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Starwood Reports Net Income 2nd Qtr 2012 of $122 million Compared to
$131 million
Same Period 2011; Worldwide System-wide RevPAR Up 6.9%

Systemwide Hotel Statistics

STAMFORD, Conn.--July 26, 2012--Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported second quarter 2012 financial results.

Second Quarter 2012 Highlights

  • Excluding special items, EPS from continuing operations was $0.70, including income from the St. Regis Bal Harbour residential project. Including special items, EPS from continuing operations was $0.66.
  • Adjusted EBITDA was $323 million, which included $35 million of EBITDA from the St. Regis Bal Harbour residential project, up 23.3% compared to 2011.
  • Excluding special items, income from continuing operations was $138 million, including income from the St. Regis Bal Harbour residential project. Including special items, income from continuing operations was $129 million.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 6.9% in constant dollars (4.2% in actual dollars) compared to 2011. Systemwide REVPAR for Same-Store Hotels in North America increased 7.3% in constant dollars (6.8% in actual dollars).
  • Management fees, franchise fees and other income increased 10.4% compared to 2011.
  • Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 150 basis points compared to 2011.
  • Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 3.1% in constant dollars (decreased 0.4% in actual dollars) compared to 2011.
  • Margins at Starwood branded Same-Store Owned Hotels Worldwide increased approximately 140 basis points compared to 2011.
  • Earnings from Starwood’s vacation ownership and residential business increased approximately $41 million compared to 2011, including $35 million of earnings from the St. Regis Bal Harbour residential project.
  • During the quarter, the Company signed 34 hotel management and franchise contracts, representing approximately 8,300 rooms, and opened 14 hotels and resorts with approximately 2,700 rooms.

Second Quarter 2012 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the second quarter of 2012 of $0.66 compared to $0.77 in the second quarter of 2011. Excluding special items, EPS from continuing operations was $0.70 for the second quarter of 2012, including income from The St. Regis Bal Harbour Resort residential project (“Bal Harbour”), compared to $0.50 in the second quarter of 2011. Special items in the second quarter of 2012, which totaled a charge of $9 million (after-tax), primarily related to costs associated with the early extinguishment of debt. Special items in the second quarter of 2011, which totaled a benefit of $53 million (after-tax), primarily related to a tax benefit associated with the sale of two wholly-owned hotels. Excluding special items, the effective income tax rate in the second quarter of 2012 was 31.5%, including the tax effects associated with income from Bal Harbour, compared to 25.4% in the second quarter of 2011.

Income from continuing operations was $129 million in the second quarter of 2012, compared to $150 million in the second quarter of 2011. Excluding special items, income from continuing operations was $138 million in the second quarter of 2012, including income from Bal Harbour, compared to $97 million in the second quarter of 2011.

Net income was $122 million and $0.62 per share in the second quarter of 2012, compared to $131 million and $0.68 per share in the second quarter of 2011.

Frits van Paasschen, CEO, said, “We kept up our momentum in the second quarter, despite a choppy global economy. Our REVPAR grew 6.9%, with occupancy over a healthy 71%. Despite the uncertain global environment, we expect the trends we saw in our business for the past quarter to continue through the second half of the year.”

“Our approach to an uncertain global marketplace is to be both smart and bold. What we mean by ‘smart’ is having a business model, balance sheet, and cost structure that can weather economic turbulence. At the same time, we are being bold in our efforts to grow our footprint in the right way, and to invest in building guest loyalty to gain more than our fair share of business.”

Six Months Ended June 30, 2012 Earnings Summary

Income from continuing operations was $258 million in the six months ended June 30, 2012 compared to $179 million in the same period in 2011. Excluding special items, income from continuing operations was $262 million in the six months ended June 30, 2012, including income from Bal Harbour, compared to $155 million in the same period in 2011.

Net income was $250 million and $1.27 per share in the six months ended June 30, 2012 compared to $159 million and $0.82 per share in the same period in 2011.

Adjusted EBITDA was $620 million in the six months ended June 30, 2012 compared to $470 million in the same period in 2011.

Second Quarter 2012 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 6.9% in constant dollars (4.2% in actual dollars) compared to the second quarter of 2011. International Systemwide REVPAR for Same-Store Hotels increased 6.3% in constant dollars (0.9% in actual dollars).

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



REVPAR
Region

Constant
Dollars




Actual
Dollars

North America
7.3 %


6.8 %
Europe
2.3 %


(8.0 )%
Asia Pacific
9.3 %


7.2 %
Africa and the Middle East
11.2 %


8.5 %
Latin America
6.1 %


6.1 %









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



REVPAR
Brand

Constant
Dollars




Actual
Dollars

St. Regis/Luxury Collection
4.5 %


(0.5 )%
W Hotels
8.8 %


7.3 %
Westin
7.5 %


5.2 %
Sheraton
6.3 %


4.4 %
Le Méridien
6.9 %


0.8 %
Four Points by Sheraton
7.0 %


5.3 %
Aloft
9.7 %


8.7 %









Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 150 basis points compared to 2011. International gross operating profit margins for Same-Store Company-Operated properties increased 160 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 150 basis points, driven by REVPAR increases and cost controls.

Management fees, franchise fees and other income were $222 million, up $21 million, or 10.4% compared to the second quarter of 2011. Management fees increased 13.5% to $126 million and franchise fees increased 6.1% to $52 million. Year-over-year base management fee and franchise fee comparisons were impacted by the conversion of some franchise agreements to management contracts in Germany.

Development

During the second quarter of 2012, the Company signed 34 hotel management and franchise contracts, representing approximately 8,300 rooms, of which 30 are new builds and four are conversions from other brands. At June 30, 2012, the Company had approximately 365 hotels in the active pipeline representing approximately 95,000 rooms.

During the second quarter of 2012, 14 new hotels and resorts (representing approximately 2,700 rooms) entered the system, including The St. Regis Doha (Qatar, 336 rooms), The Westin Xiamen (China, 304 rooms), The Sheraton Madrid Mirasierra Hotel & Spa (Spain, 182 rooms), Four Points by Sheraton Perth (Australia, 277 rooms), and Aloft, Ontario (Canada, 131 rooms). Five properties (representing approximately 1,000 rooms) were removed from the system during the quarter.

Owned, Leased and Consolidated Joint Venture Hotels

Worldwide REVPAR at Starwood branded Same-Store Owned Hotels increased 3.1% in constant dollars (decreased 0.4% in actual dollars) when compared to 2011. REVPAR at Starwood branded Same-Store Owned Hotels in North America increased 1.1% in constant dollars (decreased 0.1% actual dollars). Excluding Canada, REVPAR at Starwood branded Same-Store Owned Hotels in North America increased approximately 4%. REVPAR at Canadian owned hotels decreased 6.5% in constant dollars as group business continues to be negatively impacted by the strong Canadian dollar. Internationally, Starwood branded Same-Store Owned Hotel REVPAR increased 5.3% in constant dollars (decreased 0.8% in actual dollars).

Revenues at Starwood branded Same-Store Owned Hotels Worldwide increased 2.0% in constant dollars (decreased 1.4% in actual dollars) while costs and expenses decreased 0.1% in constant dollars (3.3% in actual dollars) when compared to 2011. Margins at these hotels increased approximately 140 basis points.

Revenues at Starwood branded Same-Store Owned Hotels in North America decreased 0.7% while costs and expenses decreased 1.7% when compared to 2011. Margins at these hotels increased approximately 70 basis points.

Internationally, revenues at Starwood branded Same-Store Owned Hotels increased 3.6% in constant dollars (decreased 2.2% in actual dollars) while costs and expenses increased 0.5% in constant dollars (decreased 5.1% in actual dollars) when compared to 2011. Margins at these hotels increased approximately 220 basis points.

