Starwood Reports Second Quarter 2008 Results

Second Quarter 2008 Highlights

-- EPS from continuing operations was $0.56.

-- Income from continuing operations was $107 million.

-- Total Company Adjusted EBITDA was $299 million.

-- Worldwide System-wide REVPAR for Same-Store Hotels increased 9.6% compared to the second quarter of 2007. System-wide REVPAR for Same-Store Hotels in North America increased 3.0%.

-- Management and franchise revenues increased 11.6% compared to 2007.

-- Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 6.8% compared to the second quarter of 2007. REVPAR for Starwood branded Same-Store Owned Hotels in North America increased 5.2%.

-- Margins at Starwood branded Same-Store Owned Hotels Worldwide and in North America decreased 84 and 58 basis points, respectively, compared to the second quarter of 2007.

-- Reported revenues from vacation ownership and residential sales decreased 29.2% compared to 2007.

-- The Company signed 37 hotel management and franchise contracts in the quarter representing approximately 9,000 rooms.

-- During the second quarter, the Company repurchased approximately 3.8 million shares at a cost of $182 million.

Starwood Hotels & Resorts Worldwide, Inc. ("Starwood" or the "Company") today reported EPS from continuing operations for the second quarter of 2008 of $0.56 compared to $0.67 in the second quarter of 2007. Excluding special items, which net to zero in 2008, EPS from continuing operations was $0.56 for the second quarter of 2008 compared to $0.82 in the second quarter of 2007. Excluding special items, the effective income tax rate in the second quarter of 2008 was 28.3% compared to 24.1% in the same period of 2007 primarily due to the recognition of foreign tax credits in the second quarter of 2007, which were generated in prior years.

Income from continuing operations was $107 million in the second quarter of 2008 compared to $145 million in 2007. Excluding special items, which net to zero in 2008 and a $33 million charge in 2007, income from continuing operations was $107 million for the second quarter of 2008 compared to $178 million in 2007. The decline in 2008 results was primarily due to lower vacation ownership results and the inclusion, in 2007, of a $27 million gain from the sale of several hotels by a joint venture in which we held a minority interest.

Net income was $105 million and EPS was $0.56 in the second quarter of 2008 compared to $145 million and EPS of $0.67 in the second quarter of 2007.

Frits van Paasschen, CEO said, "Starwood's global footprint and strong brands drove the Company's second quarter results above expectations and ahead of our competition. While international lodging demand remains solid, the economic picture in the US has continued to deteriorate, with lodging demand dropping significantly in May. We are pleased with our second quarter performance, but are focused on managing costs to minimize the impact of this slowdown. Despite the US economic picture, we remain bullish on our long-term growth prospects. Today, our pipeline consists of more than 120,000 high quality rooms with almost 60% outside the US."

Operating Results

Second Quarter Ended June 30, 2008

Management and Franchise Revenues

Worldwide System-wide REVPAR for Same-Store Hotels increased 9.6% (4.8% using constant dollars) compared to the second quarter of 2007. International System-wide REVPAR for Same-Store Hotels increased 18.6% (8.7% using constant dollars). Worldwide System-wide REVPAR increases by region were: 26.1% in Africa and the Middle East, 18.9% in Europe, 16.1% in Latin America, 14.0% in Asia Pacific, and 3.0% in North America. Worldwide System-wide REVPAR increases by brand were: Le Meridien 18.7%, Sheraton 10.5%, Four Points by Sheraton 9.5%, St. Regis/Luxury Collection 9.0%, Westin 5.6%, and W Hotels 1.5%.

Management fees, franchise fees and other income were $218 million, up $23 million, or 11.8%, from the second quarter of 2007. Management fees grew 8.5% to $115 million and franchise fees grew 18.9% to $44 million.

Approximately 55% of the Company's management and franchise fees are generated in markets outside the United States.

During the second quarter of 2008, the Company signed 37 hotel management and franchise contracts representing approximately 9,000 rooms of which 36 were new builds and 1 was a conversion from another brand. At June 30, 2008, the Company had approximately 500 hotels in the active pipeline representing over 120,000 rooms, driven by strong interest in all Starwood brands. Of these rooms, almost 70% are in the upper upscale and luxury segments and almost 60% are in international locations.

During the second quarter of 2008, 21 new hotels and resorts (representing approximately 5,000 rooms) entered the system, including the W Istanbul (Istanbul, Turkey, 134 rooms), the Sheraton Huizhou Beach Resort (Guangdong, China, 293 rooms) and three aloft hotels, officially launching our new brand. Thirteen properties (representing approximately 4,000 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 increased 6.8%. REVPAR at Starwood branded Same-Store Owned Hotels in North America increased 5.2%. Internationally, Starwood branded Same-Store Owned Hotel REVPAR increased 9.3% (down 2.0% using constant dollars).

Revenues at Starwood branded Same-Store Owned Hotels in North America increased 4.4% while costs and expenses increased 5.2% when compared to 2007. Margins at these hotels decreased 58 basis points.

Revenues at Starwood branded Same-Store Owned Hotels Worldwide increased 5.9% while costs and expenses increased 7.1% when compared to 2007. Margins at these hotels decreased 84 basis points.

Approximately 45% 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 $620 million when compared to $634 million in 2007. Reported revenues and operating income were impacted by the sale or closure of 11 hotels since the beginning of the second quarter of 2007. These hotels had $0 million of revenues and $1 million of expenses (before depreciation) in 2008 as compared to $40 million of revenues and $35 million of expenses (before depreciation) in the same quarter of 2007.

Vacation Ownership

Total vacation ownership reported revenues decreased 28.4% to $192 million when compared to 2007. Reported revenues are impacted by the timing of the recognition of deferred revenues under percentage of completion accounting for projects under construction. During the second quarter of 2008, the Company was actively selling vacation ownership interests at 18 resorts and is also in the predevelopment phase of new fractional or vacation ownership resorts in California, Colorado, Hawaii, and Mexico.

Originated contract sales of vacation ownership intervals decreased 25.7% primarily due to the sellout of the Company's Westin Ka'anapali Ocean Resort North in Maui and a decline in demand. The impact in Hawaii was partly offset by strong results in Orlando. The average price per vacation ownership unit sold decreased 19.1% to approximately $21,000, driven by a higher sales mix of lower priced biennial inventory in Hawaii. The number of contracts signed decreased 7.7% when compared to 2007.

Vacation ownership results were ahead of the Company's expectations for the second quarter, primarily due to the favorable product mix of units sold, timing of expenses and other items that were realized earlier than expected. However, the Company now expects that full year 2008 results will be lower than prior guidance due to lower sales in Hawaii and of our fractional product, as well as lower financing income.

Conditions remain uncertain in the asset backed securities market. The Company continues to expect that it will complete a sale of vacation ownership notes receivable before the end of 2008. However, given market conditions, the Company is now assuming that it will sell a smaller amount of receivables, and based on current advance rates and spreads, it now expects the gain from this sale to be $10 million to $15 million, down $20 million from prior expectations.

Residential

During the second quarter of 2008, the Company's residential revenues were $2 million compared to $6 million in the prior year as our completed residential inventory is substantially sold out.

