Starwood Reports Fourth Quarter 2008 Results

Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported fourth quarter 2008 financial results.

Fourth Quarter 2008 Highlights

• Excluding special items, EPS from continuing operations was $0.49. Including special items, EPS from continuing operations was a loss of $0.25.
• Total Company Adjusted EBITDA was $273 million.
• Excluding special items, income from continuing operations was $88 million. Including special items, the loss from continuing operations was $45 million.
• Special items totaled $133 million of net charges ($0.74 per share) primarily related to $30 million of severance costs, $79 million of impairment charges from discontinued vacation ownership projects and $86 million of impairment charges primarily at five owned hotels in North America.
• Worldwide System-wide REVPAR for Same-Store Hotels decreased 12.1% (9.1% in constant dollars) compared to the fourth quarter of 2007. System-wide REVPAR for Same-Store Hotels in North America decreased 13.2% (11.7% in constant dollars).
• Management and franchise revenues decreased 4.7% compared to 2007.
• Worldwide REVPAR for Starwood branded Same-Store Owned Hotels decreased 19.6% (15.4% in constant dollars) compared to the fourth quarter of 2007. REVPAR for Starwood branded Same-Store Owned Hotels in North America decreased 18.6% (16.3% in constant dollars).
• Margins at Starwood branded Same-Store Owned Hotels Worldwide and in North America decreased 479 and 596 basis points, respectively, compared to the fourth quarter of 2007.
• Revenues from vacation ownership and residential sales decreased 48.7% compared to 2007.
• The Company signed 31 hotel management and franchise contracts in the quarter representing approximately 6,100 rooms. For the full year, the Company signed 147 hotel contracts representing approximately 35,700 rooms.

Fourth Quarter 2008 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. ("Starwood” or the "Company”) today reported a loss from continuing operations for the fourth quarter of 2008 of $0.25 per share compared to EPS of $0.74 in the fourth quarter of 2007. Excluding special items, which net to a charge of $133 million in 2008 and $11 million in 2007, EPS from continuing operations was $0.49 for the fourth quarter of 2008 compared to $0.79 in the fourth quarter of 2007. Excluding special items, the effective income tax rate in the fourth quarter of 2008 was 27.5% compared to 28.5% in the same period of 2007.

Special items in the fourth quarter of 2008 totaled $133 million of net charges ($0.74 per share) primarily related to $30 million of severance costs, $79 million of impairment charges from discontinued vacation ownership projects, and $86 million of impairment charges primarily at five owned hotels in North America.

The loss from continuing operations was $45 million in the fourth quarter of 2008 compared to income of $146 million in 2007. Excluding special items, income from continuing operations was $88 million for the fourth quarter of 2008 compared to $157 million in 2007.

Net income was $79 million and EPS was $0.43 in the fourth quarter of 2008 compared to $146 million and EPS of $0.74 in the fourth quarter of 2007. The 2008 results include a gain of $124 million (net of taxes) in discontinued operations, resulting from the sale of three hotels which were sold unencumbered by management or franchise agreements.

Frits van Paasschen, CEO said, "In the past year, we have made significant progress in reducing our costs, which enabled us to deliver better than expected quarterly results despite worse than expected REVPAR. Cost reductions completed so far should yield a $100 million reduction in our SG&A on a run-rate basis. Our extensive cost cutting efforts at the property level will help offset some of the margin erosion that results from declining REVPAR. We also scaled back our capital spending in all areas for 2009. While the outlook for 2009 remains challenging, we are prepared for the worst and confident that we will emerge from this downturn stronger than ever. We have experienced operating teams in the field, some of the strongest brands in the lodging industry, and a pipeline that will drive our global fee growth.”

Fourth Quarter 2008 Operating Results

Management and Franchise Revenues

Worldwide System-wide REVPAR for Same-Store Hotels decreased 12.1% (9.1% using constant dollars) compared to the fourth quarter of 2007. International System-wide REVPAR for Same-Store Hotels decreased 10.8% (6.1% using constant dollars). Worldwide System-wide REVPAR increased 8.6% in Africa and the Middle East. Worldwide System-wide REVPAR decreases for the other regions were: 3.3% in Latin America, 13.2% in North America, 14.4% in Asia Pacific, and 17.8% in Europe. Worldwide System-wide REVPAR decreases by brand were: Sheraton 9.6%, Westin 11.4%, Le Méridien 11.5%, Four Points by Sheraton 11.5%, W Hotels 21.1%, and St. Regis/Luxury Collection 23.3%.

Management fees, franchise fees and other income were $215 million, down $20 million, or 8.5%, from the fourth quarter of 2007. Management fees decreased 5.6% to $119 million and franchise fees decreased 12.2% to $36 million.

Approximately 57% of the Company’s management and franchise fees are generated in markets outside the United States.

During the fourth quarter of 2008, the Company signed 31 hotel management and franchise contracts representing approximately 6,100 rooms of which 27 are new builds and four are conversions from other brands. At December 31, 2008, the Company had over 425 hotels in the active pipeline representing approximately 100,000 rooms, driven by strong interest in all Starwood brands. Of these rooms, 64% are in the upper upscale and luxury segments and 62% are in international locations.

During the fourth quarter of 2008, 21 new hotels and resorts (representing approximately 4,200 rooms) entered the system, including the Westin Book Cadillac (Detroit, MI, 453 rooms), St. Regis Punta Mita (Nayarit, Mexico, 120 rooms), Aloft Beijing (Beijing, China, 186 rooms), and the Le Méridien Bangkok (Bangkok, Thailand, 282 rooms). Fifteen properties (representing approximately 2,700 rooms) were removed from the system during the quarter.

Owned, Leased and Consolidated Joint Venture Hotels

Worldwide REVPAR for Starwood branded Same-Store Owned Hotels decreased 19.6%. REVPAR at Starwood branded Same-Store Owned Hotels in North America decreased 18.6%. Internationally, Starwood branded Same-Store Owned Hotel REVPAR decreased 21.3% (down 9.1% using constant dollars).

Revenues at Starwood branded Same-Store Owned Hotels in North America decreased 17.4% while costs and expenses decreased 10.3% when compared to 2007. Margins at these hotels decreased 596 basis points.

Revenues at Starwood branded Same-Store Owned Hotels Worldwide decreased 18.6% (down 16.3% in constant dollars) while costs and expenses decreased 13.1% when compared to 2007. Margins at these hotels decreased 479 basis points.

Approximately 47% of Starwood’s Owned Hotel earnings (before depreciation) are generated from outside the United States.

Revenues at owned, leased and consolidated joint venture hotels were $504 million when compared to $631 million in 2007.

Vacation Ownership

Total vacation ownership reported revenues decreased 48.3% to $134 million when compared to 2007. Originated contract sales of vacation ownership intervals decreased 43.2% primarily due to an overall decline in demand and the sellout of the Company’s Westin Ka’anapali Ocean Resort North in Maui. The average price per vacation ownership unit sold decreased 31.1% to approximately $17,000, driven by a higher sales mix of lower-priced inventory, including a higher percentage of lower-priced biennial inventory in Hawaii. The number of contracts signed decreased 17.2% when compared to 2007.

The Company did not sell any vacation ownership receivables during the fourth quarter. Although conditions remain uncertain in the asset backed securities market, the Company is exploring a variety of avenues to sell vacation ownership receivables. However, given unpredictable market conditions, the Company does not expect any gains from securitizations in 2009.

As a result of the current economic climate and business conditions, the Company has undertaken a comprehensive review of its vacation ownership business. The Company has significantly scaled back its overhead to match reduced revenue expectations. This included closing five sales centers and terminating over 500 employees during the fourth quarter. In 2008 and early 2009, the Company closed nine sales centers and three call centers and terminated approximately 900 employees. Additionally, the Company has reset capital plans for this business. No new projects are being initiated and the Company has decided to discontinue further development of some projects that were in their early stages. As a result, development costs and land values at certain projects have been written down to their fair value, resulting in an impairment charge during the fourth quarter of 2008 of approximately $72 million.

