Starwood Reports Third Quarter 2005 Results

Third Quarter 2005 Highlights:

-- EPS from continuing operations for the third quarter of 2005 was $0.18, compared to $0.49 in the third quarter of 2004. Excluding special items which primarily relate to tax expense on the adoption of a plan to repatriate foreign earnings in accordance with the American Jobs Creation Act of 2004 and additional tax expense related to the 1998 disposition of ITT World Directories, EPS from continuing operations was $0.58 for the third quarter of 2005 compared to $0.40 for the third quarter of 2004.

-- REVPAR at Same-Store Owned Hotels in North America and worldwide increased 13.2% and 11.9%, respectively, when compared to the third quarter of 2004. ADR increased 10.1% and 8.5% in North America and worldwide, respectively.

-- Margins at Starwood branded Same-Store Owned Hotels in North America improved approximately 280 basis points when compared to the third quarter of 2004.

-- Globally, REVPAR for Same-Store Owned Hotels grew for W Hotels (24.5%), followed by St. Regis/Luxury Collection (11.2%), Westin (10.3%), and Sheraton (10.3%), with each of these brands experiencing both ADR and occupancy gains.

-- Third-party management and franchise fees in the quarter increased 11.4% when compared to 2004.

-- Vacation ownership and residential revenues, which exclude gains on sales of notes receivable, increased 33.1%. Excluding the fractional sales at the St. Regis Aspen and residential sales at the St. Regis in San Francisco, contract sales at vacation ownership properties were up 14.4% when compared to 2004.

-- Net income for the third quarter of 2005 was $39 million, compared to net income of $107 million in the third quarter of 2004. Excluding special items, income from continuing operations was $131 million in the third quarter of 2005 compared to $85 million in the same period of 2004.

-- Total Company Adjusted EBITDA, including the impact of Hurricanes Dennis, Katrina and Rita, increased 19.2% to $347 million when compared to $291 million in 2004. The Company's two owned hotels and one joint venture hotel in New Orleans and its owned hotel in Key West were negatively impacted by Hurricanes Dennis, Katrina and Rita. In addition to the loss of business from these storms, $4 million of insurance deductible expenses and cleanup and associate relocation costs are reflected in these results.

-- According to Smith Travel Research system-wide market share in North America increased 50 basis points when compared to 2004.

Starwood Hotels & Resorts Worldwide, Inc. ("Starwood" or the"Company") today reported EPS from continuing operations for the thirdquarter of 2005 of $0.18 compared to $0.49 in the third quarter of2004. Excluding special items of $91 million, which primarily relateto tax expense on the adoption of a plan to repatriate foreignearnings in accordance with the American Jobs Creation Act of 2004 andadditional tax expense related to the 1998 disposition of ITT WorldDirectories, EPS from continuing operations was $0.58 for the thirdquarter of 2005 compared to $0.40 in the third quarter of 2004. Incomefrom continuing operations was $40 million in the third quarter of2005 compared to $105 million in 2004. Excluding special items, incomefrom continuing operations was $131 million for the third quarter of2005 compared to $85 million in 2004. Net income (after discontinuedoperations) was $39 million and EPS was $0.17 in the third quarter of2005 compared to $107 million and EPS of $0.50 in the third quarter of2004. The effective tax rate for the third quarter of 2005, includingthe two special tax items discussed above, was 72.3%.

Steven J. Heyer, CEO, said "Our Third Quarter performance wasoutstanding. Our operators remain committed to industry leading topline growth, while at the same time driving industry leading marginexpansion through productivity initiatives. We remain focused ondeveloping differentiated brand specific service excellence andemotional content. With strong brands comes significant opportunity toexpand our footprint - particularly given that our brands arecurrently underrepresented versus our competitive set.

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

Assets that do not fit our strategic criteria will be marketed forsale and we are in various stages of discussions with numerousinterested parties. We expect that between today and twelve monthsfrom now we will likely enter into agreements for the sale of $2 - $4billion of assets. In most cases we expect to retain long termmanagement or franchise contracts, maintaining our footprint whileunlocking value for reinvestment in the business and for sharerepurchase - a core strategic principle.