Revenues at owned, leased and consolidated joint venture hotels were $453 million, compared to $478 million in 2011. Expenses at owned, leased and consolidated joint venture hotels were $360 million compared to $381 million in 2011. Second quarter results were negatively impacted by five asset sales that took place since the second quarter of 2011.

Vacation Ownership

Total vacation ownership revenues increased 2.8% to $148 million in the second quarter of 2012 when compared to 2011, primarily due to the timing and recognition of deferred revenues and favorable trends with respect to default rates on notes receivable. Originated contract sales of vacation ownership intervals and numbers of contracts decreased 5.0% and 1.8%, respectively, primarily due to lower closing efficiency partially offset by increased tour flow. The average price per vacation ownership unit sold decreased 2.6% to approximately $14,400, driven by inventory mix.

Residential

The Company’s residential revenues were $168 million compared to $2 million in 2011. The Company realized residential revenues from Bal Harbour during the second quarter of 2012 of $167 million and generated EBITDA of $35 million. During the second quarter of 2012, the Company closed sales of 45 units and realized incremental cash proceeds of $148 million associated with these units. From project inception through June 30, 2012, the Company has closed contracts on approximately 60% of the total residential units.

Selling, General, Administrative and Other

Selling, general, administrative and other expenses decreased 2.3% to $86 million compared to $88 million in 2011, primarily due to changes in foreign exchange rates. The Company continues to target a 4% to 5% increase for the full year.

Capital

Gross capital spending during the quarter included approximately $22 million of maintenance capital and $70 million of development capital.

Share Repurchase

In the second quarter of 2012 and through July 25, the Company repurchased 2.84 million shares at a total cost of approximately $140.0 million. As of July 25, 2012, approximately $110.0 million remained available under the Company’s share repurchase authorization.

Balance Sheet

At June 30, 2012, the Company had gross debt of $1.652 billion, excluding $449 million of debt associated with securitized vacation ownership notes receivable. Additionally, the Company had cash and cash equivalents of $410 million (including $140 million of restricted cash), and net debt of $1.242 billion, compared to net debt of $1.383 billion as of March 31, 2012. Net debt at June 30, 2012, including debt and restricted cash ($18 million) associated with securitized vacation ownership notes receivables, was $1.673 billion.

At June 30, 2012, debt was approximately 88% fixed rate and 12% floating rate and its weighted average maturity was 4.4 years with a weighted average interest rate of 7.05%, excluding the securitized debt. The Company had cash (including current restricted cash) and availability under the domestic and international revolving credit facility of approximately $1.912 billion.

During the second quarter of 2012, the Company redeemed all $495 million of its 6.25% Senior Notes due February 2013. Redemption premiums and other costs associated with the redemption were approximately $15 million. Additionally, the Company prepaid a loan secured by one owned hotel of approximately $52 million.

Outlook

For the Full Year 2012:

  • Including Bal Harbour, which is expected to contribute at least $120 million of EBITDA, adjusted EBITDA is expected to be approximately $1.190 billion to $1.210 billion.
  • Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $1.070 billion to $1.090 billion, assuming:
    • REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 6% to 8% in constant dollars (approximately 300 basis points lower in dollars at current exchange rates).
    • REVPAR increases at branded Same-Store Owned Hotels Worldwide of 4% to 5% in constant dollars (approximately 300 basis points lower in dollars at current exchange rates).
    • Margins at branded Same-Store Owned Hotels Worldwide increase 100 to 150 basis points.
    • Management fees, franchise fees and other income increase approximately 9% to 11%.
    • Earnings from the Company’s vacation ownership and residential business of approximately $150 million to $155 million.
    • Selling, general and administrative expenses increase 4% to 5%.
  • Full year outlook is negatively impacted by exchange rate shifts and weaker Owned hotel trends in Canada and Argentina
  • Depreciation and amortization is expected to be approximately $285 million.
  • Interest expense is expected to be approximately $192 million, excluding the $15 million of redemption premiums and other costs associated with the Senior Notes redemption in the second quarter of 2012.
  • Including Bal Harbour, full year effective tax rate is expected to be approximately 31%, and cash taxes are expected to be approximately $100 million.
  • Including Bal Harbour, EPS before special items is expected to be approximately $2.49 to $2.56.
  • Full year capital expenditures (excluding vacation ownership and residential inventory) is expected to be approximately $200 million for maintenance, renovation and technology. In addition, in-flight investment projects and prior commitments for joint ventures and other investments are expected to total approximately $375 million.
  • Vacation ownership (excluding Bal Harbour) is expected to generate approximately $150 million in positive cash flow. Bal Harbour is expected to generate at least $350 million in net cash flow.

For the three months ended September 30, 2012:

  • Including Bal Harbour, which is expected to contribute at least $5 million of EBITDA, adjusted EBITDA is expected to be approximately $260 million to $270 million.
  • Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $255 million to $265 million, assuming:
    • REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 6% to 8% in constant dollars (approximately 500 basis points lower in dollars at current exchange rates).
    • REVPAR increases at branded Same-Store Company Owned Hotels Worldwide of 4% to 5% in constant dollars (approximately 500 basis points lower in dollars at current exchange rates).
    • Management fees, franchise fees and other income increase approximately 9% to 11%.
    • Earnings from the Company’s vacation ownership and residential business are flat to up $5 million year over year.
  • Third quarter outlook is negatively impacted by approximately $5 million due to exchange rate shifts and weaker Owned hotel trends in Canada and Argentina.
  • Depreciation and amortization is expected to be approximately $71 million.
  • Interest expense is expected to be approximately $45 million.
  • Including Bal Harbour, income from continuing operations is expected to be approximately $99 million to $106 million, reflecting an effective tax rate of approximately 31%.
  • Including Bal Harbour, EPS is expected to be approximately $0.50 to $0.54.

Special Items

The Company’s special items netted to a charge of $16 million ($9 million after-tax) in the second quarter of 2012 compared to a benefit of $2 million ($53 million after-tax) in the same period of 2011.

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

Three Months Ended

June 30,




Six Months Ended

June 30,

2012


2011





2012


2011










$ 138

$ 97

Income from continuing operations before special items
$ 262

$ 155
$ 0.70

$

0.50



EPS before special items
$ 1.33

$ 0.80













Special Items









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

11




(1 )

2



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

(8 )

(31 )

(15 )



Debt extinguishment (c)

(15 )



(16 )

2

Total special items – pre-tax

(12 )

(31 )

7




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

8







51

Income tax benefit (expense) associated with dispositions (e)




55

(9 )

53

Total special items – after-tax

(4 )

24









$ 129

$ 150

Income from continuing operations
$ 258

$ 179
$ 0.66

$ 0.77

EPS including special items
$ 1.31

$ 0.92

















(a)


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






(b)


During the three months ended June 30, 2012, the net loss primarily relates to asset disposals. The six months ended June 30, 2012 includes
the net loss primarily related to the sale of one wholly-owned hotel.








During the three months ended June 30, 2011, the net gain primarily relates to the sale of non-core assets. During the six months ended June
30, 2011, the net loss primarily related to an impairment of a minority investment in a joint venture hotel located in Japan.






(c)


During the three and six months ended June 30, 2012, the net charges are associated with the redemption of approximately $495 million of
senior notes.






(d)


During the three and six months ended June 30, 2012, the benefit primarily represents income tax benefits on special items at the statutory rate.






(e)


During the three and six months ended June 30, 2011, the benefit relates primarily to the sale of two wholly-owned hotels with high tax bases as
a result of a previous transaction.





The Company has included the above supplemental information concerning special items to assist investors in analyzing Starwood’s financial position and results of operations. The Company has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of core on-going operations.

Starwood will be conducting a conference call to discuss the second quarter financial results at 10:30 a.m. EDT today at (866) 921-0636 with conference ID 86194681. The conference call will be available through a simultaneous webcast in the News & Events section of the Company’s website at http://www.starwoodhotels.com/corporate/investor_relations.html. A replay of the conference call will also be available from 1:30 p.m. EDT today through Thursday, August 2, 2012 at 12:00 midnight EDT by telephone at (855) 859-2056 with conference ID 86194681. A webcast replay will be active beginning at 1:30 p.m. EDT today and will run for one year.

