Starwood Reports Third Quarter 2008 Results

WHITE PLAINS, N.Y.--(Business Wire)--
Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today
reported third quarter 2008 financial results.

Third Quarter 2008 Highlights

-- Excluding special items, EPS from continuing operations was
$0.71. Including special items, EPS from continuing operations
was $0.62.

-- Excluding special items, income from continuing operations was
$129 million. Including special items, income from continuing
operations was $113 million.

-- Total Company Adjusted EBITDA was $330 million.

-- Worldwide System-wide REVPAR for Same-Store Hotels increased
3.5% compared to the third quarter of 2007. System-wide REVPAR
for Same-Store Hotels in North America decreased 0.5%.

-- Management and franchise fees increased 6.6% compared to 2007.

-- Worldwide REVPAR for Starwood branded Same-Store Owned Hotels
increased 0.3% compared to the third quarter of 2007. REVPAR
for Starwood branded Same-Store Owned Hotels in North America
decreased 0.5%.

-- Margins at Starwood branded Same-Store Owned Hotels Worldwide
and in North America decreased 208 and 151 basis points,
respectively, compared to the third quarter of 2007.

-- Reported revenues from vacation ownership and residential
sales decreased 11.0% compared to 2007.

-- The Company signed 36 hotel management and franchise contracts
in the quarter representing approximately 8,000 rooms.

-- During the third quarter, the Company repurchased
approximately 3.7 million shares at a cost of $134 million.

Starwood Hotels & Resorts Worldwide, Inc. ("Starwood" or the
"Company") today reported EPS from continuing operations for the third
quarter of 2008 of $0.62 compared to $0.61 in the third quarter of
2007. Excluding special items, which net to a charge of $16 million in
2008 and $14 million in 2007, EPS from continuing operations was $0.71
for the third quarter of 2008 compared to $0.68 in the third quarter
of 2007. Excluding special items, the effective income tax rate in the
third quarter of 2008 was 29.7% compared to 33.0% in the same period
of 2007.

Income from continuing operations was $113 million in the third
quarter of 2008 compared to $129 million in 2007. Excluding special
items, income from continuing operations was $129 million for the
third quarter of 2008 compared to $143 million in 2007.

Net income was $113 million and EPS was $0.62 in the third quarter
of 2008 compared to $129 million and EPS of $0.61 in the third quarter
of 2007.

Frits van Paasschen, CEO said, "While we can't control the
economic environment, we can right-size our organization to offset the
effects of slowing travel demand. Earlier this year we began a process
to streamline our organization and reduce costs while continuing to
invest in Starwood's future growth. I am confident that we will emerge
from this downturn stronger than ever. Starwood is well-positioned
with a strong balance sheet, and solid liquidity. In addition, our
lodging teams are led by four divisional presidents with over 100
years of cumulative lodging experience. Thanks to a terrific brand
portfolio, we enjoy a pipeline that will fuel global growth for years
to come."

Operating Results

Third Quarter Ended September 30, 2008

Management and Franchise Revenues

Worldwide System-wide REVPAR for Same-Store Hotels increased 3.5%
(0.3% using constant dollars) compared to the third quarter of 2007.
International System-wide REVPAR for Same-Store Hotels increased 8.5%
(2.0% using constant dollars). Worldwide System-wide REVPAR increases
by region were: 13.8% in Latin America, 13.5% in Africa and the Middle
East, 8.3% in Europe, 5.4% in Asia Pacific, and a decrease of 0.5% in
North America. Worldwide System-wide REVPAR increases by brand were:
Le Meridien 8.8%, Four Points by Sheraton 7.5%, Sheraton 3.7%, Westin
1.7%, St. Regis/Luxury Collection 0.4%, and W Hotels 0.3%.

Management fees, franchise fees and other income were $218
million, up $5 million, or 2.3%, from the third quarter of 2007.
Management fees grew 4.5% to $117 million and franchise fees grew
12.8% to $44 million.

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

During the third quarter of 2008, the Company signed 36 hotel
management and franchise contracts representing approximately 8,000
rooms of which 33 are new builds and 3 are conversions from other
brands. At September 30, 2008, the Company had approximately 470
hotels in the active pipeline representing approximately 110,000
rooms, driven by strong interest in all Starwood brands. Of these
rooms, 66% are in the upper upscale and luxury segments and 62% are in
international locations.