Residential

Residential fees in the fourth quarter of 2008 totaled $2 million compared to $6 million in the same period in 2007.

Selling, General, Administrative and Other

Selling, general, administrative and other expenses decreased 35.6% to $96 million compared to the fourth quarter of 2007. The decrease was primarily due to the Company's continued focus on reducing its cost structure.

In the fourth quarter, the Company completed the second phase of its overhead cost reduction program, making significant reductions across several corporate departments and divisional headquarters. These actions have resulted in expected run rate savings of approximately $100 million. The Company anticipates completing the review of other functional areas, and implementing reductions in those areas, by the end of the first quarter of 2009.

Restructuring Charges and Other Special Charges, Net

During the fourth quarter of 2008, the Company recorded a $109 million charge, including approximately $30 million of severance and related charges associated with its ongoing initiative of rationalizing its cost structure in light of the current economic climate and the decline in activity in its business units. The charge also included impairment charges of approximately $79 million primarily related to the Company’s decision to not develop certain vacation ownership projects.

Loss on Asset Dispositions and Impairments, Net

During the fourth quarter of 2008, the Company recorded impairment charges of $64 million related to five owned hotels in which the carrying values exceeded their estimated fair values. In addition, the Company recorded a $22 million impairment charge to write down its economic retained interests in securitized vacation ownership notes receivable based on a change to the expected future cash flows as a result of the current economic climate.

Asset Sales

During the fourth quarter of 2008, the Company sold three hotels in Venice, Italy for net cash proceeds of $206 million. These hotels were sold unencumbered by any management or franchise agreement and the Company recorded a gain on the sale of these hotels of $124 million (net of taxes) in discontinued operations. Additionally, during the fourth quarter of 2008, the Company sold the Westin Turnberry for net cash proceeds of $99 million. This sale was subject to a long-term management agreement and the Company recorded a deferred gain of $27 million in connection with the sale.

Capital

Gross capital spending during the quarter included approximately $89 million in renovations of hotel assets, including construction capital, at the Sheraton Steamboat Resort, Sheraton Buenos Aires, W Times Square and Phoenician Resort. Investment spending on gross vacation ownership interest ("VOI”) and residential inventory was $98 million, primarily in Bal Harbour, Maui, Orlando and Cancun.

Share Repurchase

During the fourth quarter of 2008, the Company did not repurchase any shares. In the twelve months ended December 31, 2008, the Company repurchased approximately 13.6 million shares at a total cost of approximately $593 million. The Company had approximately 183 million shares outstanding (including partnership units) at December 31, 2008.

Dividend

In November, 2008, the Company’s Board of Directors declared its annual dividend of $0.90 per share. The dividend was paid by the Company on January 9, 2009 to holders of record on December 31, 2008.

IRS Tax Settlement

In January 2009, the Company and the IRS reached an agreement in principle to settle the litigation pertaining to the tax treatment of the Company’s 1998 disposition of World Directories, Inc. Under the proposed settlement, the Company expects to receive a refund of over $200 million as a result of tax payments previously made. The Company expects to finalize the details of the agreement and obtain the refund during the summer of 2009.

Balance Sheet

At December 31, 2008, the Company had total debt of $4.008 billion and cash and cash equivalents of $491 million (including $102 million of restricted cash), or net debt of $3.517 billion, compared to net debt of $3.240 billion at the end of 2007.

At December 31, 2008, debt was approximately 59% fixed rate and 41% floating rate and its weighted average maturity was 3.9 years with a weighted average interest rate of 5.24%. The Company had cash (including total restricted cash) and availability under the domestic and international revolving credit facility of approximately $2.070 billion.

Results for the Twelve Months Ended December 31, 2008

EPS from continuing operations decreased to $1.37 compared to $2.57 in 2007. Excluding special items, EPS from continuing operations was $2.19 compared to $2.76 in 2007. Excluding special items, income from continuing operations was $406 million compared to $582 million in 2007. Net income was $329 million and EPS was $1.77 compared to $542 million and $2.57, respectively, in 2007. Total Company Adjusted EBITDA, which was impacted by the sale or closure of 19 hotels since the beginning of 2007, was $1.157 billion compared to $1.356 billion in 2007.

Outlook

For the full year 2009:

At the current time, given significant uncertainty in the global economy, it is very difficult to provide any definitive guidance looking out four quarters. What the Company can provide are some broad parameters being used for 2009 planning purposes. In the hotel business, the Company is planning on a significant decline in Worldwide REVPAR. The Company also anticipates another difficult year in the vacation ownership business with declines in originated sales. As previously discussed, the Company’s extensive cost reduction activities at the hotel level, in the vacation ownership business and in corporate overhead have offset some of the impact of declining revenues. The Company is also significantly scaling back capital expenditures for owned hotels and the vacation ownership business.

• Assuming REVPAR at Same-Store Company Operated Hotels Worldwide REVPAR declines 12% and REVPAR at Branded Same-Store Owned Hotels declines 15% at today’s exchange rates:

-- Adjusted EBITDA would be approximately $875 million.

-- EPS before special items would be approximately $1.10.

-- Same-Store Branded Owned Hotel EBITDA will decline approximately 35% versus 2008.

-- Management and Franchise revenues will decline approximately 10%.

-- Operating income from our vacation ownership and residential business will be down approximately $50 million.

-- Selling, General and Administrative expenses will decline approximately $50 million.

-- Income from continuing operations, before special items, is expected to be approximately $200 million, reflecting an effective tax rate of approximately 31%.

• Full year capital expenditures (excluding vacation ownership and residential inventory) would be approximately $150 million for maintenance, renovation and technology. In addition, in flight investment projects, including Bal Harbour, and prior commitments for joint ventures and other investments will total approximately $175 million.

• Full year depreciation and amortization would be approximately $355 million.
• Full year interest expense would be approximately $232 million and cash taxes of approximately $100 million.
• Vacation ownership and Residential, excluding the Bal Harbour project, is expected to generate approximately $25 million in positive cash flow, not inclusive of any sales of timeshare receivables.
• The Company expects to open 80 to 100 hotels in 2009 (representing approximately 20,000 rooms).

For the three months ended March 31, 2009:

• Adjusted EBITDA is expected to be $145 million to $160 million assuming:

-- REVPAR decline at Same-Store Company Operated Hotels Worldwide of 17% to 19% (14% to 16% in constant dollars).

-- REVPAR decline at Branded Same-Store Owned Hotels in North America of 27% to 30%.

-- Management and franchise revenues will be down approximately 15%.

-- Operating income from our vacation ownership and residential businesses will be down $10 million to $15 million.

• Income from continuing operations, before special items, is expected to be approximately $3 million to $13 million, reflecting an effective tax rate of approximately 31%.
• EPS before special items is expected to be approximately $0.02 to $0.07..

Special Items

The Company’s special items netted to a charge of $133 million (after tax) in the fourth quarter of 2008 compared to a charge of $11 million (after-tax) in the same period of 2007.

