net Income (Loss) Available to Common Shareholders to
                EBITDA, Adjusted EBITDA and Comparable EBITDA
                                (in thousands)

                                        Three Months Ended    Years Ended
                                           December 31,       December 31,
                                          2007     2006      2007      2006

    Net income (loss) available to
     common shareholders                 $5,424  $(6,126)  $39,051   $95,586
    Depreciation and amortization -
     continuing operations               27,683   25,778   106,091    75,135
    Depreciation and amortization -
     discontinued operations                -        -         -       2,535
    Interest expense - continuing
     operations                          23,889   20,766    88,906    50,973
    Interest expense - discontinued
     operations                             -        (29)      823     1,993
    Income taxes - continuing
     operations                             179      627     9,714     3,946
    Income taxes - discontinued
     operations                             828      (64)      289    (4,607)
    Minority interests                      243        3      (135)    1,827
    Adjustments from consolidated
     affiliates                          (2,367)  (1,014)   (5,063)   (4,310)
    Adjustments from unconsolidated
     affiliates                           7,155    5,912    30,603    27,431
    Preferred shareholder dividends       7,722    7,462    30,107    24,543
    EBITDA                               70,756   53,315   300,386   275,052
    Realized portion of deferred gain
     on sale leasebacks                  (1,319)  (1,189)   (4,847)   (4,405)
    Adjusted EBITDA                      69,437   52,126   295,539   270,647
    Gain on sale of assets - continuing
     operations                             (18)     -         (18)      (48)
    Loss (gain) on sale of assets -
     discontinued operations                -        407       -     (88,871)
    Gain on sale of minority interests
     in hotel properties                    134      -     (84,658)      -
    (Gain) loss on sale of assets -
     unconsolidated affiliates               (4)     169       239       169
    Corporate depreciation                 (265)     -        (265)      -
    Other charges - continuing
     operations                              14      -       7,372       -
    Impairment losses  - discontinued
     operations                             -        -      37,716       -
    Foreign currency exchange loss
     (gain) (a)                             156     (627)    3,701      (756)
    Hyatt Regency La Jolla minority
     interest (b)                        (1,127)     -      (1,127)      -
    Termination costs - discontinued
     operations (c)                         -         67      (400)    9,851
    Planning costs - New Orleans Jazz
     District                               -        950       227     3,005
    Loss on early extinguishment of
     debt - continuing operations           -      2,150    10,268     2,150
    Loss on early extinguishment of
     debt - discontinued operations         -         63     4,871     1,000
    Comparable EBITDA                   $68,327  $55,305  $273,465  $197,147
 

     (a) Foreign currency exchange loss (gain) applicable to third-party and
         inter-company debt and certain balance sheet items held by foreign
         subsidiaries.

     (b) The minority interest partner's share of the Hyatt Regency La
         Jolla's property EBITDA is not deducted from net income (loss)
         available to common shareholders under GAAP accounting rules.

     (c) Termination costs (benefits) included in discontinued operations
         related to the termination of the management agreement at the
         Marriott Rancho Las Palmas property.
 
 

Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds
        From Operations (FFO), FFO - Fully Diluted and Comparable FFO
                    (in thousands, except per share data)

                                         Three Months Ended    Years Ended
                                            December 31,       December 31,
                                           2007     2006      2007     2006