During the third quarter of 2008, 35 new hotels and resorts
(representing approximately 7,533 rooms) entered the system, including
the Sheraton Phoenix Downtown Hotel (Phoenix, AZ, 1,000 rooms), The
Equinox Golf Resort and Spa (Manchester, VT, 192 rooms), The W Hong
Kong (Hong Kong, China, 393 rooms), Westin Verasa Napa (Napa, CA, 180
rooms), aloft Minneapolis (Minneapolis, MN, 155 rooms) and the Element
Lexington (Lexington, MA, 123 rooms). Seven properties (representing
approximately 2,445 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 0.3%. REVPAR at Starwood branded Same-Store Owned Hotels in
North America decreased 0.5%. Internationally, Starwood branded
Same-Store Owned Hotel REVPAR increased 1.5% (down 6.9% using constant
dollars).

Revenues at Starwood branded Same-Store Owned Hotels in North
America decreased 1.5% while costs and expenses increased 0.5% when
compared to 2007. Margins at these hotels decreased 151 basis points.

Revenues at Starwood branded Same-Store Owned Hotels Worldwide
decreased 0.4% while costs and expenses increased 2.4% when compared
to 2007. Margins at these hotels decreased 208 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 $575 million when compared to $605 million in 2007. Reported
revenues and operating income were impacted by the sale or closure of
nine hotels since the beginning of the third quarter of 2007. These
hotels had $2 million of revenues and $2 million of expenses (before
depreciation) in 2008 as compared to $29 million of revenues and $23
million of expenses (before depreciation) in the same quarter of 2007.

Vacation Ownership

Total vacation ownership reported revenues decreased 27.4% to $183
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
third quarter of 2008, the Company was actively selling vacation
ownership interests at 20 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 29.5% primarily due to the sellout of the Company's Westin
Ka'anapali Ocean Resort North in Maui and an overall decline in
demand. The average price per vacation ownership unit sold decreased
25.4% to approximately $19,000, driven by a higher sales mix of
lower-priced inventory, including a higher percentage of lower-priced
biennial inventory in Hawaii. The number of contracts signed decreased
6.1% when compared to 2007.

The Company did not sell any vacation ownership receivables during
the third quarter. As such, the Company did not recognize the
previously anticipated gain of $10 - 15 million during the quarter.
Conditions remain uncertain in the asset backed securities market, and
it is unlikely that conditions will improve before year-end. As a
result, the Company's full year guidance no longer includes any gains
from securitizations in 2008.

Given declining sales in the vacation ownership business, the
Company is resizing the existing cost structure. The Company has
closed three sales centers and is in the process of reducing overhead
to better fit the revised expectations for the business.

Residential

Residential fees in the third quarter of 2008 totaled $43 million
compared to $2 million in the same period in 2007. Residential fees in
the 2008 period include license fees in connection with the St. Regis
Singapore Residences, which opened in the third quarter of 2008. This
project opened earlier than expected and the Company had previously
included those fees in its implied guidance for the fourth quarter of
2008. Residential fees in the third quarter of 2008 also include a
non-refundable license fee received by the Company in connection with
a St. Regis project currently under development.

Selling, General, Administrative and Other

Selling, general, administrative and other expenses decreased 1.7%
to $113 million compared to the third quarter of 2007. The decrease
was primarily due to the Company's continued focus on reducing its
cost structure.

In the third quarter, the Company completed the first phase of its
overhead cost reduction program, making significant reductions across
several corporate departments. The Company anticipates completing the
review of the other functional areas, and implementing reductions in
those areas by the end of the first quarter of 2009.

Restructuring Charges

During the third quarter of 2008, the Company recorded a $22
million charge in connection with its ongoing initiative of
rationalizing its cost structure in light of the decline in growth in
its business units. The charge primarily related to costs associated
with the closure of a vacation ownership call center and two sales
centers as well as severance costs associated with the reduction in
force at the Company's corporate offices.