Our core lodging businesses remain strong. The time is right toharvest previously unrecognized assets, build on our innovativeculture, build world class brands, drive related growth and secure ourposition as the premier owned, management and franchise hotel andresort company."

Operating Results:

Third Quarter Ended September 30, 2005

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

Owned, Leased and Consolidated Joint Venture Hotels

REVPAR for Same-Store Owned Hotels in North America and worldwideincreased 13.2% and 11.9%, respectively, when compared to 2004. REVPARat Same-Store Owned Hotels in North America increased 24.5% at W,21.6% at St. Regis/Luxury Collection, 10.8% at Sheraton, and 10.5% atWestin. REVPAR growth was particularly strong at the Company's ownedhotels in New York, Seattle, Chicago, Los Angeles, Maui, Toronto, SanDiego, San Francisco, and Atlanta. Revenue from transient travel wasup 17.4% in North America when compared to 2004. Internationally,Same-Store Owned Hotel REVPAR increased 8.4%, with Latin America up18.2% (REVPAR in owned hotels in Argentina, Brazil, Peru and resortareas in Mexico was particularly strong), Europe up 6.9%, and AsiaPacific up 5.6%. Excluding the favorable effects of foreign exchange,REVPAR increased 6.4% internationally.

Total revenues at Same-Store Owned Hotels worldwide increased10.3% to $848 million when compared to $769 million in 2004 whilecosts and expenses at the hotels increased 7.0% to $624 million in2005 compared to $583 million in 2004. Total revenues at Same-StoreOwned Hotels in North America increased 10.9% to $613 million in 2005when compared to $553 million in 2004 while costs and expenses atthese hotels increased 7.4% to $454 million when compared to $423million in 2004.

System-wide REVPAR; Management/Franchise Fees

System-wide (owned, managed and franchised) REVPAR for Same-StoreHotels in North America increased 11.7%; W Hotels 23.8%, St.Regis/Luxury Collection 18.2%, Sheraton 11.5%, Four Points by Sheraton10.7%, and Westin 9.3%. For the twelfth quarter in a row, totalCompany market share in North America increased for the Company'sowned and managed hotels as well as for system-wide hotels. Totalthird-party management and franchise fees were $91 million, up $9million, or 11.4%, from last year.

Distribution

Starwood's central distribution systems gross bookings during thethird quarter of 2005 increased approximately 7.7% when compared to2004. Gross online bookings through proprietary branded websitesincreased 19.8% as compared to 2004, with gross Dollar bookings fromthe proprietary branded sites increasing 32.3%. Gross online dollarbookings represented approximately 11.6% of the overall gross dollarbookings, with 76.1% of that coming from our proprietary brandedwebsites, as compared to 10.3% of overall gross dollar bookings, with73.3% of that from proprietary branded websites in 2004.

Vacation Ownership and Residential

Vacation ownership and residential revenue, which excludes gainson sales of notes receivable (there were no sales of notes receivablein the third quarter of 2005), was up $58 million, or 33.1% to $233million when compared to 2004 primarily due to residential sales atthe St. Regis Museum Tower in San Francisco. Vacation ownership salesincreased at our resorts in Orlando, Scottsdale and Maui and decreasedat our resort in Rancho Mirage, California, where substantially all ofthe available inventory has been sold. Contract sales, excludingfractional sales at the St. Regis Aspen and residential sales at theSt. Regis in San Francisco, were up 14.4% when compared to 2004. Theaverage price per timeshare unit sold increased approximately 7.7% to$21,595, and the number of contracts signed increased approximately6.2% when compared to 2004.

In the third quarter of 2005, the Company continued sellingcondominiums at the St. Regis Museum Tower which is in the finalstages of construction in San Francisco, and recognized revenues ofapproximately $57 million. This mixed-use project (hotel andresidential) received a temporary certificate of occupancy earlierthis month, and is expected to open in early November.