Selling, General, Administrative and Other

Selling, general, administrative and other expenses increased 7.0% to $138 million compared to the second quarter of 2007. The increase was primarily due to the impact of foreign currency exchange rates and the reversal, in 2007, of a litigation reserve as a result of a favorable outcome to the Company.

Asset Sales

During the second quarter of 2008, the Company entered into purchase and sale agreements for the sale of two wholly-owned hotels. The expected proceeds from the sales, which are expected to close later in 2008, are $123 million.

Capital

Gross capital spending during the quarter included approximately $61 million in renovations of hotel assets including construction capital at the Sheraton Steamboat Resort, Sheraton Fiji Resort, W Times Square, aloft Philadelphia, aloft Lexington and element Lexington. Investment spending on gross vacation ownership interest ("VOI") inventory was $120 million, which was offset by cost of sales of $36 million associated with VOI sales during the quarter. The inventory spend included VOI construction at the Sheraton Vistana Villages in Orlando, the Westin St. John Resort and Villas in the Virgin Islands, the Westin Riverfront Resort in Avon, and the Westin Lagunamar Ocean Resort in Cancun, as well as construction costs at the St. Regis Bal Harbour Resort in Miami Beach.

Share Repurchase

During the second quarter of 2008, the Company repurchased approximately 3.8 million shares at a total cost of approximately $182 million. In the six months ended June 30, 2008, the Company repurchased approximately 9.9 million shares at a total cost of approximately $459 million. At June 30, 2008, approximately $134 million remained available under the Company's previously approved share repurchase authorization. Starwood had approximately 187 million shares outstanding (including partnership units) at June 30, 2008.

Balance Sheet

At June 30, 2008, the Company had total debt of $4.054 billion and cash and cash equivalents (including $180 million of restricted cash) of $308 million, or net debt of $3.746 billion, compared to net debt of $3.229 billion at the end of 2007.

In May 2008, the Company completed a public offering of $200 million of the Company's 6.25% Senior Notes due 2013 and $400 million of the Company's 6.75% Senior Notes due 2018. The net proceeds were used to pay down the Company's revolving credit facility.

At June 30, 2008, debt was approximately 59% fixed rate and 41% floating rate and its weighted average maturity was 4.3 years with a weighted average interest rate of 5.5%. The Company had cash (including total restricted cash) and availability under the domestic and international revolving credit facility of approximately $1.914 billion.

Results for the Six Months Ended June 30, 2008

EPS from continuing operations decreased to $0.99 compared to $1.23 in 2007. Excluding special items, EPS from continuing operations was $1.01 compared to $1.30 in 2007. Excluding special items, income from continuing operations was $190 million compared to $282 million in 2007. Net income was $137 million and EPS was $0.73 compared to $267 million and $1.23, respectively, in 2007. Total Company Adjusted EBITDA, which was impacted by the sale or closure of 12 hotels since the beginning of 2007, was $554 million compared to $647 million in 2007.

Outlook

The uncertainty surrounding the U.S. economic environment and its impact on travel patterns continues to make it difficult to predict future results.

For the full year 2008:

-- Assuming a REVPAR growth range at Same-Store Company Operated Hotels Worldwide of 6% to 8% and a REVPAR growth range at Branded Same-Store Company Owned Hotels in North America of 2% to 3%:
-- Adjusted EBITDA would be between $1.180 billion and
$1.220 billion.

-- EPS before special items would be between $2.17 and $2.32.

-- North America Same-Store Branded Owned Hotel EBITDA change
of flat to down 3% versus 2007 with margin declines of 50
to 100 basis points.

-- Management and franchise revenue growth between 10% and 12%.

-- Operating income from our vacation ownership and residential
business will decline $80 million to $100 million versus
2007 (including potential gains on sale of vacation
ownership notes receivable of $10 million to $15 million in
the third quarter 2008).

-- Income from continuing operations before special items would
be between $407 million and $434 million reflecting an
effective tax rate of 31%.

-- Full year capital expenditures (excluding vacation ownership and residential inventory) would be approximately $500 million, including $300 million for maintenance, renovation and technology and $200 million for other growth initiatives. Additionally, net capital expenditures for vacation ownership and residential inventory, including Bal Harbour, would be approximately $275 million.

-- Full year depreciation and amortization expense would be approximately $360 million.

-- Full year interest expense would be approximately $230 million and cash taxes of approximately $150 million.

-- Full year weighted average diluted shares outstanding of 187 million.

-- The Company expects to open approximately 80 to 100 hotels (representing approximately 20,000 rooms) in 2008 and is targeting signing 200 hotel management and franchise contracts in 2008.

For the three months ended September 30, 2008:

-- Adjusted EBITDA is expected to be $290 million to $305 million assuming:
-- REVPAR growth at Same-Store Company Operated Hotels
worldwide of 6% to 8%.

-- REVPAR change at Branded Same-Store Owned Hotels in North
America of -1% to 1%.

-- North America Branded Same-Store Owned Hotel EBITDA change
of -5% to -8% with margin declines of 100 to 150 basis
points.

-- Growth from management and franchise revenues of 7% to 9%.

-- Operating income from our vacation ownership and
residential business will be down $20 million to $25
million (including potential gains on sale of vacation
ownership notes of $10 million to $15 million).

-- Income from continuing operations, before special items, is expected to be approximately $96 million to $106 million, reflecting an effective tax rate of approximately 31%.

-- EPS before special items is expected to be approximately $0.52 to $0.57.

Special Items

The Company's special items netted to zero in the second quarter of 2008 compared to $33 million of net charges (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 after special items (in millions, except per share data):
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2008 2007 2008 2007
-------- -------- ------- -------

Income from continuing operations
$ 107 $ 178 before special items $ 190 $ 282
-------- -------- ------- -------
$ 0.56 $ 0.82 EPS before special items $ 1.01 $ 1.30
-------- -------- ------- -------

Special Items
Restructuring and other special
(1) (49) charges, net (a) (10) (47)
Gain/(loss) on asset dispositions --
1 (8) and impairments, net (b) 3
-------- -------- ------- -------
-- (57) Total special items - pre-tax (10) (44)
-- Income tax benefit for special
25 items (c) 6 27
-- Income tax (expense) benefits --
related to the transaction with
(1) Host (d) 3
-------- -------- ------- -------
-- (33) Total special items - after-tax (4) (14)
-------- -------- ------- -------

$ 107 $ 145 Income from continuing operations $ 186 $ 268
-------- -------- ------- -------
$ 0.56 $ 0.67 EPS including special items $ 0.99 $ 1.23
======== ======== ======= =======

(a) During the three months ended June 30, 2008, the Company recorded
additional costs related to the demolition of the Sheraton Bal
Harbour. During the six months ended June 30, 2008, the Company
recorded a restructuring charge associated with the reorganization of
certain divisions and the consolidation of certain sites. During the
three and six months ended June 30, 2007, the charge primarily
relates to accelerated depreciation of fixed assets in connection
with the conversion of the Sheraton Bal Harbour into a St. Regis
Hotel with residences and fractional units, partially offset by the
refund of insurance premiums related to a retired executive.