Asset Sales

During the third quarter of 2008, the Company completed the sale
of one hotel for net cash proceeds of $15 million. The Company
recorded a gain of $4 million in connection with this sale. The
Company still anticipates closing on the sales of three hotels in
Venice as well as the Westin Turnberry by the end of October, with
additional proceeds of approximately $325 million.

Capital

Gross capital spending during the quarter included approximately
$72 million in renovations of hotel assets including construction
capital at the Sheraton Steamboat Resort, Sheraton Fiji Resort, W
Times Square, Phoenician Resort, aloft Lexington and element
Lexington. Investment spending on gross vacation ownership interest
("VOI") inventory was $78 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 Lagunamar Ocean Resort in Cancun, the
Westin Riverfront Mountain Villas in Avon, the Westin Nanea Ocean
Resort Villas in Maui, the Westin Desert Willow Villas in Palm Desert,
as well as construction costs at the St. Regis Bal Harbour Resort in
Bal Harbour.

Share Repurchase

During the third quarter of 2008, the Company repurchased
approximately 3.7 million shares at a total cost of approximately $134
million. In the nine months ended September 30, 2008, the Company
repurchased approximately 13.6 million shares at a total cost of
approximately $593 million. Starwood had approximately 183 million
shares outstanding (including partnership units) at September 30,
2008.

Balance Sheet

At September 30, 2008, the Company had total debt of $4.074
billion and cash and cash equivalents of $328 million (including $201
million of restricted cash), or net debt of $3.746 billion, compared
to net debt of $3.229 billion at the end of 2007.

At September 30, 2008, debt was approximately 58% fixed rate and
42% floating rate and its weighted average maturity was 4.1 years with
a weighted average interest rate of 5.73%. The Company had cash
(including total restricted cash) and availability under the domestic
and international revolving credit facility of approximately $1.910
billion.

Results for the Nine Months Ended September 30, 2008

EPS from continuing operations decreased to $1.60 compared to
$1.84 in 2007. Excluding special items, EPS from continuing operations
was $1.71 compared to $1.98 in 2007. Excluding special items, income
from continuing operations was $318 million compared to $425 million
in 2007. Net income was $250 million and EPS was $1.33 compared to
$396 million and $1.84, respectively, in 2007. Total Company Adjusted
EBITDA, which was impacted by the sale or closure of 13 hotels since
the beginning of 2007, was $884 million compared to $995 million in
2007.

Outlook

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

For the three months ended December 31, 2008:

-- Adjusted EBITDA is expected to be $250 million to $265 million
assuming:

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-- REVPAR change at Same-Store Company Operated Hotels
Worldwide of -4% to -6% (-2% to -4% in constant dollars).

-- REVPAR change at Branded Same-Store Owned Hotels in North
America of -9% to -11%.

-- North America Branded Same-Store Owned Hotel EBITDA will
decline 20% to 25% with margin declines of 400 to 500 basis
points.

-- Management and franchise revenues will be flat to down 2%.

-- Operating income from our vacation ownership and
residential business will be down $50 million to $60 million
(excludes potential gains on sale of vacation ownership
notes).
*T

-- Income from continuing operations, before special items, is
expected to be approximately $65 million to $75 million,
reflecting an effective tax rate of approximately 31%.

-- EPS before special items is expected to be approximately $0.36
to $0.42.

For the full year 2008:

-- Assuming a REVPAR growth at Same-Store Company Operated Hotels
Worldwide of 2% to 4% and a REVPAR change at Branded
Same-Store Company Owned Hotels in North America of -1% to 1%:

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-- Adjusted EBITDA would be between $1.135 billion and $1.150
billion.

-- EPS before special items would be between $2.07 and $2.13.

-- North America Same-Store Branded Owned Hotel EBITDA will
decline 5% to 10% versus 2007 with margin declines of 150 to
250 basis points.

-- Management and franchise revenue growth between 4% and 6%.

-- Operating income from our vacation ownership and
residential business will decline $105 million to $115
million versus 2007.

-- Income from continuing operations before special items
would be between $384 million and $394 million reflecting an
effective tax rate of 30%.

-- 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 $357 million.

-- Full year interest expense would be approximately $233
million and cash taxes of approximately $50 million.