In addition to its robust pipeline of existing vacation ownershipinventory, the Company continues to evaluate its existing owned realestate for potential conversion to vacation ownership, fractional, orresidential projects. For example, the Company is converting twofloors of the St. Regis hotel in New York into fractional units andhas partially demolished the Sheraton in Cancun, Mexico where it willbuild a timeshare development that is expected to have up to 73 unitsupon completion of the first phase. The Company is also working withits business partners to develop similar conversion opportunities atmanaged hotels.

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

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

As mentioned earlier, the Company did not sell any notesreceivable and thereby did not recognize any gains during the thirdquarter of 2005 compared to gains of $3 million in the same period of2004.

Brand Development/Unit Growth

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

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

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

Results for the Nine Months Ended September 30, 2005:

EPS from continuing operations was $1.18 compared to $1.21 in2004. Excluding special items, EPS from continuing operations was$1.63 compared to $1.05 in 2004. Income from continuing operations was$264 million compared to $258 million in 2004. Excluding specialitems, income from continuing operations was $364 million compared to$225 million in 2004. Net income (after discontinued operations) was$263 million and EPS was $1.18 compared to $295 million and $1.38,respectively, in 2004.

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

Capital:

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

Balance Sheet:

At September 30, 2005, the Company had total debt of $4.307billion and cash and cash equivalents (including $262 million ofrestricted cash) of $1.171 billion, or net debt of $3.136 billion,compared to net debt of $3.460 billion at the end of the secondquarter of 2005. In addition, the Company continues to have aninvestment in the senior debt of Le Meridien hotels and at September30, 2005 the balance of that investment including accrued interest was$225 million.

At September 30, 2005, debt was approximately 78% fixed rate and22% floating rate and its weighted average maturity was 4.4 years witha weighted average interest rate of 6.15%. The Company had cash(including total restricted cash) and availability under domestic andinternational revolving credit facilities of approximately $2.172billion.

2005 Asset Sales

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

Outlook:

All comments in the following paragraphs and certain comments inthis release above are deemed to be forward-looking statements. Thesestatements reflect expectations of the Company's performance given itscurrent base of assets and its current understanding of externaleconomic and geo-political environments. Actual results may differmaterially.

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

-- Adjusted EBITDA would be expected to be approximately $384 million, an increase of 17.4% when compared to $327 million in the same period of 2004.

-- Net income would be expected to be approximately $143 million, an increase of 16.3% when compared to income from continuing operations before special items in the fourth quarter of 2004.

-- EPS would be expected to be $0.64, an increase of 12.3% when compared to EPS from continuing operations before special items in the fourth quarter of 2004.

For the full year 2005, based on the fourth quarter 2005assumptions above:

-- Full year revenues, including other revenues from managed and franchised properties, would be expected to be approximately $6.0 billion.

-- Full year Adjusted EBITDA would be expected to increase approximately 22.6% to approximately $1.410 billion, when compared to 2004 Adjusted EBITDA of $1.150 billion.

-- Full year net income before special items would be expected to be approximately $506 million at approximately a 24% effective tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2006), when compared to 2004 income from continuing operations before special items of approximately $348 million at a 13.9% effective tax rate.

-- Full year EPS before special items would be expected to increase approximately 40.1% to $2.27 when compared to 2004 EPS from continuing operations before special items of $1.62.

-- Full year capital expenditures (excluding timeshare inventory) would be approximately $550 million, including $300 million for maintenance, renovation and technology, approximately $100 million for the completion of the St. Regis San Francisco multi-use project under construction, and $150 million for other growth initiatives. Additionally, net capital expenditures for timeshare inventory would be approximately $100 million.

-- For the full year the Company expects cash interest expense of approximately $284 million and cash taxes of approximately $462 million.