(b) During the three and six months ended June 30, 2008, the Company
recorded insurance proceeds related to fire damage at a hotel, offset
in the case of the six month period, by the impairment charge in the
first quarter of 2008 related to a hotel held for sale. For the three
months ended June 30, 2007, primarily reflects a $29 million loss on
the sale of three hotels offset by a $15 million gain on the sale of
assets in which the Company held a minority interest and insurance
proceeds of $6 million. The gain for the six months ended June 30,
2007 also includes an $11 million gain on the sale of one hotel.

(c) For the six months ended June 30, 2008, the benefit relates to the
reduction of valuation allowance for capital losses that are expected
to be utilized prior to their expiration and the tax benefits at the
statutory rate for the reorganization described in (a). In 2007, the
amount represents taxes on special items at the Company's incremental
tax rate and the favorable impact of capital loss utilization.

(d) Primarily relates to a deferred tax asset recognized on the
deferred gain and other tax (expense) benefits realized in connection
with the Host 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. (EST) today at (913) 312-0408. 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 Thursday, July 31, 2008 at 12:00 midnight (EST) on both the Company's website and via telephone replay at (719) 457-0820 (access code 4161680).

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 910 properties in more than 100 countries and 145,000 employees at its owned and managed properties. Starwood(R) Hotels is a fully integrated owner, operator and franchisor of hotels and resorts with the following internationally renowned brands: St. Regis(R), The Luxury Collection(R), W(R), Westin(R), Le Meridien(R), Sheraton(R), Four Points(R) 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 Six Months Ended
June 30, June 30,
--------------------------- ------------------------
% %
2008 2007 Variance 2008 2007 Variance
------- ---------- -------- ------- ------- --------
Revenues
Owned, leased
and
consolidated
joint venture
$ 620 $ 634 (2.2) hotels $1,180 $1,193 (1.1)
Vacation
ownership and
residential
sales and
194 274 (29.2) services 387 506 (23.5)
Management
fees,
franchise fees
and other
218 195 11.8 income 424 386 9.8
Other revenues
from managed
and franchised
541 469 15.4 properties (a) 1,048 918 14.2
------- ---------- -------- ------- ------- --------
1,573 1,572 0.1 3,039 3,003 1.2
Costs and
Expenses
Owned, leased
and
consolidated
joint venture
454 461 1.5 hotels 892 897 0.6
Vacation
ownership and
159 201 20.9 residential 317 380 16.6
Selling,
general,
administrative
138 129 (7.0) and other 268 244 (9.8)
Restructuring
and other
special
1 49 98.0 charges, net 10 47 78.7
72 67 (7.5) Depreciation 143 134 (6.7)
9 7 (28.6) Amortization 16 13 (23.1)
Other expenses
from managed
and franchised
541 469 (15.4) properties (a) 1,048 918 (14.2)
------- ---------- -------- ------- ------- --------
1,374 1,383 0.7 2,694 2,633 (2.3)
Operating
199 189 5.3 income 345 370 (6.8)
Equity earnings
and gains and
losses from
unconsolidated
5 34 (85.3) ventures, net 11 46 (76.1)
Interest
expense, net
of interest
income of $1,
(55) (36) (52.8) $3, $3 and $10 (102) (68) (50.0)
Gain/(loss) on
asset
dispositions
and
impairments,
1 (8) n/m net -- 3 n/m
------- ---------- -------- ------- ------- --------
Income from
continuing
operations
before taxes
and minority
150 179 (16.2) equity 254 351 (27.6)
Income tax
(42) (33) (27.3) expense (68) (84) 19.0
Minority equity
in net
(1) (1) -- (income)/loss -- 1 n/m
------- ---------- -------- ------- ------- --------
Income from
continuing
107 145 (26.2) operations 186 268 (30.6)
Discontinued
Operations:
Net loss on
(2) -- n/m dispositions ( (49) (1) n/m
------- ---------- -------- ------- ------- --------
$ 105 $ 145 (27.6) Net income $ 137 $ 267 (48.7)
======= ========== ======== ======= ======= ========
Earnings (Loss)
Per Share -
Basic
Continuing
$ 0.58 $ 0.69 (15.9) operations $ 1.01 $ 1.28 (21.1)
Discontinued
(0.01) -- n/m operations (0.26) -- n/m
------- ---------- -------- ------- ------- --------
$ 0.57 $ 0.69 (17.4) Net income $ 0.75 $ 1.28 (41.4)
======= ========== ======== ======= ======= ========
Earnings (Loss)
Per Share -
Diluted
Continuing
$ 0.56 $ 0.67 (16.4) operations $ 0.99 $ 1.23 (19.5)
Discontinued
-- -- -- operations (0.26) -- n/m
------- ---------- -------- ------- ------- --------
$ 0.56 $ 0.67 (16.4) Net income $ 0.73 $ 1.23 (40.7)
======= ========== ======== ======= ======= ========

Weighted
average number
184 208 of Shares 184 209
======= ========== ======= =======
Weighted
average number
of Shares
assuming
188 216 dilution 188 217
======= ========== ======= =======

(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, December 31,
2008 2007
----------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 128 $ 162
Restricted cash 172 196
Accounts receivable, net of allowance for
doubtful accounts of $52 and $50 626 616
Inventories 896 714
Prepaid expenses and other 172 136
----------- ------------
Total current assets 1,994 1,824
Investments 429 423
Plant, property and equipment, net 3,810 3,850
Assets held for sale (a) 183 --
Goodwill and intangible assets, net 2,279 2,302
Deferred tax assets 699 729
Other assets (b) 541 494
----------- ------------
$ 9,935 $ 9,622
=========== ============
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings and current
maturities of long-term debt (c) $ 571 $ 5
Accounts payable 185 201
Accrued expenses 1,164 1,175
Accrued salaries, wages and benefits 342 405
Accrued taxes and other 301 315
----------- ------------
Total current liabilities 2,563 2,101
Long-term debt (c) 3,483 3,590
Deferred tax liabilities 32 28
Other liabilities 1,839 1,801
----------- ------------
7,917 7,520
Minority interest 26 26
Commitments and contingencies
Stockholders' equity:
Corporation common stock; $0.01 par
value; authorized 1,000,000,000 shares;
outstanding 186,954,645 and 190,998,585
shares at June 30, 2008 and December
31, 2007, respectively 2 2
Additional paid-in capital 602 868
Accumulated other comprehensive loss (102) (147)
Retained earnings 1,490 1,353
----------- ------------
Total stockholders' equity 1,992 2,076
----------- ------------
$ 9,935 $ 9,622
=========== ============

(a) Includes six hotels expected to be sold in 2008.

(b) Includes restricted cash of $8 million at June 30, 2008 and
December 31, 2007, respectively.