    Net income (loss) available to
     common shareholders                  $5,424  $(6,126)  $39,051  $95,586
    Depreciation and amortization -
     continuing operations                27,683   25,778   106,091   75,135
    Depreciation and amortization -
     discontinued operations                 -        -         -      2,535
    Corporate depreciation                  (265)     -        (265)     -
    Gain on sale of assets - continuing
     operations                              (18)     -         (18)     (48)
    Loss (gain) on sale of assets -
     discontinued operations                 -        407       -    (88,871)
    Gain on sale of minority interests
     in hotel properties                     134      -     (84,658)     -
    Realized portion of deferred gain on
     sale leasebacks                      (1,319)  (1,189)   (4,847)  (4,405)
    Deferred tax expense on realized
     portion of deferred gain on sale
     leasebacks                              379      339     1,439    1,320
    Minority interests adjustments          (379)    (353)   (1,449)  (1,761)
    Adjustments from consolidated
     affiliates                           (1,342)    (494)   (2,797)  (2,196)
    Adjustments from unconsolidated
     affiliates                            1,703    1,536     7,083    6,446
    FFO                                   32,000   19,898    59,630   83,741
      Convertible minority interests         622      356     1,314    3,588
    FFO - Fully Diluted                   32,622   20,254    60,944   87,329
    Termination costs, net of tax -
     discontinued operations (a)             -         41      (244)   6,009
    Planning costs, net of tax - New
     Orleans Jazz District                   -        818       166    2,393
    Hyatt Regency La Jolla minority
     interest (b)                           (329)     -        (329)     -
    Other charges - continuing
     operations                               14      -       7,372      -
    Impairment losses  - discontinued
     operations                              -        -      37,716      -
    Foreign currency exchange loss
     (gain), net of tax (c)                  569     (627)    4,062     (756)
    Loss on early extinguishment of debt
     - continuing operations                 -      2,150    10,268    2,150
    Loss on early extinguishment of debt
     - discontinued operations               -         63     4,871    1,000
    Comparable FFO                       $32,876  $22,699  $124,826  $98,125
 

    Comparable FFO per diluted share       $0.43    $0.30     $1.64    $1.40
    Weighted-average diluted shares (d)   75,977   76,711    76,300   70,022
 

     (a) Termination costs (benefits), net of tax, included in discontinued
         operations related to the termination of the management agreement at
         the Marriott Rancho Las Palmas property.

     (b) The minority interest partner's share of the Hyatt Regency La Jolla's
         property FFO is not deducted from net income (loss) available to
         common shareholders under GAAP accounting rules.

     (c) Foreign currency exchange loss (gain), net of tax, applicable to
         third-party and inter-company debt and certain balance sheet items
         held by foreign subsidiaries.

     (d) In the second quarter of 2007, we adjusted our calculation of
         weighed-average diluted shares to be consistent with the guidance
         prescribed by NAREIT.  These changes had no impact on the Comparable
         FFO per share amounts reported in prior periods.
 
 

                                  Debt Summary
                             (dollars in thousands)
 

                               Interest               Loan        Maturity
              Debt               Rate    Spread (a)   Amount      Date (b)

    Bank Credit Facility         5.40%     80 bp     $109,000   March 2012
    Fairmont Chicago             5.30%     70 bp      123,750   April 2012
    Loews Santa Monica           5.23%     63 bp      118,250   March 2012
    Ritz-Carlton Half Moon Bay   5.27%     67 bp       76,500   March 2012
    InterContinental Chicago     5.66%    106 bp      121,000   October 2011
    InterContinental Miami       5.33%     73 bp       90,000   October 2011
    InterContinental Prague (c)  5.54%    125 bp (c)  151,812   March 2012
    Westin St. Francis           5.30%     70 bp      220,000   August 2011
    Marriott London Grosvenor
     Square (d)                  7.09%    110 bp (d)  153,496   October 2013
    Fairmont Scottsdale          5.16%     56 bp      180,000   September 2011
    Hyatt Regency LaJolla        5.60%    100 bp       97,500   September 2012
    Punta Mita land parcel                                      August 2008
     promissory notes             N/A       N/A        31,547    and 2009
    Exchangeable senior notes    3.50%     Fixed      179,235   April 2012
                                                   $1,652,090
 

    (a) Spread over LIBOR (4.60% at December 31, 2007).
    (b) Includes extension options.
    (c) Principal balance of euro 104,000,000 at December 31, 2007.  Spread
        over EURIBOR (4.29% at December 31, 2007).
    (d) Principal balance of 77,250,000 pounds at December 31, 2007.  Spread
        over three-month GBP LIBOR (5.99% at December 31, 2007).
 