For the full year 2006, if REVPAR at Same-Store Owned Hotels inNorth America increases approximately 8% - 10% versus the full year2005:

-- Full year Adjusted EBITDA, after adjusting for 2005 asset sales that we believe would have contributed approximately $30 million of EBITDA in 2006, is expected to be approximately $1.560 billion, when compared to 2005 Adjusted EBITDA of $1.410 billion. The Adjusted EBITDA estimate includes margin improvement of approximately 200 basis points.

-- Full year income from continuing operations would be expected to be approximately $611 million at a 27% effective tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2007), when compared to 2005 net income before special items of approximately $506 million at a 24% effective tax rate.

-- Full year EPS would be expected to increase approximately 19% to $2.70 when compared to 2005 EPS before special items of $2.27.

-- The Company's guidance for 2006 above excludes the impact of SFAS 123R which requires the Company to begin expensing options in 2006. Stock option expense is expected to be approximately $40 to $45 million on a pre-tax basis or $0.13 to $0.15 of EPS. While the Board of Directors has not made final decisions on stock based compensation for 2006, the guidance assumes a shift to more restricted stock which adds $10 to $15 million to restricted stock expense in the 2006 EBITDA guidance with a commensurate reduction in option expense.

-- The 2006 guidance also excludes the impact of the adoption of SFAS 152, Accounting for Real Estate Time-Sharing Transactions, which is expected to result in a one-time pre-tax charge of approximately $100 to $120 million in the first quarter of 2006.

-- The 2006 guidance also excludes transition costs associated with the Meridien transaction which is assumed to close by year end 2005.

Special Items:

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

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

The following represents a reconciliation of income fromcontinuing operations before special items to income from continuingoperations after special items (in millions, except per share data):
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------- -------------
2005 2004 2005 2004
----- ----- ----- -----
Income from continuing operations before
$ 131 $ 85 special items $ 364 $ 225
----- ----- ----- -----
$0.58 $0.40 EPS before special items $1.63 $1.05
----- ----- ----- -----
Special Items
Restructuring and other special credits,
- 37 net (a) - 37
Adjustment to costs associated with
- - construction remediation (b) - 4
Loss on asset dispositions and
(16) (4) impairments, net (c) (32) (8)
----- ----- ----- -----
(16) 33 Total special items - pre-tax (32) 33
Income tax benefit (expense) for special
6 (13) items (d) 11 (12)
Tax expense on repatriation of foreign
(47) - earnings (e) (47) -
Reserves and settlements associated with
(34) - tax matters (f) (32) 12
----- ------ ----- -----
(91) 20 Total special items - after-tax (100) 33
----- ----- ----- -----

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

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

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

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

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

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

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

The Company has included the above supplemental informationconcerning special items to assist investors in analyzing Starwood'sfinancial position and results of operations. The Company has chosento provide this information to investors to enable them to performmeaningful comparisons of past, present and future operating resultsand as a means to emphasize the results of core on-going operations.

Starwood will be conducting a conference call to discuss the thirdquarter financial results at 10:30 a.m. (EDT) today. The conferencecall will be available through simultaneous webcast in the InvestorRelations/Press Releases section of the Company's website atwww.starwoodhotels.com. A replay of the conference call will also beavailable from 1:30 p.m. (EDT) today through Wednesday, November 2 at12:00 midnight (EDT) on both the Company's website and via telephonereplay at (719) 457-0820 (access code 9041603).

Definitions:

All references to EPS, unless otherwise noted, reflect earningsper diluted share from continuing operations. All references to "netcapital expenditures" mean gross capital expenditures for timeshareand fractional inventory net of cost of sales. EBITDA represents netincome before interest expense, taxes, depreciation and amortization.The Company believes that EBITDA is a useful measure of the Company'soperating performance due to the significance of the Company'slong-lived assets and level of indebtedness. EBITDA is a commonly usedmeasure of performance in its industry which, when considered withGAAP measures, the Company believes gives a more completeunderstanding of the Company's ability to service debt, fund capitalexpenditures, pay income taxes and pay cash distributions. It alsofacilitates comparisons between the Company and its competitors. TheCompany's management has historically adjusted EBITDA (i.e., "AdjustedEBITDA") when evaluating operating performance for the total Companyas well as for individual properties or groups of properties becausethe Company believes that the inclusion or exclusion of certainrecurring and non-recurring items, such as the special items describedon page 8 of this release and/or revenues and costs and expenses fromhotels sold, is necessary to provide the most accurate measure of coreoperating results and as a means to evaluate comparative results. TheCompany's management also used Adjusted EBITDA as a measure indetermining the value of acquisitions and dispositions and it is usedin the annual budget process. Due to guidance from the Securities andExchange Commission, the Company now does not reflect such items whencalculating EBITDA; however, the Company continues to adjust for thesespecial items and refers to this measure as Adjusted EBITDA. TheCompany has historically reported this measure to its investors andbelieves that the continued inclusion of Adjusted EBITDA providesconsistency in its financial reporting and enables investors toperform more meaningful comparisons of past, present and futureoperating results and provides a means to evaluate the results of itscore on-going operations. EBITDA and Adjusted EBITDA are not intendedto represent cash flow from operations as defined by GAAP and suchmetrics should not be considered as an alternative to net income, cashflow from operations or any other performance measure prescribed byGAAP. The Company's calculation of EBITDA and Adjusted EBITDA may bedifferent from the calculations used by other companies and,therefore, comparability may be limited.

All references to Same-Store Owned Hotels reflect the Company'sowned, leased and consolidated joint venture hotels, excluding hotelssold to date, undergoing significant repositionings or for whichcomparable results are not available (i.e., hotels not owned duringthe entire periods presented or closed due to seasonality or hurricanedamage.) REVPAR is defined as revenue per available room. ADR isdefined as average daily rate.

All references to contract sales reflect vacation ownership salesbefore revenue adjustments for percentage of completion accountingmethodology.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leadinghotel and leisure companies in the world with approximately 750properties in more than 80 countries and 120,000 employees at itsowned and managed properties. With internationally renowned brands,Starwood(R) corporation is a fully integrated owner, operator andfranchisor of hotels and resorts including: St. Regis(R), The LuxuryCollection(R), Sheraton(R), Westin(R), Four Points(R) by Sheraton, andW(R), Hotels and Resorts as well as Starwood Vacation Ownership, Inc.,one of the premier developers and operators of high quality vacationinterval ownership resorts. For more information, please visitwww.starwoodhotels.com.
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Note: This press release contains forward-looking statementswithin the meaning of federal securities regulations. Forward-lookingstatements are not guarantees of future performance and involve risksand uncertainties and other factors that may cause actual results todiffer materially from those anticipated at the time theforward-looking statements are made. Further results, performance andachievements may be affected by general economic conditions includingthe prospects for improved performance internationally, the impact ofwar and terrorist activity, business and financing conditions, foreignexchange fluctuations, cyclicality of the real estate and the hoteland vacation ownership businesses, operating risks associated with thehotel and vacation ownership businesses, relationships with associatesand labor unions, customers and property owners, the impact of theinternet reservation channels, our reliance on technology, domesticand international political and geopolitical conditions, competition,governmental and regulatory actions (including the impact of changesin U.S. and foreign tax laws and their interpretation), travelers'fears of exposure to contagious diseases, risk associated with thelevel of our indebtedness, risk associated with potential acquisitionsand dispositions, and other circumstances and uncertainties. Theserisks and uncertainties are presented in detail in our filings withthe Securities and Exchange Commission. Although we believe theexpectations reflected in such forward-looking statements are basedupon reasonable assumptions, we can give no assurance that ourexpectations will be attained or that results will not materiallydiffer. We undertake no obligation to publicly update or revise anyforward-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 Nine Months Ended
September 30, September 30,
------------------------ -------------------------
% %
2005 2004 Variance 2005 2004 Variance
------ ------ -------- ------ ------ ---------
Revenues
Owned, leased and
consolidated joint
$ 871 $ 811 7.4 venture hotels $2,623 $2,448 7.1
Vacation ownership
and residential
233 175 33.1 sales and services 697 443 57.3
Management fees,
franchise fees and
126 105 20.0 other income 349 299 16.7
Other revenues from
managed and
franchised
266 245 8.6 properties (a) 792 736 7.6
------ ------ -------- ------ ------ ---------
1,496 1,336 11.9 4,461 3,926 13.6