Definitions

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

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

All references to revenues in constant dollars represent revenues, excluding the impact of the movement of foreign exchange rates. The Company calculates revenues in constant dollars by calculating revenues for the current year using the prior year’s exchange rates. The Company uses this revenue measure to better understand the underlying results and trends of the business, excluding the impact of movements in foreign exchange rates.

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

All references to management and franchise revenues represent base and incentive fees, franchise fees, amortization of deferred gains resulting from the sales of hotels subject to long-term management contracts and termination fees.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with 1,112 properties in nearly 100 countries and 154,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences with the following internationally renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, Aloft®, and ElementSM. The Company boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG), allowing members to earn and redeem points for room stays, room upgrades and flights, with no blackout dates. Starwood also owns Starwood Vacation Ownership, Inc., a premier provider of world-class vacation experiences through villa-style resorts and privileged access to Starwood brands. For more information, including reconciliations of non-GAAP financial measures to GAAP financial measures, please visit www.starwoodhotels.com or contact Investor Relations at (203) 351-3500.

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








STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Unaudited Consolidated Statements of Income

(In millions, except per share data)








Three Months Ended

June 30,






Six Months Ended

June 30,

2012



2011



%
Variance






2012



2011



%
Variance











Revenues







$ 453


$ 478


(5.2 )


Owned, leased and consolidated joint venture hotels
$ 855


$ 888


(3.7 )

316



146


n/m



Vacation ownership and residential sales and services

830



299


n/m

222



201


10.4



Management fees, franchise fees and other income

423



378


11.9

627



601


4.3



Other revenues from managed and franchised
properties (a)



1,225



1,156


6.0

1,618



1,426


13.5






3,333



2,721


22.5










Costs and Expenses








360



381


5.5



Owned, leased and consolidated joint venture hotels

709



742


4.4

241



112


n/m



Vacation ownership and residential

634



223


n/m

86



88


2.3



Selling, general, administrative and other

182



168


(8.3 )












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



(11 )





n/m

56



60


6.7



Depreciation

113



120


5.8

6



7


14.3



Amortization

12



15


20.0

627



601


(4.3 )


Other expenses from managed and franchised
properties (a)



1,225



1,156


(6.0 )

1,376



1,249


(10.2 )





2,864



2,424


(18.2 )

242



177


36.7



Operating income

469



297


57.9

5



7


(28.6 )


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



15



11


36.4

(61 )


(52 )

(17.3 )


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



(110 )


(106 )

(3.8 )

(1 )


2


n/m



Gain (loss) on asset dispositions and impairments, net

(8 )


(31 )

(74.2 )

185



134


38.1



Income from continuing operations before taxes and
noncontrolling interests



366



171


n/m

(56 )


16


n/m



Income tax benefit (expense)

(108 )


6


n/m

129



150


(14.0 )


Income (loss) from continuing operations

258



177


45.8










Discontinued Operations:










(7 )


(19 )

63.2



Gain (loss) on dispositions, net of tax

(8

)


(20 )

(60.0 )

122



131


(6.9 )


Net income (loss)

250



157


59.2












Net loss (income) attributable to noncontrolling interests





2


(100.0 )
$ 122


$ 131


(6.9 )


Net income (loss) attributable to Starwood
$ 250


$ 159


57.2










Earnings (Losses) Per Share – Basic







$ 0.67


$ 0.79


(15.2 )


Continuing operations
$ 1.34


$ 0.95


41.1

(0.04 )


(0.10 )

(60.0 )


Discontinued operations

(0.04 )


(0.11 )

(63.6 )
$ 0.63


$ 0.69


(8.7 )


Net income (loss)
$ 1.30


$ 0.84


54.8










Earnings (Losses) Per Share – Diluted







$ 0.66


$ 0.77


(14.3 )


Continuing operations
$ 1.31


$ 0.92


42.4

(0.04 )


(0.09 )

(55.6 )


Discontinued operations

(0.04 )


(0.10 )

(60.0 )
$ 0.62


$ 0.68


(8.8 )


Net income (loss)
$ 1.27


$ 0.82


54.9










Amounts attributable to Starwood’s Common
Stockholders









$ 129


$ 150


(14.0 )


Continuing operations
$ 258


$ 179


44.1

(7 )


(19 )

(63.2 )


Discontinued operations

(8 )


(20 )

(60.0 )
$ 122


$ 131


(6.9 )


Net income (loss)
$ 250


$ 159


(57.2 )




















195



189






Weighted average number of shares

193



188




198



195






Weighted average number of shares assuming dilution

197



195


























































(a)


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





n/m = not meaningful








STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Consolidated Balance Sheets
(In millions, except share data)










June 30,

2012



December 31,

2011




(unaudited)


Assets





Current assets:





Cash and cash equivalents

$ 270


$ 454
Restricted cash


155



232
Accounts receivable, net of allowance for doubtful accounts of $48 and $46


597



569
Inventories


461



812

Securitized vacation ownership notes receivable, net of allowance for doubtful
accounts of $9 and $10




60





64


Current deferred tax asset


279



278
Prepaid expenses and other


158



125
Total current assets


1,980



2,534
Investments


267



259
Plant, property and equipment, net


3,187



3,175
Assets held for sale, net


117



127
Goodwill and intangible assets, net


2,027



2,025
Deferred tax assets


613



639
Other assets (a)


417



355
Securitized vacation ownership notes receivable


381



446
Total assets

$ 8,989


$ 9,560
Liabilities and Stockholders’ Equity





Current liabilities:





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

$


$ 3
Accounts payable


104



144
Current maturities of long-term securitized vacation ownership debt


117



130
Accrued expenses


1,117



1,177
Accrued salaries, wages and benefits


336



375
Accrued taxes and other


149



163
Total current liabilities


1,823



1,992
Long-term debt (b)


1,652



2,194
Long-term securitized vacation ownership debt


332



402
Deferred income taxes


45



46
Other liabilities


1,902



1,971
Total liabilities


5,754



6,605
Commitments and contingencies





Stockholders’ equity:





Common stock; $0.01 par value; authorized 1,000,000,000 shares;
outstanding 197,267,943 and 195,913,400 shares at June 30, 2012 and
December 31, 2011, respectively




2



2
Additional paid-in capital


999



963
Accumulated other comprehensive loss


(358 )


(348 )
Retained earnings


2,587



2,337
Total Starwood stockholders’ equity


3,230



2,954
Noncontrolling interest


5



1
Total stockholders’ equity


3,235



2,955
Total liabilities and stockholders’ equity

$ 8,989


$ 9,560












(a)


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






(b)


Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $418 million and $432 million at
June 30, 2012 and December 31, 2011, respectively.









STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Historical Data

(In millions)







Three Months Ended

June 30,





Six Months Ended

June 30,

2012



2011



%
Variance





2012



2011



%
Variance










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









$ 122

$ 131


(6.9 )

Net income (loss)
$ 250


$ 159


57.2

67


54


24.1


Interest expense (a)

116



113


2.7

54


(15 )

n/m


Income tax (benefit) expense (b)

107



(4 )

n/m

63


67


(6.0 )

Depreciation (c)

127



135


(5.9 )

7


9


(22.2 )

Amortization (d)

14



18


(22.2 )

313


246


27.2


EBITDA

614



421


45.8

1


(2 )

n/m


(Gain) loss on asset dispositions and impairments, net

8



31


(74.2 )

9


18


(50.0 )

Discontinued operations (gain) loss on dispositions

9



18


(50.0 )










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



(11 )





n/m
$ 323

$ 262


23.3


Adjusted EBITDA
$ 620


$ 470


31.9






















































(a)


Includes $5 million and $2 million of Starwood’s share of interest expense of unconsolidated joint ventures for the three months ended June 30,
2012 and 2011, respectively, and $5 million and $6 million for the six months ended June 30, 2012 and 2011, respectively.