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								Year Ended
December 31,								December 31,
	2008				2007				2008				2007
$	88			$	157		Income from continuing operations before special items	$	406			$	582
$	0.49			$	0.79		EPS before special items	$	2.19			$	2.76
							Special Items
	(109	)			(5	)	Restructuring and other special charges, net (a)		(141	)			(53	)
	(86	)			(24	)	Loss on asset dispositions and impairments, net (b)		(98	)			(44	)
	(195	)			(29	)	Total special items – pre-tax		(239	)			(97	)
	52				1		Income tax benefit for special items (c)		77				38
	10				17		Income tax benefits related to hotel sales (d)		10				20
	(133	)			(11	)	Total special items – after-tax		(152	)			(39	)
$	(45	)		$	146		(Loss)/income from continuing operations	$	254			$	543
$	(0.25	)		$	0.74		EPS including special items	$	1.37			$	2.57
(a) During the three months ended December 31, 2008, the Company recorded $30 million in restructuring charges, consisting primarily of severance costs, related to the ongoing initiative to streamline operations and eliminate costs.  Additionally, the Company recorded other special charges of $79 million primarily related to impairment charges associated with the write down of two vacation ownership projects that the Company no longer plans to develop as a result of the current economic crisis and its expected long-term impact on this business.             The full year ended December 31, 2008 includes additional restructuring costs, primarily related to severance costs incurred in prior quarters.   For the three months ended December 31, 2007, the charge primarily relates to additional costs associated with the Sheraton Bal Harbour Resort, which was demolished and is being converted into a St. Regis Hotel with residences and fractional units.   The full year ended December 31, 2007 includes the accelerated depreciation of fixed assets at the Sheraton Bal Harbour, partially offset by a $2 million refund of insurance proceeds related to a retired executive.   (b) During the three months ended December 31, 2008, the Company recorded impairment charges of $64 million on five owned hotels in which the carrying values exceeded their estimated fair values and a $22 million impairment charge to write down its retained economic interests in securitized vacation ownership notes receivable.   The net loss for the full year ended December 31, 2008 also includes an impairment charge of $11 million associated with the Company’s equity interest in a joint venture that owns land that it no longer intends to develop.   During the three months ended December 31, 2007, the charge primarily reflects losses of $20 million related to four hotels which were sold in fourth quarter of 2007.   The loss for the full year ended December 31, 2007 also includes an $18 million loss on the sale of four additional hotels and a $23 million impairment on two hotels sold in the fourth quarter, offset by a $15 million gain on the sale of assets in which the Company held minority interest and insurance proceeds of $6 million related to owned hotels damaged by hurricanes and floods in prior years.   (c) In 2008 and 2007, the benefit relates to the favorable impact of capital loss utilization and tax benefits at the statutory rate for the special items.   (d) Income tax benefit relates to adjustments to deferred taxes associated with deferred gains on hotel sales.

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 fourth quarter financial results at 10:30 a.m. (EST) today at (913) 312-0422. The conference call will be available through simultaneous web cast in the Investor Relations/Press Releases section of the Company’s website at http://www.starwoodhotels.com. A replay of the conference call will also be available from 1:30 p.m. (EST) today through February 5, 2009 at 12:00 midnight (EST) on both the Company’s website and via telephone replay at (719) 457-0820 (access code 6866584).

Definitions

All references to EPS, unless otherwise noted, reflect earnings per diluted share from continuing operations. All references to "net capital expenditures” mean gross capital expenditures for timeshare and fractional inventory net of cost of sales. EBITDA represents net income before interest expense, taxes, depreciation and amortization. The Company believes that EBITDA is a useful measure of the Company’s operating performance due to the significance of the Company’s long-lived assets and level of indebtedness. EBITDA is a commonly used measure of performance in its industry which, when considered with GAAP measures, the Company believes gives a more complete understanding of the Company’s 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 total Company as well as for individual properties or groups of properties because the Company believes that the inclusion or exclusion of certain recurring and non-recurring items, such as revenues and costs and expenses from hotels sold, restructuring 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. Due to guidance from the Securities and Exchange Commission, the Company now does not reflect such items when calculating EBITDA; however, the Company continues to adjust for these special items and refers to this measure as Adjusted EBITDA. The Company has historically reported this measure to its investors and believes that the continued inclusion of Adjusted EBITDA provides consistency in its financial reporting and enables investors to perform more meaningful comparisons of past, present and future operating results and provides a means to evaluate the results of its core on-going operations. EBITDA and Adjusted EBITDA are not intended to represent cash flow from operations as defined by GAAP and such metrics should not be considered as an alternative to net income, cash flow from operations or any other performance measure prescribed by GAAP. The Company’s calculation of EBITDA and Adjusted EBITDA may be different from the calculations used by other companies and, therefore, comparability may be limited.

All references to Same-Store Owned Hotels reflect the Company’s owned, leased and consolidated joint venture hotels, excluding 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 hurricane damage). References to Company Operated Hotel metrics (e.g. REVPAR) reflect metrics for the Company’s owned and managed hotels. References to System-Wide 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 contract sales or originated sales reflect vacation ownership sales before revenue adjustments for percentage of completion accounting methodology.

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 offset by payments by Starwood under performance and other guarantees.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with approximately 940 properties in more than 100 countries and 155,000 employees at its owned and managed properties. Starwood® Hotels is a fully integrated owner, operator and franchisor of hotels and resorts with the following internationally renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, aloft(SM), and element(SM). Starwood Hotels also owns Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, please visit www.starwoodhotels.com.