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

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

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

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

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

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

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

n/m = not meaningful




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

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

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

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

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




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

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

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

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

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

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

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


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





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

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

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


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

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

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



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

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

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


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

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

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

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

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

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




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

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

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

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

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

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

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

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


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

(2) See next page for breakdown by division


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

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

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

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

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


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

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

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

(2) See next page for breakdown by division



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

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

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

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

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

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


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


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


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

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

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


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


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

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


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



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

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

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


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


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


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


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


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




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

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

(3) See next page for breakdown by division


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

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


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


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


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



W(2)
REVENUE
EXPENSE


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


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

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

(3) See next page for breakdown by division



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

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

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


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


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


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



OTHER
REVENUE
EXPENSE


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


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

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


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



WESTIN
REVENUE
EXPENSE



ST. REGIS/LUXURY COLLECTION
REVENUE
EXPENSE


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


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



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

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

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

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

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

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

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

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

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

(2) See next page for breakdown by division


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

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

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

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

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


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

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


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

(2) See next page for breakdown by division



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

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

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

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

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

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


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


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

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

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


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


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

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



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

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

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


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


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


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


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


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


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

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

(3) See next page for breakdown by division


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

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


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


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


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



W(3)
REVENUE
EXPENSE


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


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

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

(3) See next page for breakdown by division



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

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

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


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


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


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



OTHER
REVENUE
EXPENSE


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



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

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


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



WESTIN
REVENUE
EXPENSE



ST. REGIS/LUXURY COLLECTION
REVENUE
EXPENSE


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


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



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

Floating Rate
Debt:

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

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

Mortgages and
other Various 183 4% 5.27% 2.0

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

Total Floating 967 22% 6.12% 1.2

Fixed Rate Debt:

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

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

Convertible
debt 360 8% 3.50% 0.6

Mortgages and
other 731 18% 7.26% 5.5

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

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

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


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

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

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



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

Properties without comparable results in 2005:

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

Properties sold or closed in 2005 and 2004:

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



Selected Balance Sheet and Cash Flow Items:

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


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

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

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

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

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


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



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

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

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

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

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

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



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

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


ASIA Total
--------------- ----------------
Owned Hotels Rooms Hotels Rooms
------- ------- ------- --------
Sheraton 3 1,028 56 23,386
Westin - - 36 13,632
Four Points 1 630 7 1,783
W - - 12 4,294
Luxury Collection - - 8 1,612
St. Regis - - 4 828
Other - - 11 2,634
------- ------- ------- --------
Total Owned 4 1,658 134 48,169
Managed & UJV
Sheraton 46 16,416 171 60,604
Westin 12 4,935 56 27,697
Four Points 2 387 12 2,144
W 2 353 8 1,494
Luxury Collection - - 20 2,534
St. Regis 2 591 6 1,282
Other 2 296 4 3,001
------- ------- ------- --------
Total Managed & UJV 66 22,978 277 98,756
Franchised
Sheraton 17 6,050 162 49,864
Westin 5 1,226 29 10,254
Four Points 1 126 112 18,819
Luxury Collection - - 13 1,603
------- ------- ------- --------
Total Franchised 23 7,402 316 80,540
----------------------------------------------------------------------
Systemwide
Sheraton 66 23,494 389 133,854
Westin 17 6,161 121 51,583
Four Points 4 1,143 131 22,746
W 2 353 20 5,788
Luxury Collection - - 41 5,749
St. Regis 2 591 10 2,110
Other 2 296 15 5,635
------- ------- ------- --------
Total Systemwide 93 32,038 727 227,465
======= ======= ======= ========
----------------------------------------------------------------------