(b)


Includes $(2) million and $1 million of tax expense (benefit) recorded in discontinued operations for the three months ended June 30, 2012 and
2011, respectively, and $(1) million and $2 million for the six months ended June 30, 2012 and 2011, respectively.




(c)


Includes $7 million of Starwood’s share of depreciation expense of unconsolidated joint ventures for each of the three months ended June 30,
2012 and 2011, respectively, and $14 million and $15 million for the six months ended June 30, 2012 and 2011, respectively.




(d)


Includes $1 million and $2 million of Starwood’s share of amortization expense of unconsolidated joint ventures for the three months ended June
30, 2012 and 2011, respectively, and $2 million and $3 million for the six months ended June 30, 2012 and 2011, respectively.







Non-GAAP to GAAP Reconciliations – Branded Same-Store Owned Hotels Worldwide

(In millions)


























Three Months Ended

June 30, 2012













$ Change


% Variance

Revenue













Revenue increase/(decrease) (GAAP)










$ (5 )
(1.4 )%
Impact of changes in foreign exchange rates











13

3.4 %
Revenue increase/(decrease) in constant dollars










$ 8

2.0 %















Expense













Expense increase/(decrease) (GAAP)










$ (10 )
(3.3 )%
Impact of changes in foreign exchange rates











10

3.2 %
Expense increase/(decrease) in constant dollars










$

(0.1 )%




































Non-GAAP to GAAP Reconciliation –

Earnings from Vacation Ownership and Residential Business

(In millions)








Three Months Ended

June 30,


Six Months Ended

June 30,



2012


2011


$

Variance


2012


2011


$

Variance














Earnings from vacation ownership and residential
$ 75

$ 34

$

41



$ 196

$ 76

$

120


Depreciation expense

(4 )

(5 )

1


(9 )

(12 )

3
Operating income from vacation ownership and residential
$ 71

$ 29

$ 42

$ 187

$ 64

$ 123














































Non-GAAP to GAAP Reconciliation –

Earnings from Bal Harbour

(In millions)






































Three Months Ended

June 30,


Six Months Ended

June 30,


















2012


2011


$

Variance


2012



2011


$

Variance






























Earnings from Bal Harbour















$

35




$ (3 )
$

38



$

113



$ (5 )
$

118


Depreciation expense

































Operating income from Bal Harbour















$ 35


$ (3 )
$ 38

$ 113

$ (5 )
$ 118











































































STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Future Performance

(In millions, except per share data)



Low Case









Three Months Ended
September 30, 2012






Year Ended

December 31, 2012










$

99





Net income
$ 479


45



Interest expense

192


45



Income tax expense(a)

213


71



Depreciation and amortization

285


260



EBITDA

1,169






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



(11

)







(Gain) loss on asset dispositions and impairments, net

8






Debt extinguishment

15






Discontinued operations (gain) loss on dispositions

9

$ 260



Adjusted EBITDA
$ 1,190

Three Months Ended
September 30, 2012











Year Ended

December 31, 2012















$

99





Income from continuing operations before special items





$ 491

$ 0.50



EPS before special items







$ 2.49


















Special Items












Restructuring and other special credits






11






Gain (loss) on asset dispositions and impairments, net






(8 )






Debt extinguishment






(15 )






Total special items – pre-tax






(12 )






Income tax benefit associated with special items








8






Total special items – after-tax






(4 )














$ 99



Income from continuing operations





$ 487

$ 0.50



EPS including special items





$ 2.47

















High Case










Three Months Ended
September 30, 2012






Year Ended

December 31, 2012










$

106





Net income
$ 493


45



Interest expense

192


48



Income tax expense(a)

219


71



Depreciation and amortization

285


270



EBITDA

1,189






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



(11

)







(Gain) loss on asset dispositions and impairments, net



8






Debt extinguishment



15






Discontinued operations (gain) loss on dispositions

9

$ 270



Adjusted EBITDA
$ 1,210

Three Months Ended
September 30, 2012











Year Ended

December 31, 2012















$

106





Income from continuing operations before special items





$ 505

$ 0.54



EPS before special items







$ 2.56


















Special Items












Restructuring and other special credits






11






Gain (loss) on asset dispositions and impairments, net






(8 )






Debt extinguishment






(15 )






Total special items – pre-tax






(12 )






Income tax benefit associated with special items






8






Total special items – after-tax






(4 )














$ 106



Income from continuing operations





$ 501

$ 0.54



EPS including special items





$ 2.54

















(a)


The full year amounts include a $1 million tax benefit recorded in discontinued operations.







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

Low Case







Three Months Ended

September 30,




2012


2011


$

Variance









Earnings from vacation ownership and residential

$ 33

$ 33

$


Depreciation expense


(5 )

(5 )


Operating income from vacation ownership and residential



$ 28

$ 28

$













Three Months
Ended
September 30,
2012








Year Ended
December 31,
2012










$ 33



Earnings from vacation ownership and residential


$ 150

(5 )


Depreciation expense



(20 )
$ 28



Operating income from vacation ownership and residential


$ 130













High Case








Three Months Ended

September 30,




2012


2011


$

Variance









Earnings from vacation ownership and residential

$ 38

$ 33

$

5


Depreciation expense


(5 )

(5 )


Operating income from vacation ownership and residential

$ 33

$ 28

$ 5













Three Months
Ended
September 30,
2012








Year Ended
December 31,
2012










$ 38



Earnings from vacation ownership and residential


$ 155

(5 )


Depreciation expense



(20 )
$ 33



Operating income from vacation ownership and residential


$ 135


























STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations –

Future Earnings from Bal Harbour

(In millions)






Three Months Ended

September 30,



2012



2011


$

Variance








Earnings from Bal Harbour
$

5



$ (2 )
$

7


Depreciation expense








Operating income from Bal Harbour


$ 5

$ (2 )
$ 7




















Year Ended

December 31, 2012











Earnings from Bal Harbour







$

120


Depreciation expense









Operating income from Bal Harbour







$ 120
























STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses

(In millions)







Three Months Ended

June 30,





Six Months Ended

June 30,

2012



2011



%
Variance



Same-Store Owned Hotels

Worldwide


2012



2011



%
Variance






















Revenue





$

399



$

402



(0.7 )

Same-Store Owned Hotels (a)
$

739



$

728



1.5




26

(100.0 )

Hotels Sold or Closed in 2012 and 2011

2


57

(96.5 )

47


42

11.9


Hotels Without Comparable Results

100


89

12.4

7


8

(12.5 )

Other ancillary hotel operations

14


14


$ 453

$ 478

(5.2 )

Total Owned, Leased and Consolidated Joint Venture Hotels
Revenue


$ 855

$ 888

(3.7 )





















Costs and Expenses





$ 306

$ 315

2.9


Same-Store Owned Hotels (a)
$ 590

$ 592

0.3




22

100.0


Hotels Sold or Closed in 2012 and 2011

2


52

96.2

47


37

(27.0 )

Hotels Without Comparable Results

104


84

(23.8 )

7


7




Other ancillary hotel operations

13


14

7.1
$ 360

$ 381

5.5


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


$ 709

$ 742

4.4




























Three Months Ended

June 30,




Six Months Ended

June 30,

2012

2011

%
Variance



Same-Store Owned Hotels

North America


2012

2011

%
Variance






















Revenue







$ 222

$ 221

0.5


Same-Store Owned Hotels (a)
$ 429

$ 421

1.9




21

(100.0 )

Hotels Sold or Closed in 2012 and 2011

2


48

(95.8 )

35


24

45.8


Hotels Without Comparable Results

69


51

35.3









Other ancillary hotel operations







$ 257

$ 266

(3.4 )