** Please contact Starwood’s new, toll-free media hotline at (866) 4-STAR-PR

(866-478-2777) for photography or additional information.**

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, business and financing conditions, 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													Year Ended
December 31,													December 31,
								%													%
	2008				2007			Variance						2008				2007			Variance
											Revenues
$	504			$	631			(20.1	)		Owned, leased and consolidated joint venture hotels		$	2,259			$	2,429			(7.0	)
	136				265			(48.7	)		Vacation ownership and residential sales and services			749				1,025			(26.9	)
	215				235			(8.5	)		Management fees, franchise fees and other income			857				834			2.8
	478				479			(0.2	)		Other revenues from managed and franchised properties (a)			2,042				1,865			9.5
	1,333				1,610			(17.2	)					5,907				6,153			(4.0	)
											Costs and Expenses
	393				460			14.6			Owned, leased and consolidated joint venture hotels			1,722				1,805			4.6
	111				195			43.1			Vacation ownership and residential			583				758			23.1
	96				149			35.6			Selling, general, administrative and other			477				508			6.1
	109				5			n/m			Restructuring and other special charges, net			141				53			n/m
	75				74			(1.4	)		Depreciation			291				280			(3.9	)
	6				6			?			Amortization			32				26			(23.1	)
	478				479			0.2			Other expenses from managed and franchised properties (a)			2,042				1,865			(9.5	)
	1,268				1,368			7.3						5,288				5,295			0.1
	65				242			(73.1	)		Operating income			619				858			(27.9	)
	2				12			(83.3	)		Equity earnings and gains and losses from unconsolidated ventures, net			16				66			(75.8	)
	(57	)			(39	)		(46.2	)		Interest expense, net of interest income of $0, $9, $3 and $21			(207	)			(147	)		(40.8	)
	(86	)			(24	)		n/m			Loss on asset dispositions and impairments, net			(98	)			(44	)		n/m
	(76	)			191			n/m			(Loss)/income from continuing operations before taxes and minority equity			330				733			(55.0	)
	30				(44	)		n/m			Income tax benefit (expense)			(76	)			(189	)		59.8
	1				(1	)		n/m			Minority equity in net income		?					(1	)		n/m
	(45	)			146			n/m			(Loss)/income from continuing operations			254				543			(53.2	)
	124			?				n/m			Discontinued operations: Net gain/(loss) on dispositions			( 75				( (1	)		n/m
$	79			$	146			(45.9	)		Net income		$	329			$	542			(39.3	)
											Earnings (Loss) Per Share – Basic
$	(0.25	)		$	0.77			n/m			Continuing operations		$	1.40			$	2.67			(47.6	)
	0.69				—			n/m			Discontinued operations			0.41				—			n/m
$	0.44			$	0.77			(42.9	)		Net income		$	1.81			$	2.67			(32.2	)
											Earnings (Loss) Per Share – Diluted
$	(0.25	)		$	0.74			n/m			Continuing operations		$	1.37			$	2.57			(46.7	)
	0.68				—			n/m			Discontinued operations			0.40				—			n/m
$	0.43			$	0.74			(41.9	)		Net income		$	1.77			$	2.57			(31.1	)
	178				192						Weighted average number of Shares			181				203
	181				198						Weighted average number of Shares assuming dilution			185				211
(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)
		December 31,				December 31,
			2008				2007
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	389			$	151
Restricted cash			96				196
Accounts receivable, net of allowance for doubtful accounts of $49 and $50			552				627
Inventories			986				714
Prepaid expenses and other			143				136
Total current assets			2,166				1,824
Investments			372				423
Plant, property and equipment, net			3,599				3,850
Assets held for sale (a)			10				—
Goodwill and intangible assets, net			2,235				2,302
Deferred tax assets			553				729
Other assets (b)			768				494
		$	9,703			$	9,622
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt (c)		$	506			$	5
Accounts payable			171				201
Accrued expenses			1,274				1,175
Accrued salaries, wages and benefits			346				405
Accrued taxes and other			391				315
Total current liabilities			2,688				2,101
Long-term debt (c)			3,502				3,590
Deferred tax liabilities			26				28
Other liabilities			1,843				1,801
			8,059				7,520
Minority interest			23				26
Commitments and contingencies
Stockholders’ equity:
Corporation common stock; $0.01 par value; authorized 1,000,000,000 shares; outstanding 183,005,332 and 190,998,585 shares at December 31, 2008 and December 31, 2007, respectively			2				2
Additional paid-in capital			493				868
Accumulated other comprehensive loss			(391	)			(147	)
Retained earnings			1,517				1,353
Total stockholders’ equity			1,621				2,076
		$	9,703			$	9,622
(a) Includes one hotel expected to be sold in 2009.   (b) Includes restricted cash of $6 million and $8 million at December 31, 2008 and December 31, 2007, respectively.   (c) Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $642 million and $572 million at December 31, 2008 and December 31, 2007, respectively.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.   Non-GAAP to GAAP Reconciliations – Historical Data (in millions)
Three Months Ended									Year Ended
December 31,									December 31,
				%												%
2008		2007		Variance						2008				2007		Variance
							Reconciliation of Net Income to EBITDA and Adjusted EBITDA
$ 79		$ 146		(45.9	)		Net income		$	329			$	542		(39.3	)
64		54		18.5			Interest expense(a)			233				188		23.9
(24)		44		n/m			Income tax expense(b)			131				190		(31.1	)
83		81		2.5			Depreciation(c)			321				309		3.9
6		7		(14.3	)		Amortization (d)			34				30		13.3
208		332		(37.3	)		EBITDA			1,048				1,259		(16.8	)
86		24		n/m			Loss on asset dispositions and impairments, net			98				44		n/m
(130)		?		n/m			Discontinued operations			(130	)		?			n/m
109		5		n/m			Restructuring and other special charges, net			141				53		n/m
$ 273		$ 361		(24.4	)		Adjusted EBITDA		$	1,157			$	1,356		(14.7	)
(a) Includes $7 million and $6 million of interest expense related to unconsolidated joint ventures for the three months ended December 31, 2008 and 2007, respectively, and $23 million and $20 million for the year ended December 31, 2008 and 2007, respectively.   (b) Includes $6 million and $0 million of tax expense recorded in discontinued operations for the three months ended December 31, 2008 and 2007, respectively, and $55 million and $1 million for the year ended December 31, 2008 and 2007, respectively.   (c) Includes $8 million and $7 million of Starwood’s share of depreciation expense of unconsolidated joint ventures for the three months ended December 31, 2008 and 2007, respectively, and $30 million and $29 million for the year ended December 31, 2008 and 2007, respectively.   (d) Includes $0 million and $1 million of Starwood’s share of amortization expense of unconsolidated joint ventures for the three months ended December 31, 2008 and 2007, respectively, and $2 million and $4 million for the year ended December 31, 2008 and 2007, respectively.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.   Non-GAAP to GAAP Reconciliations – Future Performance (In millions)
	Low Case					High Case
	Three Months Ended					Three Months Ended
	March 31, 2009					March 31, 2009
	$	3		Net income		$	13
		52		Interest expense			52
		—		Income tax expense			5
		90		Depreciation and amortization			90
	$	145		EBITDA		$	160
						Year Ended December 31, 2009
				Net income		$	200
				Interest expense			232
				Income tax expense			88
				Depreciation and amortization			355
				EBITDA		$	875

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.   Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses (In millions)
Three Months Ended									Year Ended
December 31,									December 31,
				%			Same-Store Owned Hotels ((1))								%
2008		2007		Variance			Worldwide		2008			2007			Variance
							Revenue
$ 462		$ 565		(18.2	)		Same-Store Owned Hotels		$	2,015		$	2,046		(1.5	)
6		26		(76.9	)		Hotels Sold or Closed in 2008 and 2007 (19 hotels)			77			216		(64.4	)
36		40		(10.0	)		Hotels Without Comparable Results (10 hotels)			158			160		(1.3	)
?		?		?			Other ancillary hotel operations			9			7		28.6
$ 504		$ 631		(20.1	)		Total Owned, Leased and Consolidated Joint Venture Hotels Revenue		$	2,259		$	2,429		(7.0	)
							Costs and Expenses
$ 351		$ 400		12.3			Same-Store Owned Hotels		$	1,511		$	1,492		(1.3	)
8		27		70.4			Hotels Sold or Closed in 2008 and 2007 (19 hotels)			70			180		61.1
33		33		?			Hotels Without Comparable Results (10 hotels)			135			128		(5.5	)
1		?		n/m			Other ancillary hotel operations			6			5		(20.0	)
$ 393		$ 460		14.6			Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses		$	1,722		$	1,805		4.6
Three Months Ended									Year Ended
December 31,									December 31,
				%			Same-Store Owned Hotels								%
2008		2007		Variance			North America			2008			2007		Variance
							Revenue
$ 298		$ 358		(16.8	)		Same-Store Owned Hotels		$	1,279		$	1,308		(2.2	)
?		17		n/m			Hotels Sold or Closed in 2008 and 2007 (15 hotels)			17			148		(88.5	)
29		31		(6.5	)		Hotels Without Comparable Results (8 hotels)			131			131		?
$ 327		$ 406		(19.5	)		Total Owned, Leased and Consolidated Joint Venture Hotels Revenue		$	1,427		$	1,587		(10.1	)
							Costs and Expenses
$ 230		$ 254		9.4			Same-Store Owned Hotels		$	968		$	961		(0.7	)
3		15		80.0			Hotels Sold or Closed in 2008 and 2007 (15 hotels)			17			121		86.0
26		26		?			Hotels Without Comparable Results (8 hotels)			111			104		(6.7	)
$ 259		$ 295		12.2			Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses		$	1,096		$	1,186		7.6
Three Months Ended									Year Ended
December 31,									December 31,
				%			Same-Store Owned Hotels								%
2008		2007		Variance			International			2008			2007		Variance
							Revenue
$ 164		$ 207		(20.8	)		Same-Store Owned Hotels		$	736		$	738		(0.3	)
6		9		(33.3	)		Hotels Sold or Closed in 2008 and 2007 (4 hotels)			60			68		(11.8	)
7		9		(22.2	)		Hotels Without Comparable Results (2 hotels)			27			29		(6.9	)
?		?		?			Other ancillary hotel operations			9			7		28.6
$ 177		$ 225		(21.3	)		Total Owned, Leased and Consolidated Joint Venture Hotels Revenue		$	832		$	842		(1.2	)
							Costs and Expenses
$ 121		$ 146		17.1			Same-Store Owned Hotels		$	543		$	531		(2.3	)
5		12		58.3			Hotels Sold or Closed in 2008 and 2007 (4 hotels)			53			59		10.2
7		7		?			Hotels Without Comparable Results (2 hotels)			24			24		?
1		?		n/m			Other ancillary hotel operations			6			5		(20.0	)
$ 134		$ 165		18.8			Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses		$	626		$	619		(1.1	)
(1) Same-Store Owned Hotel Results exclude 19 hotels sold or closed in 2008 and 2007 and 10 hotels without comparable results.