(c) Excludes Starwood's share of unconsolidated joint venture debt
aggregating approximately $597 million and $572 million at June 30,
2008 and December 31, 2007, respectively.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations - Historical Data
(in millions)

Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
% %
2008 2007 Variance 2008 2007 Variance
------ ------ -------- ----- ------ --------

Reconciliation of Net
Income to EBITDA and
Adjusted EBITDA
$105 $145 (27.6) Net income $ 137 $ 267 (48.7)
62 44 40.9 Interest expense(a) 116 87 33.3
44 33 33.3 Income tax expense(b) 117 85 37.6
79 75 5.3 Depreciation(c) 157 149 5.4
9 8 12.5 Amortization (d) 17 15 13.3
------ ------ -------- ----- ------ --------
299 305 (2.0) EBITDA 544 603 (9.8)
(Gain)/loss on asset
dispositions and
(1) 8 n/m impairments, net -- (3) n/m
Restructuring and
other special
1 49 (98.0) charges, net 10 47 (78.7)
------ ------ -------- ----- ------ --------
$299 $362 (17.4) Adjusted EBITDA $ 554 $ 647 (14.4)
====== ====== ======== ===== ====== ========

(a) Includes $6 million and $5 million of interest expense related to
unconsolidated joint ventures for the three months ended June 30,
2008 and 2007, respectively, and $11 million and $9 million for the
six months ended June 30, 2008 and 2007, respectively.

(b) Includes $2 million and $0 of tax expense recorded in discontinued
operations for the three months ended June 30, 2008 and 2007,
respectively, and $49 million and $1 million for the six months ended
June 30, 2008 and 2007 respectively.

(c) Includes $7 million and $8 million of Starwood's share of
depreciation expense of unconsolidated joint ventures for the three
months ended June 30, 2008 and 2007, respectively, and $14 million
and $15 million for the six months ended June 30, 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 June 30, 2008 and 2007, respectively, and $1 million and
$2 million for the six months ended June 30, 2008 and 2007,
respectively.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations - Future Performance
(In millions, except per share data)

Low Case
Three Months Ended Year Ended
September 30, 2008 December 31, 2008
------------------ -----------------

$ 96 Net income $ 403
59 Interest expense 230
43 Income tax expense 177
92 Depreciation and amortization 360
---------------- ----------------
290 EBITDA 1,170
-- Loss on asset disposition and
impairments, net --
-- Restructuring and other special
charges, net 10
---------------- ----------------
$ 290 Adjusted EBITDA $ 1,180
================ ================
Three Months Ended Year Ended
September 30, 2008 December 31, 2008
------------------ -----------------

Income from continuing operations
$ 96 before special items $ 407
---------------- ----------------
$ 0.52 EPS before special items be $ 2.17
---------------- ----------------

Special Items
Restructuring and other special
-- charges, net (10)
Loss on asset dispositions and
-- impairments, net --
---------------- ----------------
-- Total special items - pre-tax (10)
-- Income tax benefit on special items 6
---------------- ----------------
-- Total special items - after-tax (4)
---------------- ----------------

$ 96 Income from continuing operations $ 403
---------------- ----------------
$ 0.52 EPS including special items $ 2.15
================ ================
High Case
Three Months Ended Year Ended
September 30, 2008 December 31, 2008
------------------ -----------------

$ 106 Net income $ 430
59 Interest expense 230
48 Income tax expense 190
92 Depreciation and amortization 360
---------------- ----------------
305 EBITDA 1,210
Loss on asset disposition and
-- impairments, net --
Restructuring and other special
-- charges, net 10
---------------- ----------------
$ 305 Adjusted EBITDA $ 1,220
================ ================
Three Months Ended Year Ended
September 30, 2008 December 31, 2008
------------------ -----------------

Income from continuing operations
$ 106 before special items $ 434
---------------- ----------------
$ 0.57 EPS before special items be $ 2.32
---------------- ----------------

Special Items
Restructuring and other special
-- charges, net (10)
Loss on asset dispositions and
-- impairments, net --
---------------- ----------------
-- Total special items - pre-tax (10)
Income tax benefit on special
-- items 6
---------------- ----------------
-- Total special items - after-tax (4)
---------------- ----------------

$ 106 Income from continuing operations $ 430
---------------- ----------------
$ 0.57 EPS including special items $ 2.30
================ ================
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations - Same Store Owned Hotel Revenue and
Expenses
(In millions)

Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ----------------------
Same-Store Owned Hotels
% (1) %
2008 2007 Variance Worldwide 2008 2007 Variance
------ ------ -------- ------ ------ --------

Revenue
Same-Store Owned
$587 $554 6.0 Hotels $1,100 $1,031 6.7
Hotels Sold or Closed
in 2008 and 2007 (12
-- 40 n/m hotels) 2 90 (97.8)
Hotels Without
Comparable Results
31 38 (18.4) (6 hotels) 76 70 8.6
Other ancillary hotel
2 2 -- operations 2 2 --
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
$620 $634 (2.2) Venture Hotels Revenue $1,180 $1,193 (1.1)
====== ====== ======== ====== ====== ========

Costs and Expenses
Same-Store Owned
$420 $393 (6.9) Hotels $ 822 $ 765 (7.5)
Hotels Sold or Closed
in 2008 and 2007 (12
1 35 97.1 hotels) 3 73 95.9
Hotels Without
Comparable Results
31 31 -- (6 hotels) 65 57 (14.0)
Other ancillary hotel
2 2 -- operations 2 2 --
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
Venture Hotels Costs
$454 $461 1.5 and Expenses $ 892 $ 897 0.6
====== ====== ======== ====== ====== ========


Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ----------------------
% Same-Store Owned Hotels %
2008 2007 Variance North America 2008 2007 Variance
------ ------ -------- ------ ------ --------

Revenue
Same-Store Owned
$357 $341 4.7 Hotels $ 687 $ 654 5.0
Hotels Sold or Closed
in 2008 and 2007 (12
-- 40 n/m hotels) 2 90 (97.8)
Hotels Without
Comparable Results
25 27 (7.4) (3 hotels) 61 55 10.9
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
$382 $408 (6.4) Venture Hotels Revenue $ 750 $ 799 (6.1)
====== ====== ======== ====== ====== ========

Costs and Expenses
Same-Store Owned
$257 $245 (4.9) Hotels $ 513 $ 486 (5.6)
Hotels Sold or Closed
in 2008 and 2007 (12
1 35 97.1 hotels) 3 73 95.9
Hotels Without
Comparable Results
23 22 (4.5) (3 hotels) 48 42 (14.3)
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
Venture Hotels Costs
$281 $302 7.0 and Expenses $ 564 $ 601 6.2
====== ====== ======== ====== ====== ========

Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ----------------------
% Same-Store Owned Hotels %
2008 2007 Variance International 2008 2007 Variance
------ ------ -------- ------ ------ --------

Revenue
Same-Store Owned
$230 $213 8.0 Hotels $ 413 $ 377 9.5
Hotels Sold or
Closed in 2008 and
-- -- -- 2007 (0 hotels) -- -- --
Hotels Without
Comparable Results
6 11 (45.5) (3 hotels) 15 15 --
Other ancillary
2 2 -- hotel operations 2 2 --
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
$238 $226 5.3 Venture Hotels Revenue $ 430 $ 394 9.1
====== ====== ======== ====== ====== ========

Costs and Expenses
Same-Store Owned
$163 $148 (10.1) Hotels $ 309 $ 279 (10.8)
Hotels Sold or
Closed in 2008 and
-- -- -- 2007 (0 hotels) -- -- --
Hotels Without
Comparable Results
8 9 11.1 (3 hotels) 17 15 (13.3)
Other ancillary
2 2 -- hotel operations 2 2 --
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
Venture Hotels Costs
$173 $159 (8.8) and Expenses $ 328 $ 296 (10.8)
====== ====== ======== ====== ====== ========