Total Owned, Leased and Consolidated Joint Venture Hotels
Revenue


$ 500

$ 520

(3.8 )





















Costs and Expenses





$ 176

$ 178

1.1


Same-Store Owned Hotels (a)
$ 351

$ 349

(0.6 )




17

100.0


Hotels Sold or Closed in 2012 and 2011

2


43

95.3

34


24

(41.7 )

Hotels Without Comparable Results

70


48

(45.8 )

1




n/m


Other ancillary hotel operations

1




n/m
$ 211

$ 219

3.7


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


$ 424

$ 440

3.6




























Three Months Ended

June 30,




Six Months Ended

June 30,

2012


2011


%

Variance



Same-Store Owned Hotels

International


2012



2011



%

Variance






















Revenue





$ 177

$ 181

(2.2 )

Same-Store Owned Hotels (a)
$ 310

$ 307

1.0




5

(100.0 )

Hotels Sold or Closed in 2012 and 2011






9

(100.0 )

12


18

(33.3 )

Hotels Without Comparable Results

31


38

(18.4 )

7


8

(12.5 )

Other ancillary hotel operations

14


14


$ 196

$ 212

(7.5 )

Total Owned, Leased and Consolidated Joint Venture Hotels
Revenue


$ 355

$ 368

(3.5 )





















Costs and Expenses





$ 130

$ 137

5.1


Same-Store Owned Hotels (a)
$ 239

$ 243

1.6




5

100.0


Hotels Sold or Closed in 2012 and 2011




9

100.0

13


13




Hotels Without Comparable Results

34


36

5.6

6


7

14.3


Other ancillary hotel operations

12


14

14.3
$ 149

$ 162

8.0


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


$ 285

$ 302

5.6








































(a)


Same-Store Owned Hotel results exclude five hotels sold and 11 hotels without comparable results for the three months



ended June 30, 2012 and five hotels sold and 12 hotels without comparable results for the six months ended June 30, 2012.

n/m = not meaningful



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



































Systemwide - Worldwide

Systemwide - North America

Systemwide - International





2012



2011



Variance



2012



2011



Variance



2012



2011



Variance





























































TOTAL HOTELS



























REVPAR ($)


121.82


116.86


4.2 %

123.66


115.80


6.8 %

119.37


118.28


0.9 %
ADR ($)


170.41


169.47


0.6 %

163.32


157.28


3.8 %

181.27


188.52


(3.8 %)
Occupancy (%)


71.5%

69.0%

2.5


75.7%

73.6%

2.1


65.8%

62.7%

3.1




























































SHERATON



























REVPAR ($)


101.37


97.11


4.4 %

103.58


97.53


6.2 %

98.61


96.57


2.1 %
ADR ($)


145.48


144.13


0.9 %

138.79


134.97


2.8 %

155.29


157.60


(1.5 %)
Occupancy (%)


69.7%

67.4%

2.3


74.6%

72.3%

2.3


63.5%

61.3%

2.2




























































WESTIN



























REVPAR ($)


138.06


131.22


5.2 %

135.42


127.70


6.0 %

144.81


140.18


3.3 %
ADR ($)


184.38


180.64


2.1 %

176.62


169.28


4.3 %

205.98


213.86


(3.7 %)
Occupancy (%)


74.9%

72.6%

2.3


76.7%

75.4%

1.3


70.3%

65.5%

4.8




























































ST. REGIS/LUXURY COLLECTION



























REVPAR ($)




196.01


197.04


(0.5 %)

233.40


207.93


12.2 %

175.92


191.15


(8.0 %)
ADR ($)


301.86


307.52


(1.8 %)

314.11


292.84


7.3 %

293.69


316.87


(7.3 %)
Occupancy (%)


64.9%

64.1%

0.8


74.3%

71.0%

3.3


59.9%

60.3%

(0.4 )




























































LE MERIDIEN



























REVPAR ($)


135.66


134.55


0.8 %

226.93


216.22


5.0 %

125.63


125.55


0.1 %
ADR ($)


188.11


199.45


(5.7 %)

259.99


246.23


5.6 %

178.32


192.52


(7.4 %)
Occupancy (%)


72.1%

67.5%

4.6


87.3%

87.8%

(0.5 )

70.5%

65.2%

5.3




























































W






























REVPAR ($)


225.40


210.02


7.3 %

214.87


203.07


5.8 %

254.47


229.22


11.0 %
ADR ($)


282.33


273.36


3.3 %

264.98


255.69


3.6 %

333.15


329.06


1.2 %
Occupancy (%)


79.8%

76.8%

3.0


81.1%

79.4%

1.7


76.4%

69.7%

6.7




























































FOUR POINTS



























REVPAR ($)


81.38


77.30


5.3 %

83.30


77.44


7.6 %

78.45


77.08


1.8 %
ADR ($)


115.68


114.14


1.3 %

113.24


109.16


3.7 %

119.88


122.88


(2.4 %)
Occupancy (%)


70.4%

67.7%

2.7


73.6%

70.9%

2.7


65.4%

62.7%

2.7




























































ALOFT




























REVPAR ($)


77.24


71.03


8.7 %

81.71


74.75


9.3 %








ADR ($)


105.15


103.89


1.2 %

108.71


104.54


4.0 %








Occupancy (%)


73.5%

68.4%

5.1


75.2%

71.5%

3.7





































































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





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


























Systemwide (1)

Company-Operated (2)





2012



2011



Variance



2012



2011



Variance











































TOTAL WORLDWIDE



















REVPAR ($)


121.82


116.86


4.2 %

136.21


131.11


3.9 %

ADR ($)


170.41


169.47


0.6 %

192.00


191.60


0.2 %

Occupancy (%)


71.5%



69.0%



2.5


70.9%



68.4%



2.5










































NORTH AMERICA



















REVPAR ($)


123.66


115.80


6.8 %

152.50


143.57


6.2 %

ADR ($)


163.32


157.28


3.8 %

197.39


189.90


3.9 %

Occupancy (%)


75.7%



73.6%



2.1


77.3%



75.6%



1.7










































EUROPE



















REVPAR ($)


157.54


171.20


(8.0 %)

170.56


183.76


(7.2 %)

ADR ($)


225.89


243.00


(7.0 %)

240.02


256.27


(6.3 %)

Occupancy (%)


69.7%



70.5%



(0.8 )

71.1%



71.7%



(0.6 )










































AFRICA & MIDDLE EAST



















REVPAR ($)


110.30


101.63


8.5 %

110.12


102.01


8.0 %

ADR ($)


168.65


176.54


(4.5 %)

169.32


178.29


(5.0 %)

Occupancy (%)


65.4%



57.6%



7.8


65.0%



57.2%



7.8










































ASIA PACIFIC



















REVPAR ($)


103.59


96.60


7.2 %

105.33


97.08


8.5 %

ADR ($)


160.78


160.03


0.5 %

161.86


159.10


1.7 %

Occupancy (%)


64.4%



60.4%



4.0


65.1%



61.0%



4.1










































LATIN AMERICA



















REVPAR ($)


96.36


90.79


6.1 %

103.09


93.80


9.9 %

ADR ($)


155.51


153.82


1.1 %

171.49


159.45


7.6 %

Occupancy (%)


62.0%



59.0%



3.0


60.1%



58.8%



1.3










































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

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





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




















































WORLDWIDE
NORTH AMERICA
INTERNATIONAL






2012


2011


Variance


2012


2011


Variance


2012


2011


Variance
























TOTAL HOTELS





48 Hotels






23 Hotels






25 Hotels




REVPAR ($)



172.34

171.91

0.3 %
176.01

174.06

1.1 %
167.94

169.33

(0.8 %)

ADR ($)



230.75

231.02

(0.1 %)
224.71

222.05

1.2 %
238.82

243.12

(1.8 %)

Occupancy (%)



74.7%


74.4%


0.3

78.3%


78.4%


(0.1 )