Starwood Hotels & Resorts Worldwide, Inc.
Systemwide(1) Statistics - Same Store
For the Three Months Ended December 31,
UNAUDITED
			Systemwide - Worldwide									Systemwide - North America									Systemwide - International
			2008			2007			Var.			2008			2007			Var.			2008			2007			Var.
TOTAL HOTELS
	REVPAR ($)		110.11			125.25			-12.1	%		104.23			120.07			-13.2	%		117.79			132.02			-10.8	%
	ADR ($)		176.98			187.05			-5.4	%		168.96			179.84			-6.0	%		187.23			196.38			-4.7	%
	Occupancy (%)		62.2	%		67.0	%		-4.8			61.7	%		66.8	%		-5.1			62.9	%		67.2	%		-4.3
SHERATON
	REVPAR ($)		96.72			107.00			-9.6	%		89.27			102.39			-12.8	%		105.76			112.62			-6.1	%
	ADR ($)		157.15			160.92			-2.3	%		147.31			154.97			-4.9	%		168.67			168.05			0.4	%
	Occupancy (%)		61.5	%		66.5	%		-5.0			60.6	%		66.1	%		-5.5			62.7	%		67.0	%		-4.3
WESTIN
	REVPAR ($)		118.61			133.87			-11.4	%		115.36			129.22			-10.7	%		127.84			147.09			-13.1	%
	ADR ($)		187.59			199.90			-6.2	%		182.80			192.16			-4.9	%		201.07			222.23			-9.5	%
	Occupancy (%)		63.2	%		67.0	%		-3.8			63.1	%		67.2	%		-4.1			63.6	%		66.2	%		-2.6
ST. REGIS/LUXURY COLLECTION
	REVPAR ($)		185.59			242.09			-23.3	%		211.65			253.07			-16.4	%		169.10			235.16			-28.1	%
	ADR ($)		331.39			376.33			-11.9	%		366.05			391.05			-6.4	%		308.27			366.96			-16.0	%
	Occupancy (%)		56.0	%		64.3	%		-8.3			57.8	%		64.7	%		-6.9			54.9	%		64.1	%		-9.2
LE MERIDIEN
	REVPAR ($)		143.61			162.29			-11.5	%		220.47			265.22			-16.9	%		136.79			153.14			-10.7	%
	ADR ($)		218.31			232.41			-6.1	%		297.78			350.03			-14.9	%		210.28			220.98			-4.8	%
	Occupancy (%)		65.8	%		69.8	%		-4.0			74.0	%		75.8	%		-1.8			65.1	%		69.3	%		-4.2
W
	REVPAR ($)		197.57			250.33			-21.1	%		195.49			251.14			-22.2	%		217.53			242.53			-10.3	%
	ADR ($)		301.80			337.90			-10.7	%		296.03			333.38			-11.2	%		362.79			390.51			-7.1	%
	Occupancy (%)		65.5	%		74.1	%		-8.6			66.0	%		75.3	%		-9.3			60.0	%		62.1	%		-2.1
FOUR POINTS
	REVPAR ($)		67.09			75.78			-11.5	%		62.76			70.60			-11.1	%		77.09			87.76			-12.2	%
	ADR ($)		108.91			114.85			-5.2	%		103.57			108.44			-4.5	%		120.63			129.04			-6.5	%
	Occupancy (%)		61.6	%		66.0	%		-4.4			60.6	%		65.1	%		-4.5			63.9	%		68.0	%		-4.1
OTHER
	REVPAR ($)		98.32			117.68			-16.5	%		98.32			117.68			-16.5	%
	ADR ($)		163.39			186.01			-12.2	%		163.39			186.01			-12.2	%
	Occupancy (%)		60.2	%		63.3	%		-3.1			60.2	%		63.3	%		-3.1
(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 December 31,
UNAUDITED
			Systemwide (1)									Company Operated (2)
			2008			2007			Var.			2008			2007			Var.
TOTAL WORLDWIDE
	REVPAR ($)		110.11			125.25			-12.1	%		126.75			143.24			-11.5	%
	ADR ($)		176.98			187.05			-5.4	%		198.03			208.52			-5.0	%
	Occupancy (%)		62.2	%		67.0	%		-4.8			64.0	%		68.7	%		-4.7
NORTH AMERICA
	REVPAR ($)		104.23			120.07			-13.2	%		131.14			152.49			-14.0	%
	ADR ($)		168.96			179.84			-6.0	%		201.82			216.83			-6.9	%
	Occupancy (%)		61.7	%		66.8	%		-5.1			65.0	%		70.3	%		-5.3
EUROPE
	REVPAR ($)		125.75			153.03			-17.8	%		135.95			167.17			-18.7	%
	ADR ($)		207.87			232.03			-10.4	%		220.62			248.80			-11.3	%
	Occupancy (%)		60.5	%		66.0	%		-5.5			61.6	%		67.2	%		-5.6
AFRICA & MIDDLE EAST
	REVPAR ($)		154.85			142.61			8.6	%		158.11			143.37			10.3	%
	ADR ($)		219.96			204.85			7.4	%		224.01			205.92			8.8	%
	Occupancy (%)		70.4	%		69.6	%		0.8			70.6	%		69.6	%		1.0
ASIA PACIFIC
	REVPAR ($)		103.56			120.96			-14.4	%		98.90			112.78			-12.3	%
	ADR ($)		165.46			178.88			-7.5	%		162.08			170.30			-4.8	%
	Occupancy (%)		62.6	%		67.6	%		-5.0			61.0	%		66.2	%		-5.2
LATIN AMERICA
	REVPAR ($)		87.02			90.01			-3.3	%		97.98			98.21			-0.2	%
	ADR ($)		144.96			136.18			6.4	%		160.49			146.34			9.7	%
	Occupancy (%)		60.0	%		66.1	%		-6.1			61.1	%		67.1	%		-6.0
(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 December 31,
UNAUDITED
			WORLDWIDE									NORTH AMERICA									INTERNATIONAL
			2008			2007			Var.			2008			2007			Var.			2008			2007			Var.
TOTAL HOTELS			59 Hotels									31 Hotels									28 Hotels
	REVPAR ($)		148.99			184.97			-19.5	%		160.47			196.69			-18.4	%		131.16			166.76			-21.3	%
	ADR ($)		226.42			256.36			-11.7	%		238.54			269.32			-11.4	%		206.47			235.57			-12.4	%
	Occupancy (%)		65.8	%		72.2	%		-6.4			67.3	%		73.0	%		-5.7			63.5	%		70.8	%		-7.3
	Total Revenue		461,938			564,785			-18.2	%		297,895			358,052			-16.8	%		164,043			206,733			-20.6	%
	Total Expenses		350,809			399,972			-12.3	%		230,086			253,870			-9.4	%		120,723			146,102			-17.4	%
BRANDED HOTELS			53 Hotels									25 Hotels									28 Hotels
	REVPAR ($)		154.21			191.88			-19.6	%		171.73			210.97			-18.6	%		131.16			166.76			-21.3	%
	ADR ($)		232.30			262.61			-11.5	%		250.50			282.05			-11.2	%		206.47			235.57			-12.4	%
	Occupancy (%)		66.4	%		73.1	%		-6.7			68.6	%		74.8	%		-6.2			63.5	%		70.8	%		-7.3
	Total Revenue		431,741			530,687			-18.6	%		267,698			323,954			-17.4	%		164,043			206,733			-20.6	%
	Total Expenses		323,300			371,958			-13.1	%		202,577			225,856			-10.3	%		120,723			146,102			-17.4	%
(1) Hotel Results exclude 19 hotels sold or closed and 10 hotels without comparable results during 2007 & 2008