(1) Same-Store Owned Hotel Results exclude 12 hotels sold or closed in
2008 and 2007 and 6 hotels without comparable results.
Starwood Hotels & Resorts Worldwide, Inc.
Systemwide(1) Statistics - Same Store
For the Three Months Ended June 30,
UNAUDITED


Systemwide - Systemwide -
Worldwide North America
--------------------- ---------------------
2008 2007 Var. 2008 2007 Var.
------- ------- ----- ------- ------- -----


TOTAL HOTELS
REVPAR ($) 135.91 123.97 9.6% 129.96 126.12 3.0%
ADR ($) 189.89 174.04 9.1% 175.75 169.44 3.7%
Occupancy (%) 71.6% 71.2% 0.4 73.9% 74.4% -0.5


SHERATON
REVPAR ($) 117.26 106.16 10.5% 113.84 110.08 3.4%
ADR ($) 166.04 151.30 9.7% 155.04 149.14 4.0%
Occupancy (%) 70.6% 70.2% 0.4 73.4% 73.8% -0.4


WESTIN
REVPAR ($) 149.90 141.92 5.6% 146.03 141.03 3.5%
ADR ($) 201.95 191.44 5.5% 192.58 185.55 3.8%
Occupancy (%) 74.2% 74.1% 0.1 75.8% 76.0% -0.2


ST. REGIS/LUXURY
COLLECTION
REVPAR ($) 258.85 237.46 9.0% 232.69 233.18 -0.2%
ADR ($) 391.61 349.19 12.1% 347.27 340.97 1.8%
Occupancy (%) 66.1% 68.0% -1.9 67.0% 68.4% -1.4


LE MERIDIEN
REVPAR ($) 165.26 139.22 18.7% 246.42 239.06 3.1%
ADR ($) 230.05 198.27 16.0% 318.47 304.26 4.7%
Occupancy (%) 71.8% 70.2% 1.6 77.4% 78.6% -1.2


W
REVPAR ($) 227.78 224.46 1.5% 230.19 229.27 0.4%
ADR ($) 301.72 294.87 2.3% 299.88 292.42 2.6%
Occupancy (%) 75.5% 76.1% -0.6 76.8% 78.4% -1.6


FOUR POINTS
REVPAR ($) 87.08 79.49 9.5% 80.48 77.89 3.3%
ADR ($) 120.76 110.06 9.7% 111.05 105.44 5.3%
Occupancy (%) 72.1% 72.2% -0.1 72.5% 73.9% -1.4


OTHER
REVPAR ($) 116.23 110.34 5.3% 116.23 110.34 5.3%
ADR ($) 167.85 162.99 3.0% 167.85 162.99 3.0%
Occupancy (%) 69.2% 67.7% 1.5 69.2% 67.7% 1.5





Systemwide -
International
---------------------
2008 2007 Var.
------- ------- -----


TOTAL HOTELS
REVPAR ($) 143.66 121.15 18.6%
ADR ($) 209.78 180.71 16.1%
Occupancy (%) 68.5% 67.0% 1.5


SHERATON
REVPAR ($) 121.57 101.22 20.1%
ADR ($) 181.16 154.36 17.4%
Occupancy (%) 67.1% 65.6% 1.5


WESTIN
REVPAR ($) 161.09 144.52 11.5%
ADR ($) 231.52 210.34 10.1%
Occupancy (%) 69.6% 68.7% 0.9


ST. REGIS/LUXURY COLLECTION
REVPAR ($) 276.73 240.37 15.1%
ADR ($) 422.61 354.85 19.1%
Occupancy (%) 65.5% 67.7% -2.2


LE MERIDIEN
REVPAR ($) 158.62 131.00 21.1%
ADR ($) 222.20 188.41 17.9%
Occupancy (%) 71.4% 69.5% 1.9


W
REVPAR ($) 204.70 178.23 14.9%
ADR ($) 323.08 329.01 -1.8%
Occupancy (%) 63.4% 54.2% 9.2


FOUR POINTS
REVPAR ($) 104.74 83.75 25.1%
ADR ($) 147.24 123.48 19.2%
Occupancy (%) 71.1% 67.8% 3.3


OTHER
REVPAR ($)
ADR ($)
Occupancy (%)




(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)
--------------------- ---------------------
2008 2007 Var. 2008 2007 Var.
------- ------- ----- ------- ------- -----


TOTAL WORLDWIDE
REVPAR ($) 135.91 123.97 9.6% 154.48 140.09 10.3%
ADR ($) 189.89 174.04 9.1% 212.12 194.34 9.1%
Occupancy (%) 71.6% 71.2% 0.4 72.8% 72.1% 0.7


NORTH AMERICA
REVPAR ($) 129.96 126.12 3.0% 160.21 155.25 3.2%
ADR ($) 175.75 169.44 3.7% 209.16 202.02 3.5%
Occupancy (%) 73.9% 74.4% -0.5 76.6% 76.9% -0.3


EUROPE
REVPAR ($) 189.07 159.01 18.9% 206.86 178.08 16.2%
ADR ($) 266.68 224.53 18.8% 281.78 243.75 15.6%
Occupancy (%) 70.9% 70.8% 0.1 73.4% 73.1% 0.3


AFRICA & MIDDLE EAST
REVPAR ($) 146.32 116.03 26.1% 149.40 117.84 26.8%
ADR ($) 200.47 167.32 19.8% 202.26 168.51 20.0%
Occupancy (%) 73.0% 69.3% 3.7 73.9% 69.9% 4.0


ASIA PACIFIC
REVPAR ($) 112.94 99.05 14.0% 109.11 95.14 14.7%
ADR ($) 175.23 154.65 13.3% 170.10 149.43 13.8%
Occupancy (%) 64.5% 64.0% 0.5 64.1% 63.7% 0.4


LATIN AMERICA
REVPAR ($) 90.37 77.86 16.1% 96.17 83.48 15.2%
ADR ($) 137.08 128.27 6.9% 150.05 139.42 7.6%
Occupancy (%) 65.9% 60.7% 5.2 64.1% 59.9% 4.2



(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
---------------------- ----------------------
2008 2007 Var. 2008 2007 Var.
-------- -------- ---- -------- -------- ----

TOTAL HOTELS 67 Hotels 36 Hotels
---------------------- ----------------------
REVPAR ($) 183.05 171.47 6.8% 184.03 174.86 5.2%
ADR ($) 246.17 232.29 6.0% 237.42 228.29 4.0%
Occupancy (%) 74.4% 73.8% 0.6 77.5% 76.6% 0.9

Total Revenue 586,912 553,583 6.0% 357,206 340,786 4.8%
Total Expenses 420,386 393,200 6.9% 257,741 245,150 5.1%




BRANDED HOTELS 59 Hotels 28 Hotels
---------------------- ----------------------
REVPAR ($) 190.34 178.14 6.8% 196.94 187.14 5.2%
ADR ($) 254.06 239.15 6.2% 249.03 239.03 4.2%
Occupancy (%) 74.9% 74.5% 0.4 79.1% 78.3% 0.8