70.3%


69.6%


0.7
























Total Revenue



398,663

402,189

(0.9 %)
221,573

221,043

0.2 %
177,089

181,146

(2.2 %)

Total Expenses



305,765

315,015

2.9 %
176,071

178,350

1.3 %
129,694

136,665

5.1 %




























































































BRANDED HOTELS





43 Hotels






18 Hotels






25 Hotels




REVPAR ($)



174.84

175.61

(0.4 %)
181.65

181.82

(0.1 %)
167.94

169.33

(0.8 %)

ADR ($)



232.17

233.37

(0.5 %)
226.40

225.07

0.6 %
238.82

243.12

(1.8 %)

Occupancy (%)



75.3%


75.2%


0.1

80.2%


80.8%


(0.6 )

70.3%


69.6%


0.7
























Total Revenue



374,329

379,819

(1.4 %)
197,240

198,673

(0.7 %)
177,089

181,146

(2.2 %)

Total Expenses



286,403

296,064

3.3 %
156,709

159,399

1.7 %
129,694

136,665

5.1 %














































(1)

Hotel Results exclude five hotels sold and 11 hotels without comparable results during 2011 & 2012

*

Revenues & Expenses above are represented in '000's





























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
































Worldwide




2012



2011



$ Variance



% Variance















Management Fees:











Base Fees

85

79

6



7.6%
Incentive Fees

41

32

9



28.1%
Total Management Fees

126

111

15



13.5%














Franchise Fees

52

49

3



6.1%














Total Management & Franchise Fees

178

160

18



11.3%














Other Management & Franchise Revenues (1)

37

31

6



19.4%














Total Management & Franchise Revenues

215

191

24



12.6%














Other

7

10

(3)

(30.0%)














Management Fees, Franchise Fees & Other Income

222

201

21



10.4%






























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



Vacation Ownership & Residential Revenues and Expenses

For the Three Months Ended June 30,
UNAUDITED ($ millions)

























































2012



2011




$ Variance



% Variance


















Originated Sales Revenues (1) -- Vacation Ownership Sales




76



80




(4)

(5.0%)
Other Sales and Services Revenues (2)




72



70




2



2.9%
Deferred Revenues -- Percentage of Completion




2



-


2



n/m
Deferred Revenues -- Other (3)




(2)

(6)


4



66.7%
Vacation Ownership Sales and Services Revenues




148



144




4



2.8%
Residential Sales and Services Revenues (4)




168



2




166



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




316



146




170



n/m






































Originated Sales Expenses (5) -- Vacation Ownership Sales




52



54




2



3.7%
Other Expenses (6)




52



53




1



1.9%
Deferred Expenses -- Percentage of Completion




2



-


(2)

n/m
Deferred Expenses -- Other




3



3




0



-
Vacation Ownership Expenses




109



110




1



0.9%
Residential Expenses (4)




132



2




(130)

n/m
Total Vacation Ownership & Residential Expenses




241



112




(129)

n/m










































(1) Timeshare sales revenue originated at each sales location before deferrals of revenue for U.S. GAAP reporting purposes

(2) Includes resort income, interest income, gain on sale of notes receivable, and miscellaneous other revenues

(3) Includes deferral of revenue for contracts still in rescission period, contracts that do not yet meet the requirements of ASC 978-605-25

and provision for loan loss

(4) For 2012, includes $167 million of revenues and $132 million expenses associated with the St. Regis Bal Harbour residential project

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

(6) Includes resort, general and administrative, and other miscellaneous expenses





Note: Deferred revenue is calculated based on the Percentage of Completion ("POC") of the project. Deferred expenses, also based on POC, include

product costs and direct sales and marketing costs only. Indirect sales and marketing costs are not deferred per ASC 978-720-25 and ASC 978-340-25.





n/m = not meaningful




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



























Systemwide - Worldwide

Systemwide - North America

Systemwide - International




2012


2011


Variance



2012


2011


Variance



2012


2011


Variance















































TOTAL HOTELS




















REVPAR ($)

116.25

110.79

4.9 %

116.58

108.94

7.0 %

115.81

113.30

2.2 %
ADR ($)

169.77

167.80

1.2 %

162.36

157.06

3.4 %

180.99

184.17

(1.7 %)
Occupancy (%)

68.5%


66.0%


2.5


71.8%


69.4%


2.4


64.0%


61.5%


2.5














































SHERATON




















REVPAR ($)

97.44

92.90

4.9 %

97.20

91.11

6.7 %

97.74

95.13

2.7 %
ADR ($)

146.86

144.61

1.6 %

138.29

134.38

2.9 %

159.04

159.06

(0.0 %)
Occupancy (%)

66.3%


64.2%


2.1


70.3%


67.8%


2.5


61.5%


59.8%


1.7














































WESTIN




















REVPAR ($)

133.02

125.37

6.1 %

130.63

122.77

6.4 %

139.20

132.10

5.4 %
ADR ($)

183.99

180.27

2.1 %

177.31

171.12

3.6 %

202.58

206.89

(2.1 %)
Occupancy (%)

72.3%


69.5%


2.8


73.7%


71.7%


2.0


68.7%


63.9%


4.8














































ST. REGIS/LUXURY COLLECTION




















REVPAR ($)

187.05

185.48

0.8 %

227.33

208.38

9.1 %

165.31

173.06

(4.5 %)
ADR ($)

295.90

299.99

(1.4 %)

320.19

304.24

5.2 %

280.13

297.28

(5.8 %)
Occupancy (%)

63.2%


61.8%


1.4


71.0%


68.5%


2.5


59.0%


58.2%


0.8














































LE MERIDIEN




















REVPAR ($)

128.21

125.47

2.2 %

198.49

188.85

5.1 %

120.46

118.45

1.7 %
ADR ($)

185.51

190.74

(2.7 %)

240.37

229.98

4.5 %

178.12

185.16

(3.8 %)
Occupancy (%)

69.1%


65.8%


3.3


82.6%


82.1%


0.5


67.6%


64.0%


3.6














































W





















REVPAR ($)

207.36

193.98

6.9 %

197.81

184.13

7.4 %

242.22

229.90

5.4 %
ADR ($)

270.42

261.11

3.6 %

254.92

245.83

3.7 %

330.24

319.11

3.5 %
Occupancy (%)

76.7%


74.3%


2.4


77.6%


74.9%


2.7


73.3%


72.0%


1.3














































FOUR POINTS




















REVPAR ($)

79.42

75.18

5.6 %

76.10

71.17

6.9 %

84.84

81.71

3.8 %
ADR ($)

117.25

114.61

2.3 %

110.19

106.87

3.1 %

129.41

127.74

1.3 %
Occupancy (%)

67.7%


65.6%


2.1


69.1%


66.6%


2.5


65.6%


64.0%

1.6














































ALOFT





















REVPAR ($)

74.39

68.64

8.4 %

75.60

69.07

9.5 %






ADR ($)

106.47

106.63

(0.2 %)

107.47

105.22

2.1 %






Occupancy (%)

69.9%


64.4%


5.5


70.3%


65.6%


4.7





















































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





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




















Systemwide (1)

Company-Operated (2)




2012


2011


Variance



2012


2011


Variance

































TOTAL WORLDWIDE














REVPAR ($)

116.25

110.79

4.9 %

131.08

125.02

4.8 %

ADR ($)

169.77

167.80

1.2 %

191.22

188.75

1.3 %

Occupancy (%)

68.5%


66.0%


2.5


68.5%


66.2%


2.3
































NORTH AMERICA














REVPAR ($)

116.58

108.94

7.0 %

145.54

136.08

7.0 %

ADR ($)

162.36

157.06

3.4 %

196.98

188.99

4.2 %

Occupancy (%)

71.8%


69.4%


2.4


73.9%


72.0%


1.9
































EUROPE















REVPAR ($)

134.81

142.93

(5.7 %)