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended December 31,
UNAUDITED ($ millions)
			Worldwide
			2008		2007		$ Variance		% Variance
Management Fees:
	Base Fees		71		75		-4		-5.3	%
	Incentive Fees		48		51		-3		-5.9	%
Total Management Fees			119		126		-7		-5.6	%
Franchise Fees			36		41		-5		-12.2	%
Total Management & Franchise Fees			155		167		-12		-7.2	%
Other Management & Franchise Revenues (1)			26		23		3		13.0	%
Total Management & Franchise Revenues			181		190		-9		-4.7	%
Other (2)			34		45		-11		-24.4	%
Management Fees, Franchise Fees & Other Income			215		235		-20		-8.5	%
(1) Other Management & Franchise Revenues primarily includes the amortization of deferred gains of approximately $20 million in 2008 and $21 million in 2007 resulting from the sales of hotels subject to long-term management contracts and termination fees.
(2) Amount includes revenues from the Company's Bliss spa and product business and other miscellaneous revenue.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Three Months Ended December 31,
UNAUDITED ($ millions)
		2008			2007			% Variance
Originated Sales Revenues (1) -- Vacation Ownership Sales		92			162			(43.2	%)
Other Sales and Services Revenues (2)		51			47			8.5	%
Deferred Revenues -- Percentage of Completion		18			59			n/m
Deferred Revenues -- Other (3)		(27	)		(9	)		n/m
Vacation Ownership Sales and Services Revenues		134			259			(48.3	%)
Residential Sales and Services Revenues		2			6			n/m
Total Vacation Ownership & Residential Sales and Services Revenues		136			265			(48.7	%)
Originated Sales Expenses (4) -- Vacation Ownership Sales		51			104			51.0	%
Other Expenses (5)		46			56			17.9	%
Deferred Expenses -- Percentage of Completion		9			25			n/m
Deferred Expenses -- Other		3			6			n/m
Vacation Ownership Expenses		109			191			42.9	%
Residential Expenses		2			4			50.0	%
Total Vacation Ownership & Residential Expenses		111			195			43.1	%
(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 SFAS No. 66 or SFAS No. 152 and provision for loan loss
(4) Timeshare cost of sales and sales & marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes
(5) 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 SFAS No. 152.
n/m = not meaningful

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Top 40 Owned, Leased and Consolidated Joint Venture Hotels
For the Year Ended December 31, 2008
	US Hotels		Location		Rooms		International Hotels		Location		Rooms
	St. Regis Aspen		Aspen, CO		179		St. Regis Grand Hotel, Rome		Rome, Italy		161
	St. Regis New York		New York, NY		229
							Grand Hotel, Florence		Florence, Italy		107
	The Phoenician		Scottsdale, AZ		643		Hotel Alfonso XIII		Seville, Spain		147
							Hotel Gritti Palace		Venice, Italy		91
	W Chicago - City Center		Chicago, IL		369		Hotel Imperial		Vienna, Austria		138
	W Chicago Lakeshore		Chicago, IL		520		Park Tower, Buenos Aires		Buesnos Aires, Argentina		180
	W Los Angeles Westwood		Los Angeles, CA		258
	W New Orleans		New Orleans, LA		423		Westin Denarau Island Resort		Nadi, Fiji		273
	W New York - The Court & Tuscany		New York, NY		318		The Westin Excelsior, Florence		Florence, Italy		171
	W New York - Time Square		New York, NY		507		The Westin Excelsior, Rome		Rome, Italy		316
	W San Francisco		San Francisco, CA		404		The Westin Resort & Spa, Cancun		Cancun, Mexico		379
							The Westin Resort & Spa, Los Cabos		San Jose del Cabo, Mexico		243
	The Westin Gaslamp Quarter, San Diego		San Diego, CA		450		The Westin Resort & Spa, Puerto Vallarta		Puerta Vallarta, Mexico		280
	Westin Maui Resort & Spa		Lahaina, HI		759
	Westin Peachtree Plaza		Atlanta, GA		1,068		Le Centre Sheraton Hotel		Montreal, Canada		825
	Westin San Francisco Airport		San Francisco, CA		397		Sheraton Brussels Hotel & Towers		Brussels, Belgium		511
							Sheraton Buenos Aires Hotel & Convention Center		Buenos Aires, Argentina		739
	Sheraton Kauai Resort		Koloa, HI		394		Sheraton Centre Toronto Hotel		Toronto, Canada		1,377
	Sheraton Manhattan Hotel		New York, NY		665		Sheraton Gateway Hotel in Toronto International Hotel		Toronto, Canada		474
	Sheraton Steamboat		Steamboat Springs, CO		205		Sheraton Maria Isabel Hotel & Towers		Mexico City, Mexico		755
							Sheraton On The Park		Sydney, Australia		557
	Boston Park Plaza Hotel		Boston, MA		941		Sheraton Paris Airport Hotel Charles de Gaulle		Roissy Aerogare, France		252
							The Park Lane Hotel		London, England		305
							Four Points by Sheraton Sydney Hotel		Sydney, Australia		630
									Top 40 hotels represent approximately 95% of owned, leased and consolidated joint venture earnings before depreciation

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Top 20 Worldwide Markets - Owned
For the Twelve Months Ended December 31, 2008
UNAUDITED
		% of 2008				% of 2008
US Markets		Total Earnings 1		International Markets		Total Earnings 1
New York, NY		14%		Italy		9%
Hawaii		7%		Mexico		9%
Phoenix, AZ		7%		Canada		9%
Chicago, IL		5%		Australia		5%
San Francisco/San Mateo, CA		4%		Argentina		4%
Atlanta, GA		4%		United Kingdom		4%
San Diego, CA		3%		Spain		2%
Colorado Area		2%		France		2%
Los Angeles-Long Beach, CA		2%		Austria		1%
Boston, MA		2%		Belgium		1%
Total Top 10 US Markets		50%		Total Top 10 International Markets		46%
	Other US Markets	3%			Other International Markets	1%
Total US Markets		53%		Total International Markets		47%
1 Represents earnings before depreciation for owned, leased and consolidated joint venture hotels

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Total Management & Franchise Fees by Geographic Region
For the Year Ended December 31, 2008
UNAUDITED
			Management		Franchise		Total Management and
	Geographical Region		Fees		Fees		Franchise Fees
	United States		36%		61%		43%
	Europe		18%		15%		17%
	Asia Pacific		20%		9%		17%
	Middle East and Africa		19%		1%		14%
	Americas (Latin America & Canada)		7%		14%		9%
	Total		100%		100%		100%

Starwood Hotels & Resorts Worldwide, Inc.
Systemwide(1) Statistics - Same Store
For the Twelve Months Ended December 31,
UNAUDITED
			Systemwide - Worldwide									Systemwide - North America									Systemwide - International
			2008			2007			Var.			2008			2007			Var.			2008			2007			Var.
TOTAL HOTELS
	REVPAR ($)		125.21			123.13			1.7	%		118.89			121.58			-2.2	%		133.70			125.22			6.8	%
	ADR ($)		185.20			177.03			4.6	%		172.70			170.77			1.1	%		202.72			185.93			9.0	%
	Occupancy (%)		67.6	%		69.6	%		-2.0			68.8	%		71.2	%		-2.4			66.0	%		67.4	%		-1.4
SHERATON
	REVPAR ($)		107.82			105.15			2.5	%		101.11			103.42			-2.2	%		116.30			107.35			8.3	%
	ADR ($)		161.64			152.91			5.7	%		148.83			147.11			1.2	%		178.49			160.63			11.1	%
	Occupancy (%)		66.7	%		68.8	%		-2.1			67.9	%		70.3	%		-2.4			65.2	%		66.8	%		-1.6
WESTIN
	REVPAR ($)		135.68			136.19			-0.4	%		133.78			135.97			-1.6	%		141.34			136.86			3.3	%
	ADR ($)		195.22			190.35			2.6	%		189.55			186.43			1.7	%		213.18			203.29			4.9	%
	Occupancy (%)		69.5	%		71.5	%		-2.0			70.6	%		72.9	%		-2.3			66.3	%		67.3	%		-1.0
ST. REGIS/LUXURY COLLECTION
	REVPAR ($)		242.93			244.72			-0.7	%		235.32			243.15			-3.2	%		247.92			245.74			0.9	%
	ADR ($)		386.29			367.67			5.1	%		362.12			362.89			-0.2	%		403.04			370.83			8.7	%
	Occupancy (%)		62.9	%		66.6	%		-3.7			65.0	%		67.0	%		-2.0			61.5	%		66.3	%		-4.8
LE MERIDIEN
	REVPAR ($)		152.95			143.43			6.6	%		226.58			231.52			-2.1	%		146.12			135.26			8.0	%
	ADR ($)		221.67			205.86			7.7	%		302.87			305.27			-0.8	%		213.44			195.74			9.0	%
	Occupancy (%)		69.0	%		69.7	%		-0.7			74.8	%		75.8	%		-1.0			68.5	%		69.1	%		-0.6
W
	REVPAR ($)		212.36			221.69			-4.2	%		211.62			224.25			-5.6	%		219.48			197.13			11.3	%
	ADR ($)		296.46			298.35			-0.6	%		290.50			294.46			-1.3	%		365.98			348.77			4.9	%
	Occupancy (%)		71.6	%		74.3	%		-2.7			72.8	%		76.2	%		-3.4			60.0	%		56.5	%		3.5
FOUR POINTS
	REVPAR ($)		78.85			76.17			3.5	%		74.65			74.28			0.5	%		91.12			81.69			11.5	%
	ADR ($)		116.10			109.53			6.0	%		110.54			106.01			4.3	%		132.04			120.13			9.9	%
	Occupancy (%)		67.9	%		69.5	%		-1.6			67.5	%		70.1	%		-2.6			69.0	%		68.0	%		1.0
OTHER
	REVPAR ($)		108.26			111.56			-3.0	%		108.26			111.56			-3.0	%
	ADR ($)		168.37			173.40			-2.9	%		168.37			173.40			-2.9	%
	Occupancy (%)		64.3	%		64.3	%					64.3	%		64.3	%
(1) Includes same store owned, leased, managed, and franchised hotels