Total Revenue 548,873 518,531 5.9% 319,167 305,734 4.4%
Total Expenses 389,449 363,545 7.1% 226,804 215,495 5.2%






INTERNATIONAL
-----------------------
2008 2007 Var.
-------- -------- -----

TOTAL HOTELS 31 Hotels
-----------------------
REVPAR ($) 181.50 166.06 9.3%
ADR ($) 261.76 239.34 9.4%
Occupancy (%) 69.3% 69.4% -0.1

Total Revenue 229,706 212,797 7.9%
Total Expenses 162,645 148,050 9.9%




BRANDED HOTELS 31 Hotels
-----------------------
REVPAR ($) 181.50 166.06 9.3%
ADR ($) 261.76 239.34 9.4%
Occupancy (%) 69.3% 69.4% -0.1

Total Revenue 229,706 212,797 7.9%
Total Expenses 162,645 148,050 9.9%




(1) Hotel Results exclude 12 hotels sold or closed and 6 hotels
without comparable results during 2008 & 2007
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended June 30,
UNAUDITED ($ millions)


Worldwide
------------------------------------------
2008 2007 $ Variance % Variance
-------- -------- ---------- ----------

Management Fees:
Base Fees 75 72 3 4.2%
Incentive Fees 40 34 6 17.6%
-------- -------- ---------- ----------
Total Management Fees 115 106 9 8.5%

Franchise Fees 44 37 7 18.9%
-------- -------- ---------- ----------

Total Management & Franchise
Fees 159 143 16 11.2%

Other Management & Franchise
Revenues (1) 24 21 3 14.3%
-------- -------- ---------- ----------

Total Management & Franchise
Revenues 183 164 19 11.6%

Other (2) 35 31 4 12.9%
-------- -------- ---------- ----------

Management Fees, Franchise
Fees & Other Income 218 195 23 11.8%
======== ======== ========== ==========


(1) Other Management & Franchise Revenues primarily includes the
amortization of deferred gains of approximately $21 million in 2008
and $20 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 June 30,
UNAUDITED ($ millions)



2008 2007 % Variance
----------- -------- ----------

Originated Sales Revenues (1) --
Vacation Ownership Sales 142 191 (25.7%)
Other Sales and Services Revenues
(2) 51 47 8.5%
Deferred Revenues -- Percentage of
Completion (5) 30 n/m
Deferred Revenues -- Other (3) 4 - n/m
----------- -------- ----------
Vacation Ownership Sales and
Services Revenues 192 268 (28.4%)
Residential Sales and Services
Revenues 2 6 (66.7%)
----------- -------- ----------
Total Vacation Ownership &
Residential Sales and Services
Revenues 194 274 (29.2%)
=========== ======== ==========

Originated Sales Expenses (4) --
Vacation Ownership Sales 95 121 21.5%
Other Expenses (5) 57 54 (5.6%)
Deferred Expenses -- Percentage of
Completion (2) 15 n/m
Deferred Expenses -- Other 8 8 -
----------- -------- ----------
Vacation Ownership Expenses 158 198 20.2%
Residential Expenses 1 3 66.7%
----------- -------- ----------
Total Vacation Ownership &
Residential Expenses 159 201 20.9%
=========== ======== ==========


(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, offset by the
recognition of revenues previously deferred where the recission
period has expired

(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.
Systemwide(1) Statistics - Same Store
For the Six Months Ended June 30,
UNAUDITED


Systemwide - Systemwide -
Worldwide North America
--------------------- ---------------------
2008 2007 Var. 2008 2007 Var.
------- ------- ----- ------- ------- -----


TOTAL HOTELS
REVPAR ($) 129.37 118.85 8.9% 123.14 119.72 2.9%
ADR ($) 188.17 172.07 9.4% 175.34 167.75 4.5%
Occupancy (%) 68.8% 69.1% -0.3 70.2% 71.4% -1.2


SHERATON
REVPAR ($) 111.05 101.89 9.0% 104.55 101.74 2.8%
ADR ($) 163.72 149.41 9.6% 150.80 144.50 4.4%
Occupancy (%) 67.8% 68.2% -0.4 69.3% 70.4% -1.1


WESTIN
REVPAR ($) 144.16 136.88 5.3% 142.90 138.50 3.2%
ADR ($) 202.75 190.48 6.4% 196.52 187.10 5.0%
Occupancy (%) 71.1% 71.9% -0.8 72.7% 74.0% -1.3


ST. REGIS/LUXURY
COLLECTION
REVPAR ($) 247.85 227.19 9.1% 248.63 244.14 1.8%
ADR ($) 379.84 340.91 11.4% 365.04 359.67 1.5%
Occupancy (%) 65.3% 66.6% -1.3 68.1% 67.9% 0.2


LE MERIDIEN
REVPAR ($) 157.40 133.65 17.8% 220.76 214.33 3.0%
ADR ($) 225.50 194.87 15.7% 306.56 288.76 6.2%
Occupancy (%) 69.8% 68.6% 1.2 72.0% 74.2% -2.2


W
REVPAR ($) 216.35 208.72 3.7% 214.71 211.10 1.7%
ADR ($) 297.24 283.75 4.8% 289.42 279.14 3.7%
Occupancy (%) 72.8% 73.6% -0.8 74.2% 75.6% -1.4


FOUR POINTS
REVPAR ($) 79.15 72.89 8.6% 74.54 71.60 4.1%
ADR ($) 115.91 106.18 9.2% 109.44 103.13 6.1%
Occupancy (%) 68.3% 68.7% -0.4 68.1% 69.4% -1.3


OTHER
REVPAR ($) 97.98 93.68 4.6% 97.98 93.68 4.6%
ADR ($) 160.16 154.37 3.8% 160.16 154.37 3.8%
Occupancy (%) 61.2% 60.7% 0.5 61.2% 60.7% 0.5





Systemwide -
International
---------------------
2008 2007 Var.
------- ------- -----


TOTAL HOTELS
REVPAR ($) 137.48 117.73 16.8%
ADR ($) 205.73 178.15 15.5%
Occupancy (%) 66.8% 66.1% 0.7


SHERATON
REVPAR ($) 119.16 102.07 16.7%
ADR ($) 180.67 156.02 15.8%
Occupancy (%) 66.0% 65.4% 0.6


WESTIN
REVPAR ($) 147.72 132.29 11.7%
ADR ($) 221.94 201.20 10.3%
Occupancy (%) 66.6% 65.8% 0.8


ST. REGIS/LUXURY COLLECTION
REVPAR ($) 247.29 215.14 14.9%
ADR ($) 391.20 327.15 19.6%
Occupancy (%) 63.2% 65.8% -2.6


LE MERIDIEN
REVPAR ($) 152.16 126.97 19.8%
ADR ($) 218.57 186.39 17.3%
Occupancy (%) 69.6% 68.1% 1.5


W
REVPAR ($) 232.15 185.80 24.9%
ADR ($) 391.14 346.14 13.0%
Occupancy (%) 59.4% 53.7% 5.7


FOUR POINTS
REVPAR ($) 93.36 76.85 21.5%
ADR ($) 135.59 115.98 16.9%
Occupancy (%) 68.9% 66.3% 2.6