145.48

153.42

(5.2 %)

ADR ($)

210.73

223.75

(5.8 %)

222.27

235.29

(5.5 %)

Occupancy (%)

64.0%


63.9%


0.1


65.4%


65.2%


0.2
































AFRICA & MIDDLE EAST














REVPAR ($)

117.39

111.15

5.6 %

117.61

111.83

5.2 %

ADR ($)

180.49

186.36

(3.1 %)

181.64

188.27

(3.5 %)

Occupancy (%)

65.0%


59.6%


5.4


64.7%


59.4%


5.3
































ASIA PACIFIC














REVPAR ($)

106.67

100.29

6.4 %

107.80

100.06

7.7 %

ADR ($)

166.60

164.41

1.3 %

167.75

163.40

2.7 %

Occupancy (%)

64.0%


61.0%


3.0


64.3%


61.2%


3.1
































LATIN AMERICA














REVPAR ($)

101.71

92.15

10.4 %

110.23

96.71

14.0 %

ADR ($)

163.11

153.78

6.1 %

175.05

160.60

9.0 %

Occupancy (%)

62.4%


59.9%


2.5


63.0%


60.2%


2.8
































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

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





STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned Hotel Results - Same Store (1)
For the Six Months Ended June 30,
UNAUDITED











































WORLDWIDE
NORTH AMERICA
INTERNATIONAL



2012


2011


Variance


2012


2011


Variance


2012


2011


Variance





















TOTAL HOTELS



47 Hotels






23 Hotels






24 Hotels



REVPAR ($)
159.67

156.06

2.3 %
167.58

163.45

2.5 %
149.83

146.89

2.0 %
ADR ($)
222.01

218.97

1.4 %
223.37

218.26

2.3 %
220.15

219.97

0.1 %
Occupancy (%)

71.9%


71.3%


0.6

75.0%


74.9%


0.1

68.1%


66.8%


1.3




















Total Revenue
739,495

728,289

1.5 %
429,370

420,960

2.0 %
310,124

307,329

0.9 %
Total Expenses
589,773

592,267

0.4 %
351,072

349,381

(0.5 %)
238,701

242,886

1.7 %
















































































BRANDED HOTELS



42 Hotels






18 Hotels






24 Hotels



REVPAR ($)
162.82

159.87

1.8 %
175.20

172.27

1.7 %
149.83

146.89

2.0 %
ADR ($)
224.00

220.95

1.4 %
227.24

221.76

2.5 %
220.15

219.97

0.1 %
Occupancy (%)

72.7%


72.4%


0.3

77.1%


77.7%


(0.6 )

68.1%


66.8%


1.3




















Total Revenue
695,598

687,716

1.1 %
385,473

380,387

1.3 %
310,124

307,329

0.9 %
Total Expenses
551,333

554,543

0.6 %
312,632

311,657

(0.3 %)
238,701

242,886

1.7 %








































(1) Hotel Results exclude five hotels sold and 12 hotels without comparable results during 2011 & 2012

* Revenues & Expenses above are represented in '000's





























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





























Worldwide





2012


2011


$ Variance


% Variance













Management Fees:









Base Fees


161
146
15
10.3%
Incentive Fees


80
62
18
29.0%
Total Management Fees


241
208
33
15.9%












Franchise Fees


97
92
5
5.4%












Total Management & Franchise Fees


338
300
38
12.7%












Other Management & Franchise Revenues (1)


73
63
10
15.9%












Total Management & Franchise Revenues


411
363
48
13.2%












Other


12
15
(3)
(20.0%)












Management Fees, Franchise Fees & Other Income


423
378
45
11.9%


























(1) Other Management & Franchise Revenues includes the amortization of deferred gains of approximately $43 in
2012 and $42 in 2011, resulting from the sales of hotels subject to long-term management contracts and
termination fees.



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





























































2012



2011




$ Variance



% Variance



















Originated Sales Revenues (1) -- Vacation Ownership Sales





159



162




(3)

(1.9%)
Other Sales and Services Revenues (2)





142



136




6



4.4%
Deferred Revenues -- Percentage of Completion





3



-


3



n/m
Deferred Revenues -- Other (3)





(4)

(7)


3



42.9%
Vacation Ownership Sales and Services Revenues





300



291




9



3.1%
Residential Sales and Services Revenues (4)





530



8




522



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





830



299




531



n/m








































Originated Sales Expenses (5) -- Vacation Ownership Sales





111



112




1



0.9%
Other Expenses (6)





105



101




(4)

(4.0%)
Deferred Expenses -- Percentage of Completion





2



-


(2)

n/m
Deferred Expenses -- Other





6



6




-

-
Vacation Ownership Expenses





224



219




(5)

(2.3%)
Residential Expenses (4)





410



4




(406)

n/m
Total Vacation Ownership & Residential Expenses





634



223




(411)

n/m












































(1) Timeshare sales revenue originated at each sales location before deferrals of revenue for U.S. GAAP reporting purposes

(2) Includes resort income, interest income, gain on sale of notes receivable, and miscellaneous other revenues

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

(4) For 2012, includes $523 million of revenues and $410 million expenses associated with the St. Regis Bal Harbour residential project

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

(6) Includes resort, general and administrative, and other miscellaneous expenses







Note: Deferred revenue is calculated based on the Percentage of Completion ("POC") of the project. Deferred expenses, also based on POC, include

product costs and direct sales and marketing costs only. Indirect sales and marketing costs are not deferred per ASC 978-720-25 and ASC 978-340-25.




n/m = not meaningful


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotels without Comparable Results & Other Selected Items
As of June 30, 2012
UNAUDITED ($ millions)




















































































Properties without comparable results in 2012 and 2011:


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





















Property


Location



















The Westin Peachtree Plaza
Atlanta, GA




Q1

Q2

Q3

Q4

Full Year
St. Regis Bal Harbour
Bal Harbour, FL


Hotels Sold or Closed in 2011:













Sheraton Kauai Resort
Koloa, HI


2011













Grand Hotel - Florence
Florence, Italy


Revenues
$ 28

$ 23

$ 5

$ -


$ 56
W London - Leicester Square
London, England


Expenses (excluding depreciation)
$ 28

$ 19

$ 4

$ (1 )

$ 50
Clarion Hotel
Millbrae, CA

















W New Orleans - French Quarter
New Orleans, LA


Hotels Sold or Closed in 2012:













Sheraton Suites Philadelphia Airport
Philadelphia, PA


2012













Hotel Maria Cristina
San Sebastian, Spain


Revenues
$ 2

$ -

$ -

$ -


$ 2
Hotel Alfonso XIII
Seville, Spain


Expenses (excluding depreciation)
$ 2

$ -

$ -

$ -


$ 2
Four Points Tucson
Tucson, AZ

















Hotel Gritti Palace
Venice, Italy


2011



















Revenues
$ 3

$ 3

$ 2

$ 2


$ 10
Properties sold or closed in 2012 and 2011:


Expenses (excluding depreciation)
$ 2

$ 3

$ 3

$ 2


$ 10





















Property


Location




(1) Results consist of one hotel sold in 2012 and four hotels sold in 2011. These amounts are included in the revenues

Atlanta Perimeter
Atlanta, GA


and expenses from owned, leased and consolidated joint venture hotels in the statements of income for 2012 and 2011.
Boston Park Plaza
Boston, MA

















W City Center
Chicago, IL

















The Westin Gaslamp Quarter
San Diego, CA

















Hotel Bristol
Vienna, Austria
















































































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
























Q2





YTD

Maintenance Capital Expenditures: (1)








Owned, Leased and Consolidated Joint Venture Hotels


5





16

Corporate/IT


17





35

Subtotal


22





51











Vacation Ownership and Residential Capital Expenditures:








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


(9)



(20)
Capital expenditures for inventory - St. Regis Bal Harbour


5





17

Subtotal


(4)



(3)










Development Capital


70





120











Total Capital Expenditures


88





168

























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


(2) Represents gross inventory capital expenditures of $9 and $19 in the three and six months ended June

30, 2012, respectively, less cost of sales of $18 and $39 in the three and six months ended June 30, 2012,

respectively.