Starwood Hotels & Resorts Worldwide, Inc.
Worldwide Hotel Results - Same Store
For the Twelve Months Ended December 31,
UNAUDITED
			Systemwide (1)									Company Operated (2)
			2008			2007			Var.			2008			2007			Var.
TOTAL WORLDWIDE
	REVPAR ($)		125.21			123.13			1.7	%		141.89			138.75			2.3	%
	ADR ($)		185.20			177.03			4.6	%		205.92			196.22			4.9	%
	Occupancy (%)		67.6	%		69.6	%		-2.0			68.9	%		70.7	%		-1.8
NORTH AMERICA
	REVPAR ($)		118.89			121.58			-2.2	%		145.91			150.00			-2.7	%
	ADR ($)		172.70			170.77			1.1	%		204.26			203.06			0.6	%
	Occupancy (%)		68.8	%		71.2	%		-2.4			71.4	%		73.9	%		-2.5
EUROPE
	REVPAR ($)		162.40			154.25			5.3	%		172.85			165.51			4.4	%
	ADR ($)		246.76			226.85			8.8	%		256.75			238.57			7.6	%
	Occupancy (%)		65.8	%		68.0	%		-2.2			67.3	%		69.4	%		-2.1
AFRICA & MIDDLE EAST
	REVPAR ($)		145.56			125.20			16.3	%		148.32			126.70			17.1	%
	ADR ($)		205.95			181.15			13.7	%		208.43			182.50			14.2	%
	Occupancy (%)		70.7	%		69.1	%		1.6			71.2	%		69.4	%		1.8
ASIA PACIFIC
	REVPAR ($)		115.05			111.67			3.0	%		110.80			106.52			4.0	%
	ADR ($)		178.44			166.02			7.5	%		173.09			159.01			8.9	%
	Occupancy (%)		64.5	%		67.3	%		-2.8			64.0	%		67.0	%		-3.0
LATIN AMERICA
	REVPAR ($)		90.78			83.72			8.4	%		98.35			90.23			9.0	%
	ADR ($)		142.74			132.51			7.7	%		154.35			142.96			8.0	%
	Occupancy (%)		63.6	%		63.2	%		0.4			63.7	%		63.1	%		0.6
(1) Includes same store owned, leased, managed, and franchised hotels
(2) Includes same store owned, leased, and managed hotels

Starwood Hotels & Resorts Worldwide, Inc.
Owned Hotel Results - Same Store (1)
For the Twelve Months Ended December 31,
UNAUDITED
			WORLDWIDE									NORTH AMERICA									INTERNATIONAL
			2008			2007			Var.			2008			2007			Var.			2008			2007			Var.
TOTAL HOTELS			59 Hotels									31 Hotels									28 Hotels
	REVPAR ($)		168.93			171.01			-1.2	%		178.14			181.68			-1.9	%		154.62			154.40			0.1	%
	ADR ($)		237.45			235.18			1.0	%		241.26			242.07			-0.3	%		230.91			223.54			3.3	%
	Occupancy (%)		71.1	%		72.7	%		-1.6			73.8	%		75.1	%		-1.3			67.0	%		69.1	%		-2.1
	Total Revenue		2,015,182			2,046,063			-1.5	%		1,279,252			1,307,548			-2.2	%		735,930			738,515			-0.4	%
	Total Expenses		1,510,612			1,492,476			1.2	%		967,626			961,110			0.7	%		542,986			531,366			2.2	%
BRANDED HOTELS			53 Hotels									25 Hotels									28 Hotels
	REVPAR ($)		175.17			177.12			-1.1	%		190.78			194.35			-1.8	%		154.62			154.40			0.1	%
	ADR ($)		243.80			240.73			1.3	%		252.48			252.43			0.0	%		230.91			223.54			3.3	%
	Occupancy (%)		71.8	%		73.6	%		-1.8			75.6	%		77.0	%		-1.4			67.0	%		69.1	%		-2.1
	Total Revenue		1,887,249			1,917,583			-1.6	%		1,151,319			1,179,068			-2.4	%		735,930			738,515			-0.4	%
	Total Expenses		1,397,290			1,383,081			1.0	%		854,304			851,715			0.3	%		542,986			531,366			2.2	%
(1) Hotel Results exclude 19 hotels sold or closed and 10 hotels without comparable results during 2007 & 2008

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Twelve Months Ended December 31,
UNAUDITED ($ millions)
			Worldwide
			2008		2007		$ Variance		% Variance
Management Fees:
	Base Fees		287		280		7		2.5	%
	Incentive Fees		169		155		14		9.0	%
Total Management Fees			456		435		21		4.8	%
Franchise Fees			164		151		13		8.6	%
Total Management & Franchise Fees			620		586		34		5.8	%
Other Management & Franchise Revenues (1)			97		96		1		1.0	%
Total Management & Franchise Revenues			717		682		35		5.1	%
Other (2)			140		152		-12		-7.9	%
Management Fees, Franchise Fees & Other Income			857		834		23		2.8	%
(1) Other Management & Franchise Revenues primarily includes the amortization of deferred gains of approximately $83 million in 2008 and $81 million in 2007 resulting from the sales of hotels subject to long-term management contracts and termination fees.
(2) The amount includes revenues from the Company's Bliss spa and product business and other miscellaneous revenue. In 2007, amount includes $18 million of income earned from the Company's carried interests in the Westin Boston Waterfront Hotel which was earned when the hotel was sold by its owners in January 2007.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Twelve Months Ended December 31,
UNAUDITED ($ millions)
		2008			2007			% Variance
Originated Sales Revenues (1) -- Vacation Ownership Sales		526			711			(26.0	%)
Other Sales and Services Revenues (2)		207			181			14.4	%
Deferred Revenues -- Percentage of Completion		(9	)		118			n/m
Deferred Revenues -- Other (3)		(24	)		(3	)		n/m
Vacation Ownership Sales and Services Revenues		700			1,007			(30.5	%)
Residential Sales and Services Revenues		49			18			n/m
Total Vacation Ownership & Residential Sales and Services Revenues		749			1,025			(26.9	%)
Originated Sales Expenses (4) -- Vacation Ownership Sales		356			452			21.2	%
Other Expenses (5)		201			209			3.8	%
Deferred Expenses -- Percentage of Completion		(5	)		53			n/m
Deferred Expenses -- Other		24			30			n/m
Vacation Ownership Expenses		576			744			22.6	%
Residential Expenses		7			14			50.0	%
Total Vacation Ownership & Residential Expenses		583			758			23.1	%
(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 SFAS No. 66 or SFAS No. 152 and provision for loan loss
(4) Timeshare cost of sales and sales & marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes
(5) 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 SFAS No. 152.
n/m = not meaningful