OTHER
REVPAR ($)
ADR ($)
Occupancy (%)




(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)
--------------------- ---------------------
2008 2007 Var. 2008 2007 Var.
------- ------- ----- ------- ------- -----


TOTAL WORLDWIDE
REVPAR ($) 129.37 118.85 8.9% 146.59 133.45 9.8%
ADR ($) 188.17 172.07 9.4% 208.84 190.81 9.4%
Occupancy (%) 68.8% 69.1% -0.3 70.2% 69.9% 0.3


NORTH AMERICA
REVPAR ($) 123.14 119.72 2.9% 151.18 146.87 2.9%
ADR ($) 175.34 167.75 4.5% 207.50 199.06 4.2%
Occupancy (%) 70.2% 71.4% -1.2 72.9% 73.8% -0.9


EUROPE
REVPAR ($) 161.36 138.14 16.8% 175.31 151.08 16.0%
ADR ($) 246.95 210.02 17.6% 259.91 225.24 15.4%
Occupancy (%) 65.3% 65.8% -0.5 67.4% 67.1% 0.3


AFRICA & MIDDLE EAST
REVPAR ($) 150.99 124.07 21.7% 153.19 125.64 21.9%
ADR ($) 208.71 177.49 17.6% 210.60 178.92 17.7%
Occupancy (%) 72.3% 69.9% 2.4 72.7% 70.2% 2.5


ASIA PACIFIC
REVPAR ($) 119.91 104.39 14.9% 114.78 98.53 16.5%
ADR ($) 183.36 159.81 14.7% 175.89 152.42 15.4%
Occupancy (%) 65.4% 65.3% 0.1 65.3% 64.6% 0.7


LATIN AMERICA
REVPAR ($) 95.88 85.34 12.4% 103.06 92.64 11.2%
ADR ($) 143.70 134.86 6.6% 155.28 147.54 5.2%
Occupancy (%) 66.7% 63.3% 3.4 66.4% 62.8% 3.6



(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 Six Months Ended June 30,
UNAUDITED



WORLDWIDE NORTH AMERICA
-------------------------- -----------------------
2008 2007 Var. 2008 2007 Var.
---------- ---------- ---- -------- -------- -----

TOTAL HOTELS 67 Hotels 36 Hotels
-------------------------- -----------------------
REVPAR ($) 172.12 159.50 7.9% 176.32 165.65 6.4%
ADR ($) 240.87 223.67 7.7% 240.36 225.80 6.4%
Occupancy (%) 71.5% 71.3% 0.2 73.4% 73.4% 0.0

Total Revenue 1,100,108 1,030,700 6.7% 687,469 653,112 5.3%
Total Expenses 821,742 765,445 7.4% 512,813 485,793 5.6%




BRANDED HOTELS 59 Hotels 28 Hotels
-------------------------- -----------------------
REVPAR ($) 180.25 166.72 8.1% 191.23 179.34 6.6%
ADR ($) 248.33 230.03 8.0% 252.71 236.69 6.8%
Occupancy (%) 72.6% 72.5% 0.1 75.7% 75.8% -0.1

Total Revenue 1,035,105 968,650 6.9% 622,466 591,062 5.3%
Total Expenses 763,081 709,193 7.6% 454,152 429,541 5.7%






INTERNATIONAL
-----------------------
2008 2007 Var.
-------- -------- -----

TOTAL HOTELS 31 Hotels
-----------------------
REVPAR ($) 165.33 149.56 10.5%
ADR ($) 241.75 219.94 9.9%
Occupancy (%) 68.4% 68.0% 0.4

Total Revenue 412,639 377,588 9.3%
Total Expenses 308,929 279,652 10.5%




BRANDED HOTELS 31 Hotels
-----------------------
REVPAR ($) 165.33 149.56 10.5%
ADR ($) 241.75 219.94 9.9%
Occupancy (%) 68.4% 68.0% 0.4

Total Revenue 412,639 377,588 9.3%
Total Expenses 308,929 279,652 10.5%




(1) Hotel Results exclude 12 hotels sold or closed and 6 hotels
without comparable results during 2008 & 2007
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Six Months Ended June 30,
UNAUDITED ($ millions)


Worldwide
------------------------------------------
2008 2007 $ Variance % Variance
-------- -------- ---------- ----------

Management Fees:
Base Fees 143 134 9 6.7%
Incentive Fees 77 63 14 22.2%
-------- -------- ---------- ----------
Total Management Fees 220 197 23 11.7%

Franchise Fees 83 70 13 18.6%
-------- -------- ---------- ----------

Total Management &
Franchise Fees 303 267 36 13.5%

Other Management &
Franchise Revenues (1) 49 43 6 14.0%
-------- -------- ---------- ----------

Total Management &
Franchise Revenues 352 310 42 13.5%

Other (2) 72 76 (4) -5.3%
-------- -------- ---------- ----------

Management Fees, Franchise
Fees & Other Income 424 386 38 9.8%
======== ======== ========== ==========


(1) Other Management & Franchise Revenues primarily includes the
amortization of deferred gains of approximately $42 million in 2008
and $40 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 $18 million of income earned from the Company's carried
interests in the Westin Boston Waterfront Hotel which was earned when
the hotel was sold by its owners in January 2007.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Six Months Ended June 30,
UNAUDITED ($ millions)



2008 2007 % Variance
--------- -------- ----------

Originated Sales Revenues (1) --
Vacation Ownership Sales 305 366 (16.7%)
Other Sales and Services Revenues (2) 105 91 15.4%
Deferred Revenues -- Percentage of
Completion (29) 35 n/m
Deferred Revenues -- Other (3) 2 4 (50.0%)
--------- -------- ----------
Vacation Ownership Sales and Services
Revenues 383 496 (22.8%)
Residential Sales and Services
Revenues 4 10 (60.0%)
--------- -------- ----------
Total Vacation Ownership & Residential
Sales and Services Revenues 387 506 (23.5%)
========= ======== ==========

Originated Sales Expenses (4) --
Vacation Ownership Sales 212 235 9.8%
Other Expenses (5) 103 103 -
Deferred Expenses -- Percentage of
Completion (15) 18 n/m
Deferred Expenses -- Other 13 16 18.8%
--------- -------- ----------
Vacation Ownership Expenses 313 372 15.9%
Residential Expenses 4 8 50.0%
--------- -------- ----------
Total Vacation Ownership & Residential
Expenses 317 380 16.6%
========= ======== ==========


(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, offset by the
recognition of revenues previously deferred where the recission
period has expired

(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 June 30, 2008
UNAUDITED ($ millions)

Properties without comparable results in 2008:

Property Location
--------------------------------------------- ------------------------
Sheraton Steamboat Resort & Conference Center Steamboat Springs, CO
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
Hotel Des Bains Venice, Italy



Properties sold or closed in 2008 and 2007:

Property Location
--------------------------------------------- ------------------------
Westin Fort Lauderdale Ft. Lauderdale, FL
Days Inn City Center Portland, OR
Sheraton Nashua Hotel Nashua, NH
Four Points by Sheraton Denver Cherry Creek Denver, CO
Sheraton Bal Harbour Beach Resort Bal Harbour, FL
Sheraton Edison Edison, NJ
Four Points Hyannis Hyannis, MA
Four Points Portland Portland, OR
Sheraton South Portland Portland, ME
Westin Galleria Houston, TX
Westin Oaks Houston, TX
Caesar's Brookdale Scotrun, PA
Selected Balance Sheet and Cash Flow Items:

Cash and cash equivalents
(including restricted cash of $180 million) $ 308
Debt $ 4,054



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:
2007
Revenues $ 48 $ 39 $ 24 $ 10 $ 121
Expenses (excluding depreciation) $ 36 $ 33 $ 18 $ 9 $ 96

Hotels Sold or Closed in 2008:
2008
Revenues $ 2 $ - $ - $ - $ 2
Expenses (excluding depreciation) $ 2 $ 1 $ - $ - $ 3

2007
Revenues $ 2 $ 1 $ 2 $ 1 $ 6
Expenses (excluding depreciation) $ 2 $ 2 $ 2 $ 2 $ 8

(1) Results consist of 1 hotel 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.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three Months Ended June 30, 2008

Q2 YTD
---- -----
Capital Expenditures:
Owned, Leased and Consolidated Joint Venture Hotels 61 118
Corporate/IT 18 43
---- -----
Subtotal 79 161

Vacation Ownership Capital Expenditures:
Capital expenditures (includes land acquisitions) 26 54
Net capital expenditures for inventory (1) 84 151
---- -----
Subtotal 110 205

Development Capital 8 28
---- -----

Total Capital Expenditures 197 394
==== =====

(1) Represents gross inventory capital expenditures of $120 and $226
in the three and six months ended June 30, 2008, respectively, less
cost of sales of $36 and $75 in the three and six months ended June
30, 2008, respectively.
Starwood Hotels & Resorts Worldwide, Inc.
2008 Divisional Hotel Inventory Summary by Ownership by Brand
June 30, 2008



---------------------------------------------
NAD EAME LAD
---------------------------------------------
Hotels Rooms Hotels Rooms Hotels Rooms
---------------------------------------------
Owned
Sheraton 10 5,030 8 1,727 5 2,713
Westin 5 2,849 5 1,065 3 902
Four Points 3 579 - - - -
W 9 3,172 - - - -
Luxury Collection 1 647 7 828 1 180
St. Regis 3 668 1 161 - -
Other 8 2,189 - - - -
---------------------------------------------
Total Owned 39 15,134 21 3,781 9 3,795
---------------------------------------------

Managed & UJV
Sheraton 45 29,699 69 20,504 14 2,751
Westin 49 26,773 15 4,089 - -
Four Points 2 646 8 1,536 3 427
W 9 2,735 1 134 1 237
Luxury Collection 9 2,054 9 1,527 7 250
St. Regis 5 1,091 1 95 - -
Le Meridien 5 741 67 16,456 1 130
Other 1 - 1 - - -
---------------------------------------------
Total Managed & UJV 125 63,739 171 44,341 26 3,795
---------------------------------------------

Franchised
Sheraton 150 45,100 27 6,626 8 2,204
Westin 50 16,770 5 2,030 3 600
Four Points 87 14,488 12 1,671 6 840
Luxury Collection 2 385 14 1,795 - -
Le Meridien 5 1,553 8 3,178 1 213
aloft 3 402 - - - -
---------------------------------------------
Total Franchised 297 78,698 66 15,300 18 3,857
---------------------------------------------

Systemwide
Sheraton 205 79,829 104 28,857 27 7,668
Westin 104 46,392 25 7,184 6 1,502
Four Points 92 15,713 20 3,207 9 1,267
W 18 5,907 1 134 1 237
Luxury Collection 12 3,086 30 4,150 8 430
St. Regis 8 1,759 2 256 - -
Le Meridien 10 2,294 75 19,634 2 343
aloft 3 402 - - - -
Other 9 2,189 1 - - -
---------------------------------------------
Total Systemwide 461 157,571 258 63,422 53 11,447
=============================================



-------------------------------
ASIA Total
-------------------------------
Hotels Rooms Hotels Rooms
-------------------------------
Owned
Sheraton 2 821 25 10,291
Westin 1 273 14 5,089
Four Points 1 630 4 1,209
W - - 9 3,172
Luxury Collection - - 9 1,655
St. Regis - - 4 829
Other - - 8 2,189
-------------------------------
Total Owned 4 1,724 73 24,434
-------------------------------

Managed & UJV
Sheraton 52 18,401 180 71,355
Westin 15 5,432 79 36,294
Four Points 6 1,639 19 4,248
W 2 330 13 3,436
Luxury Collection - - 25 3,831
St. Regis 3 900 9 2,086
Le Meridien 22 5,802 95 23,129
Other - - 2 -
-------------------------------
Total Managed & UJV 100 32,504 422 144,379
-------------------------------

Franchised
Sheraton 14 5,651 199 59,581
Westin 7 1,939 65 21,339
Four Points 2 235 107 17,234
Luxury Collection 7 2,022 23 4,202
Le Meridien 2 554 16 5,498
aloft - - 3 402
-------------------------------
Total Franchised 32 10,401 413 108,256
-------------------------------

Systemwide
Sheraton 68 24,873 404 141,227
Westin 23 7,644 158 62,722
Four Points 9 2,504 130 22,691
W 2 330 22 6,608
Luxury Collection 7 2,022 57 9,688
St. Regis 3 900 13 2,915
Le Meridien 24 6,356 111 28,627
aloft - - 3 402
Other - - 10 2,189
-------------------------------
Total Systemwide 136 44,629 908 277,069
===============================
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership Inventory Pipeline
As of June 30, 2008
UNAUDITED



---------------------------------------------------------------------
# Resorts
---------------------------------

In In Active
Brand Total (2) Operations Sales
---------------------------------------------------------------------

Sheraton 8 6 7
Westin 12 6 7
St. Regis 2 2 2
The Luxury Collection 1 1 1
Unbranded 3 3 -
---------------------------------
Total SVO, Inc. 26 18 17
---------------------------------

Unconsolidated Joint Ventures
(UJV's) 2 1 1
---------------------------------
Total including UJV's 28 19 18
---------------------------------------------------------------------

---------------------------------------------------------------------
Total Intervals Including UJV's (7)
---------------------------------------------------------------------






---------------------------------------------------------------------
# of Units (1)
----------------------------------------------------

Future
Brand Pre-sales/ Capacity Total at
Completed (3) Development (4) (5),(6) Buildout
---------------------------------------------------------------------

Sheraton 2,781 307 1,394 4,482
Westin 1,283 180 1,070 2,533
St. Regis 51 12 - 63
The Luxury
Collection 6 - 6 12
Unbranded 124 - 1 125
----------------------------------------------------
Total SVO, Inc. 4,245 499 2,471 7,215
----------------------------------------------------

Unconsolidated
Joint Ventures
(UJV's) 198 - 40 238
----------------------------------------------------
Total including
UJV's 4,443 499 2,511 7,453
---------------------------------------------------------------------

---------------------------------------------------------------------
Total Intervals
Including UJV's
(7) 231,036 25,948 130,572 387,556
---------------------------------------------------------------------




(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.