 

    U.S. Interest Rate Swaps

                                     Fixed Pay Rate  Notional
           Swap Effective Date       Against LIBOR    Amount     Maturity

    April 2005                           4.42%       $75,000    April 2010
    April 2005                           4.59%       $75,000    April 2012
    June 2005                            4.12%       $50,000    June 2012
    June 2006                            5.50%       $75,000    June 2013
    August 2006                          5.34%      $100,000    August 2011
    August 2006                          5.42%      $100,000    August 2013
    September 2006                       5.08%      $100,000    February 2011
    September 2006                       5.10%      $100,000    December 2010
    September 2006                       5.09%      $100,000    September 2009
    March 2007                           4.81%      $100,000    December 2009
    March 2007                           4.84%      $100,000    July 2012
                                         4.99%      $975,000
 
 

    European Interest Rate Swap

                                   Fixed Pay Rate    Notional
           Swap Effective Date   Against GBP LIBOR    Amount       Maturity

    October 2007                       5.72%       77,250 pounds  October 2013
 
 

    Forward-Starting Interest Rate Swaps
 

           Swap Effective Date    Fixed Pay Rate    Notional
                                  Against LIBOR      Amount      Maturity

    September 2009                    4.90%         $100,000   September 2014
    December 2009                     4.96%         $100,000   December 2014
    April 2010                        5.42%          $75,000   April 2015
    December 2010                     5.23%         $100,000   December 2015
    February 2011                     5.27%         $100,000   February 2016
                                                    $475,000
 

At December 31, 2007, future scheduled debt principal payments (including extension options) are as follows:

    Years ended                            Amounts
    December 31,                        (in thousands)
    2008                                   $16,480
    2009                                    15,067
    2010                                     8,648
    2011                                   619,648
    2012                                   851,031
    Thereafter                             141,216
    Total                               $1,652,090

    Percent of fixed rate debt including
     U.S. and European swaps                             81.1%
    Weighted average interest rate
     including U.S. and European swaps                   5.43%
    Weighted average maturity of fixed rate debt         5.47
 
 

              Under Construction and Completed Capital Projects

      (images of completed projects available on the company's website)

    Hotel                   Project Description                Completed

    Fairmont Chicago        Spa and fitness center                       Q1 08
                            Gold lounge                                  Q4 06
                            Sushi bar                                    Q4 06
                            ENO, wine tasting room *           In Construction
                            Lobby renovation                   In Construction
                            Room renovation                    In Construction

    Fairmont Scottsdale     Michael Mina operated
     Princess                Bourbon Steak Restaurant                    Q1 08
                            Midnight Oil operated
                             Stone Rose Bar                              Q1 08
                            Gold room renovation                         Q1 08
                            GM house conversion
                             - 1 room addition                           Q1 08

    Four Seasons
     Mexico City            Guest room renovation                        Q1 06

    Four Seasons
     Punta Mita             Lobby bar                                    Q1 08
                            Oasis room and river pool
                             - 23 room addition                          Q2 07
                            Fitness center expansion                     Q1 07
                            Coral suite - 5 room addition                Q1 07
                            Retail expansion                             Q4 06
                            Tamai pool                                   Q4 06
                            Tamai garden                                 Q4 06
                            Beachfront restaurant addition               Q4 06
                            Arena suite - 5 room addition                Q1 06

    Four Seasons
     Washington, D.C.       Presidential suite renovation      In Construction
                            11 room expansion                  In Construction

    Hotel del Coronado      ENO, wine tasting room *                     Q1 08
                            Guest room renovation                        Q2 07
                            Restaurant renovation                        Q2 07
                            Beach Village - 78 room addition             Q2 07
                            Spa & fitness center / beach club            Q1 07
                            Retail reconfiguration /
                             renovation                        In Construction

    InterContinental
     Chicago                Starbucks                                    Q3 07
                            Meeting space addition                       Q3 07
                            ENO, wine tasting room *                     Q4 06

    InterContinental
     Miami                  Starbucks                                    Q3 06
                            Spa                                In Construction

    InterContinental
     Prague                 Partial guest room renovation                Q2 07

    Loews Santa Monica      Restaurant renovation                        Q4 04

    Marriott London
     Grosvenor Square       Restaurant reconfiguration         In Construction
                            Concierge lounge                   In Construction
                            Guestroom renovation               In Construction

    Ritz-Carlton
     Half Moon Bay          Outdoor patios                               Q3 06
                            Guestroom fireplaces                         Q2 06
                            Ocean terrace                                Q2 06
                            Restaurant expansion                         Q4 05
                            Wine tasting room                            Q3 05
                            Retail expansion                             Q3 05
                            Suite renovation                   In Construction