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotels without Comparable Results & Other Selected Items
As of December 31, 2008
UNAUDITED ($ millions)
Properties without comparable results in 2008:				Selected Balance Sheet and Cash Flow Items:
Property		Location		Cash and cash equivalents (including restricted cash of $102 million)															$	491
Sheraton Steamboat Resort & Conference Center		Steamboat Springs, CO		Debt															$	4,008
Westin St. John Resort & Villas		St. John, Virgin Islands
Westin Peachtree		Atlanta, GA
Sheraton Fiji Resort		Nadi, Fiji
Westin Denarau Island Resort & Spa		Nadi, Fiji
element Lexington		Lexington, MA
aloft Lexington		Lexington, MA
aloft Philadelphia Airport		Philadelphia, PA
Park Ridge Hotel & Conference Center at Valley Forge		King of Prussia, PA
Four Points by Sheraton Minneapolis		Minneapolis, MN
				Revenues and Expenses Associated with Assets Sold or Closed in 2008 and 2007 (1):
						Q1			Q2			Q3			Q4				Full Year
				Hotels Sold or Closed in 2007:
Properties sold or closed in 2008 and 2007:				2007
				Revenues		$	48		$	39		$	24		$	10			$	121
Property		Location		Expenses (excluding depreciation)		$	36		$	33		$	18		$	9			$	96
Westin Fort Lauderdale		Ft. Lauderdale, FL
Days Inn City Center		Portland, OR		Hotels Sold or Closed in 2008:
Sheraton Nashua Hotel		Nashua, NH		2008
Four Points by Sheraton Denver Cherry Creek		Denver, CO		Revenues		$	10		$	25		$	36		$	6			$	77
Sheraton Bal Harbour Beach Resort		Bal Harbour, FL		Expenses (excluding depreciation)		$	16		$	23		$	23		$	8			$	70
Sheraton Edison		Edison, NJ
Four Points by Sheraton Hyannis		Hyannis, MA		2007
Four Points by Sheraton Portland		Portland, OR		Revenues		$	10		$	30		$	39		$	16			$	95
Sheraton South Portland		Portland, ME		Expenses (excluding depreciation)		$	15		$	25		$	26		$	18			$	84
Westin Galleria		Houston, TX
Westin Oaks		Houston, TX		(1) Results consist of 8 hotels sold or closed in 2008 and 11 hotels sold or closed in 2007. These amounts are included in the revenues and expenses from owned, leased and consolidated joint venture hotels in 2008 and 2007.
Caesar's Brookdale		Scotrun, PA
Sheraton Hamilton		Hamilton, Ontario
Days Inn Town Center		Seattle, WA
Sixth Avenue Inn		Seattle, WA
Hotel Des Bains		Venice Lido, Italy
The Westin Excelsior		Venice Lido, Italy
Hotel Villa Cipriani		Asolo, Italy
The Westin Turnberry		Ayreshire, Scotland

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three and Twelve Months Ended December 31, 2008
UNAUDITED ($ millions)
		Q4		YTD
Capital Expenditures:
Owned, Leased and Consolidated Joint Venture Hotels		89		279
Corporate/IT		20		84
Subtotal		109		363
Vacation Ownership Capital Expenditures:
Capital expenditures (includes land acquisitions)		30		110
Net capital expenditures for inventory (excluding St. Regis Bal Harbour) (1)		39		131
Net capital expenditures for inventory - St. Regis Bal Harbour (1)		47		148
Subtotal		116		389
Development Capital		33		65
Total Capital Expenditures		258		817
(1) Represents gross inventory capital expenditures of $98 and $402 in the three and twelve months ended December 31, 2008, respectively, less cost of sales of $12 and $123 in the three and twelve months ended December 31, 2008, respectively.

Starwood Hotels & Resorts Worldwide, Inc.
2008 Divisional Hotel Inventory Summary by Ownership by Brand
December 31, 2008
		NAD				EAME				LAD				ASIA				Total
		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms
Owned
Sheraton		8		4,461		6		1,505		5		2,713		2		821		21		9,500
Westin		5		2,849		3		650		3		902		1		273		12		4,674
Four Points		3		579		-		-		-		-		1		630		4		1,209
W		9		3,172		-		-		-		-		-		-		9		3,172
Luxury Collection		1		643		7		828		1		180		-		-		9		1,651
St. Regis		3		668		1		161		-		-		-		-		4		829
aloft		2		272		-		-		-		-		-		-		2		272
element		1		123		-		-		-		-		-		-		1		123
Other		7		2,200		-		-		-		-		-		-		7		2,200
Total Owned		39		14,967		17		3,144		9		3,795		4		1,724		69		23,630
Managed & UJV
Sheraton		46		30,421		71		20,931		15		2,934		52		19,150		184		73,436
Westin		50		27,242		15		4,080		-		-		16		5,978		81		37,300
Four Points		2		646		8		1,536		3		427		7		2,144		20		4,753
W		12		3,476		1		134		1		237		3		723		17		4,570
Luxury Collection		9		1,803		12		1,804		7		250		-		-		28		3,857
St. Regis		4		900		1		95		1		120		4		1,008		10		2,123
Le Meridien		5		1,046		64		16,172		-		-		24		6,405		93		23,623
aloft		-		-		-		-		-		-		1		186		1		186
Other		1		-		1		-		-		-		-		-		2		-
Total Managed & UJV		129		65,534		173		44,752		27		3,968		107		35,594		436		149,848
Franchised
Sheraton		154		45,345		27		6,846		9		2,500		14		5,651		204		60,342
Westin		54		17,883		5		2,030		3		600		7		1,939		69		22,452
Four Points		88		14,335		12		1,670		8		1,296		2		235		110		17,536
Luxury Collection		4		908		14		1,829		-		-		7		2,022		25		4,759
Le Meridien		5		1,553		6		1,743		1		213		2		554		14		4,063
aloft		14		2,047		-		-		-		-		-		-		14		2,047
element		1		123		-		-		-		-		-		-		1		123
Total Franchised		320		82,194		64		14,118		21		4,609		32		10,401		437		111,322
Systemwide
Sheraton		208		80,227		104		29,282		29		8,147		68		25,622		409		143,278
Westin		109		47,974		23		6,760		6		1,502		24		8,190		162		64,426
Four Points		93		15,560		20		3,206		11		1,723		10		3,009		134		23,498
W		21		6,648		1		134		1		237		3		723		26		7,742
Luxury Collection		14		3,354		33		4,461		8		430		7		2,022		62		10,267
St. Regis		7		1,568		2		256		1		120		4		1,008		14		2,952
Le Meridien		10		2,599		70		17,915		1		213		26		6,959		107		27,686
aloft		16		2,319		-		-		-		-		1		186		17		2,505
element		2		246		-		-		-		-		-		-		2		246
Other		8		2,200		1		-		-		-		-		-		9		2,200
Total Systemwide		488		162,695		254		62,014		57		12,372		143		47,719		942		284,800

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership Inventory Pipeline
As of December 31, 2008
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		8		7		7		2,934		145		1,394		4,473
	Westin		10		7		9		1,333		229		756		2,318
	St. Regis		2		2		2		63		-		-		63
	The Luxury Collection		1		1		1		6		-		1		7
	Unbranded		3		3		1		124		-		1		125
	Total SVO, Inc.		24		20		20		4,460		374		2,152		6,986
	Unconsolidated Joint Ventures (UJV's)		2		1		1		198		-		40		238
	Total including UJV's		26		21		21		4,658		374		2,192		7,224
	Total Intervals Including UJV's (7)								242,216		19,448		113,984		375,648
	(1) Lockoff units are considered as one unit for this analysis.
	(2) Includes resorts in operation and in active sales.
	(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.