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




















































NAD
EUROPE
AME
LAD
ASIA
TOTAL


Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


Hotels


Rooms

Owned























Sheraton
6
3,528
4
705
-
-
5
2,699
2
821
17
7,753
Westin
4
2,399
3
650
-
-
3
902
1
273
11
4,224
Four Points
2
327
-
-
-
-
-
-
-
-
2
327
W
5
1,795
2
665
-
-
-
-
-
-
7
2,460
Luxury Collection
1
643
5
584
-
-
1
181
-
-
7
1,408
St. Regis
3
725
2
261
-
-
-
-
1
160
6
1,146
Aloft
2
272
-
-
-
-
-
-
-
-
2
272
Element
1
123
-
-
-
-
-
-
-
-
1
123
Other
6
1,654
-
-
-
-
-
-
-
-
6
1,654
Total Owned
30
11,466
16
2,865
-
-
9
3,782
4
1,254
59
19,367

























Managed & UJV























Sheraton
37
26,283
41
11,936
31
8,624
15
2,950
74
26,549
198
76,342
Westin
54
28,377
12
4,098
4
1,086
3
886
29
9,669
102
44,116
Four Points
1
171
6
1,013
7
1,329
4
517
18
5,560
36
8,590
W
23
6,890
3
364
1
441
2
433
6
1,437
35
9,565
Luxury Collection
4
1,648
19
2,996
5
1,384
7
290
7
1,536
42
7,854
St. Regis
9
1,811
2
223
2
713
2
309
8
2,048
23
5,104
Le Meridien
4
607
21
6,173
31
7,073
-
-
26
7,249
82
21,102
Aloft
-
-
2
399
1
408
2
292
6
1,327
11
2,426
Other
1
773
1
165
-
-
-
-
-
-
2
938
Total Managed & UJV
133
66,560
107
27,367
82
21,058
35
5,677
174
55,375
531
176,037

























Franchised























Sheraton
161
47,979
16
4,290
2
403
9
2,332
13
6,081
201
61,085
Westin
60
19,461
3
1,176
-
-
4
1,309
9
2,730
76
24,676
Four Points
107
16,989
5
835
-
-
8
1,239
8
1,441
128
20,504
Luxury Collection
8
1,621
11
1,537
-
-
2
248
11
2,577
32
5,983
Le Meridien
8
2,161
5
1,455
-
-
1
111
3
714
17
4,441
Aloft
42
6,096
-
-
-
-
-
-
3
471
45
6,567
Element
9
1,518
-
-
-
-
-
-
-
-
9
1,518
Other
1
275
-
-
-
-
-
-
-
-
1
275
Total Franchised
396
96,100
40
9,293
2
403
24
5,239
47
14,014
509
125,049

























Systemwide























Sheraton
204
77,790
61
16,931
33
9,027
29
7,981
89
33,451
416
145,180
Westin
118
50,237
18
5,924
4
1,086
10
3,097
39
12,672
189
73,016
Four Points
110
17,487
11
1,848
7
1,329
12
1,756
26
7,001
166
29,421
W
28
8,685
5
1,029
1
441
2
433
6
1,437
42
12,025
Luxury Collection
13
3,912
35
5,117
5
1,384
10
719
18
4,113
81
15,245
St. Regis
12
2,536
4
484
2
713
2
309
9
2,208
29
6,250
Le Meridien
12
2,768
26
7,628
31
7,073
1
111
29
7,963
99
25,543
Aloft
44
6,368
2
399
1
408
2
292
9
1,798
58
9,265
Element
10
1,641
-
-
-
-
-
-
-
-
10
1,641
Other
8
2,702
1
165
-
-
-
-
-
-
9
2,867
Vacation Ownership
12
6,780
-
-
-
-
1
580
-
-
13
7,360
Total Systemwide
571
180,906
163
39,525
84
21,461
69
15,278
225
70,643
1,112
327,813











































































*Includes Vacation Ownership properties


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership Inventory Pipeline
As of June 30, 2012
UNAUDITED





















































# Resorts




# of Units (1)






In

In Active







Pre-sales/

Future

Total at
Brand

Total(2)



Operations

Sales




Completed(3)



Development(4)



Capacity(5),(6)



Buildout

























Sheraton

7

7

6




3,079

-

712

3,791
Westin

9

9

9




1,584

-

43

1,627
St. Regis

2

2

-




56

-

-

56
The Luxury Collection

1

1

-




6

-

-

6
Unbranded

2

2

1




99

-

1

100
Total SVO, Inc.

21

21

16




4,824

-

756

5,580

























Unconsolidated Joint Ventures (UJV's)

1

1

1




198

-

-

198
Total including UJV's

22

22

17




5,022

-

756

5,778

























Total Intervals Including UJV's (7)













261,144

-

39,312

300,456


















































(1) Lockoff units are considered as one unit for this analysis.
(2) Includes resorts in operation, active sales or future development.
(3) Completed units include those units that have a certificate of occupancy.
(4) Units in Pre-sales/Development are in various stages of development (including the permitting stage), most of which are currently being offered for sale to customers.
(5) Based on owned land and average density in existing marketplaces.
(6) Future units indicated above include planned timeshare units on land owned by the Company or applicable UJV that have received all major governmental land use
approvals for the development of timeshare. There can be no assurance that such units will in fact be developed and, if developed, the time period of such development
(which may be more than several years in the future). Some of the projects may require additional third-party approvals or permits for development and build
out and may also be subject to legal challenges as well as a commitment of capital by the Company. The actual number of units to be constructed may be
significantly lower than the number of future units indicated.
(7) Assumes 52 intervals per unit.

.
Contact: 

Starwood Hotels & Resorts Worldwide, Inc.
Investor Contact
Stephen Pettibone, 203-351-3500
or
Media Contact
KC Kavanagh, 866-478-2777

.
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Also See: Starwood Reports Net Income 1st Qtr 2012 of $128 million Compared to $28 million Same Period 2011; Worldwide System-wide RevPAR Up 6.4% / Systemwide Hotel Statistics / April 2012

Starwood Reports Net Income 4th Qtr 2011 of $167 million Compared to $339 million Same Period 2010; Worldwide System-wide RevPAR Up 5.8% / Systemwide Hotel Statistics / February 2012

Starwood Reports Net Income in 3rd Qtr 2011 of $163 million Compared to Loss of $6 million Same Period a Year Earlier; Worldwide System-wide RevPAR Up 11.6% / Systemwide Hotel Statistics / October 2011

Starwood Reports Net Income in 2nd Qtr 2011 of $131 million Compared to $114 million Same Period a Year Earlier; Worldwide System-wide RevPAR Up 11.8% / Systemwide Hotel Statistics / July 2011

Starwood Net Income in 1st Qtr 2011 $28 million Compared to $30 million Same Period a Year Earlier; RevPAR Up 10.4% / Systemwide Hotel Statistics / April 2011

Starwood Net income Rose to $30 million in the 1st Qtr 2010 from $6 million a Year Earlier; RevPAR Up 6.6% with the Most Improvement in Asia / Systemwide Hotel Statistics / April 2010

Starwood Reports $107 million Net Loss for 4th Qtr 2009 Compared to Net Income of $79 million in the 4th Qtr 2008; Takes $362 million Impairment Charge Related to Starwood Vacation Ownership World Wide RevPAR Down 7.9% / Hotel Operating Statistics / February 2010

Starwood Hotels Reports Sharp Drop in 1st Qtr 2009 Net Income - $6 million vs $32 million in 1st Qtr Last Year; Worldwide RevPAR Down 23.5% / Hotel Operating Statistics / April 2009
.

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