    Ritz-Carlton
     Laguna Niguel          Meeting space renovation                     Q4 07
                            Suite conversion
                             - 3 room addition                           Q2 07
                            Suite renovation                             Q2 07
                            ENO, wine tasting room *                     Q1 07

    Westin St. Francis      Lobby bar                          In Construction
                            Room and corridor renovation       In Construction
 

    * Strategic's branded wine room concept
 
 

                  Operating Statistics by Geographic Region

Operating results have been adjusted to show hotel performance on a comparable period basis. Adjustments are the (i) exclusion of unconsolidated Hotel del Coronado, (ii) exclusion of Hotel Le Parc partial year results for the three months and years ended December 31, 2007 and 2006 and the additional exclusion of Four Seasons Washington, D.C., Westin St. Francis, Ritz-Carlton Laguna Niguel, Marriott London Grosvenor Square and Fairmont Scottsdale Princess partial year results for the years ended December 31, 2007 and 2006; (iii) exclusion of Marriott Rancho Las Palmas, Hilton Burbank Airport and Convention Center and Hyatt Regency New Orleans as these properties' results of operations were reclassified to discontinued operations; and (iv) presentation of the European hotels without regard to either ownership structure or leaseholds.

    United States Hotels (as of December 31, 2007)

    12 Properties (three month period) and 8 Properties (year end period)
    6,680 Rooms (three month period) and 4,227 Rooms (year end period)

                            Three Months Ended              Years Ended
                                December 31,                December 31,
                          2007      2006   Change     2007      2006   Change

    Average Daily Rate  $233.07   $223.94   4.1%    $207.96   $198.26  4.9%
    Average Occupancy     72.6%     71.1%   1.5 pts   75.3%     73.0%  2.3 pts
    RevPAR              $169.12   $159.29   6.2%    $156.51   $144.73  8.1%
    Total RevPAR        $336.73   $315.89   6.6%    $284.07   $262.41  8.3%
    Property EBITDA
     Margin               25.5%     21.5%   4.0 pts   26.1%     25.1%  1.0 pts
 

    Mexican Hotels (as of December 31, 2007)

    2 Properties
    413 Rooms

                            Three Months Ended              Years Ended
                                December 31,                December 31,
                          2007      2006   Change     2007      2006   Change

    Average Daily Rate  $485.68   $433.09  12.1%    $466.85   $430.67  8.4%
    Average Occupancy     72.6%     72.6%     - pts   71.5%     68.2%  3.3 pts
    RevPAR              $352.55   $314.40  12.1%    $333.64   $293.54 13.7%
    Total RevPAR        $638.11   $564.02  13.1%    $578.20   $496.03 16.6%
    Property EBITDA
     Margin               35.7%     32.1%   3.6 pts   35.5%     33.1%  2.4 pts
 

    North American Same Store Hotels (as of December 31, 2007)

    14 Properties (three month period) and 10 Properties (year end period)
    7,093 Rooms (three month period) and 4,640 Rooms (year end period)

                            Three Months Ended              Years Ended
                                December 31,                December 31,
                          2007      2006   Change     2007      2006   Change

    Average Daily Rate  $247.62   $235.43   5.2%    $229.63   $216.47  6.1%
    Average Occupancy     72.6%     71.2%   1.4 pts   74.9%     72.6%  2.3 pts
    RevPAR              $179.68   $167.65   7.2%    $172.05   $157.15  9.5%
    Total RevPAR        $354.07   $329.26   7.5%    $309.88   $281.90  9.9%
    Property EBITDA
     Margin               26.6%     22.4%   4.2 pts   27.7%     26.3%  1.4 pts
 

    European Same Store Hotels (as of December 31, 2007)

    4 Properties (three month period) and 3 Properties (year end period)
    1,078 Rooms (three month period) and 842 Rooms (year end period)

                            Three Months Ended              Years Ended
                                December 31,                December 31,
                          2007      2006   Change     2007      2006   Change

    Average Daily Rate  $345.56  $281.81  22.6%    $302.16  $260.25  16.1%
    Average Occupancy     79.9%    80.7%  (0.8) pts  81.8%    83.6%  (1.8) pts
    RevPAR              $276.25  $227.48  21.4%    $247.12  $217.60  13.6%
    Total RevPAR        $419.01  $357.50  17.2%    $344.33  $305.91  12.6%
    Property EBITDA
     Margin               38.3%    36.1%   2.2 pts   39.6%    38.1%   1.5 pts
 
 

Source: Strategic Hotels & Resorts, Inc.
Earnings Call

The company will conduct its fourth quarter and full year 2007 conference call for investors and other interested parties on February 28, 10:00 a.m. Eastern Time (ET). Interested individuals are invited to listen to the call by telephone at 888-679-8034 (toll international: 617-213-4847). The participant passcode is 81456194. To participate on the web cast, log on to www.strategichotels.com or www.earnings.com 15 minutes before the call to download the necessary software. For those unable to listen to the call live, a taped rebroadcast will be available beginning at 2:00 p.m. ET on February 28, 2008, through 12:00 midnight ET on March 6, 2008. To access the replay, dial 888-286-8010 (toll international: 617-801-6888) and request replay pin number 33901012. A replay of the call will also be available on the Internet at http://www.strategichotels.com or http://www.earnings.com for 30 days after the call.

The company also produces supplemental financial data that includes detailed information regarding its operating results. This supplemental data is considered an integral part of this earnings release. These materials are available on the Strategic Hotels & Resorts website at www.strategichotels.com within the fourth quarter information section.

Portfolio Definitions

"Same Store" hotel comparisons for the fourth quarter 2007 are derived from the company's North American portfolio at December 31, 2007, consisting of properties held for five or more quarters, in which operations are included in the consolidated results of the company.

"Same Store" hotel comparisons for the twelve-month period-over-period are derived from the company's North American portfolio at December 31, 2007, consisting of properties held for nine or more quarters, in which operations are included in the consolidated results of the company.

Total North American hotel comparisons are derived from the company's hotel portfolio at December 31, 2007, consisting of properties in which operations are included in the consolidated results of the company.

European hotel comparisons are derived from the company's European owned and leased hotel properties at December 31, 2007, consisting of the Marriott London Grosvenor Square, the Paris Marriott Champs-Elysees, the Marriott Hamburg, and the InterContinental Prague and excluding the Hotel Le Parc, which was acquired during the third quarter of 2007.

About the Company

Strategic Hotels & Resorts, Inc. is a real estate investment trust (REIT) which owns and provides value-enhancing asset management of high-end hotels and resorts in the United States, Mexico and Europe. The company currently has ownership interests in 20 properties with an aggregate of 9,044 rooms. For a list of current properties and for further information, please visit the company's website at www.strategichotels.com.

This press release contains forward-looking statements about Strategic Hotels & Resorts (the "Company"). Except for historical information, the matters discussed in this press release are forward-looking statements subject to certain risks and uncertainties. Actual results could differ materially from the Company's projections. Factors that may contribute to these differences include, but are not limited to the following: availability of capital; ability to obtain or refinance debt; rising interest rates; rising insurance premiums; cash available for capital expenditures; competition; demand for hotel rooms in our current and proposed market areas; economic conditions generally and in the real estate market specifically; satisfaction of closing contingencies in our agreements; delays and cost overruns in construction and development; demand for hotel condominiums; marketing challenges associated with entering new lines of business; risks related to natural disasters; the effect of threats of terrorism and increased security precautions on travel patterns and hotel bookings; the outbreak of hostilities and international political instability; legislative or regulatory changes, including changes to laws governing the taxation of REITs; and changes in generally accepted accounting principles, policies and guidelines applicable to REITs.

Additional risks are discussed in the Company's current filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. The forward-looking statements are made as of the date of this press release, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
.
Contact:

    Ryan Bowie
    Vice President and Treasurer
    Strategic Hotels & Resorts
    (312) 658-5766
 
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Also See: Strategic Hotels & Resorts Agrees to Sell Katrina-ravaged Hyatt Regency New Orleans for $32 million, About One-fifth of 1997 Acquisition Cost / October 2007
Sunstone Hotels and Strategic Hotels Partner to Own and Operate BuyEfficient, an Internet Based Purchasing System for the Hospitality Industry / December 2007
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