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

-- The Company expects to open approximately 80 to 100 hotels
(representing approximately 20,000 rooms) in 2008 and is
targeting signing over 150 hotel management and franchise
contracts in 2008.
*T

For the full year 2009:

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

-- Assuming North American and Worldwide Company-operated REVPAR
declines 5% at today's exchange rates:

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-- EBITDA would be approximately $1.0 billion.

-- EPS would be approximately $1.55.
*T

-- A 1% change in REVPAR impacts Company-wide EBITDA by
approximately $25 million, and a 1% change in the US dollar
versus a basket of foreign currencies impacts Company-wide
EBITDA by approximately $5 million.

-- Full year capital expenditures (excluding vacation ownership
and residential inventory) would be approximately $225 million
for maintenance, renovation and technology. Net capital
expenditures for vacation ownership inventory would be
moderately negative. Capital expenditures for Bal Harbour
would be approximately $200 million.

Special Items

The Company's special items netted to a charge of $16 million
(after tax) in the third quarter of 2008 compared to a charge of $14
million (after-tax) in the same period of 2007.

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

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Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ------------------
2008 2007 2008 2007
---------- ---------- --------- --------

Income from continuing
operations before special
$ 129 $ 143 items $ 318 $ 425
---------- ---------- --------- --------
$ 0.71 $ 0.68 EPS before special items $ 1.71 $ 1.98
---------- ---------- --------- --------

Special Items
Restructuring and other special
(22) (1) charges, net (a) (32) (48)
Loss on asset dispositions and
(12) (23) impairments, net (b) (12) (20)
---------- ---------- --------- --------
(34) (24)Total special items - pre-tax (44) (68)
Income tax benefit for special
18 10 items (c) 25 37
Income tax benefits related to
-- -- previous hotel sales (d) -- 3
---------- ---------- --------- --------
(16) (14)Total special items - after-tax (19) (28)
---------- ---------- --------- --------

Income from continuing
$ 113 $ 129 operations $ 299 $ 397
---------- ---------- --------- --------
$ 0.62 $ 0.61 EPS including special items $ 1.60 $ 1.84
========== ========== ========= ========

(a) During the three and nine months ended September 30, 2008, the
Company recorded restructuring charges primarily related to the
ongoing initiatives to streamline operations and eliminate costs. For
the three months ended September 30, 2007, the costs are associated
with the Sheraton Bal Harbour, which was demolished and is being
converted into a St. Regis Hotel with residences and fractional
units. The charge for the nine months ended September 30, 2007
primarily relates to accelerated depreciation of fixed assets at the
Sheraton Bal Harbour, partially offset by a $2 million refund of
insurance premiums related to a retired executive.

(b) During the three and nine months ended September 30, 2008,
primarily relates to an $11 million impairment charge associated with
the Company's equity interest in a joint venture that owns land it no
longer intends to develop partially offset by a $4 million gain on
the sale of a hotel. For the three months ended September 30, 2007,
primarily reflects impairment charges related to two hotels which
were sold in the fourth quarter of 2007. The loss for the nine months
ended September 30, 2007 also includes an $18 million loss on the
sale of four hotels offset by a $15 million gain on the sale of
assets in which the Company held minority interests and insurance
proceeds of $6 million related to owned hotels damaged by hurricanes
and floods in earlier years.

(c) In 2008 and 2007, the benefit relates to the favorable impact of
capital loss utilization and tax benefits at the statutory rate for
the special items.

(d) Income tax benefit relates to adjustments to deferred taxes
associated with deferred gains on previous hotel sales.
*T

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 third
quarter financial results at 10:30 a.m. (EDT) today at (913) 312-0967.
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. (EDT) today through October 30, 2008
at 12:00 midnight (EDT) on both the Company's website and via
telephone replay at (719) 457-0820 (access code 4490609).

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 936
properties in more than 100 countries and 155,000 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.

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** Please contact Starwood's new, toll-free media hotline at
(866) 4-STAR-PR (866-478-2777)
for photography or additional information.**
*T

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.

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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,
------------------------ ------------------------
% %
2008 2007 Variance 2008 2007 Variance
------- ------- -------- ------- ------- --------
Revenues
Owned, leased and
consolidated joint
$ 575 $ 605 (5.0) venture hotels $1,755 $1,798 (2.4)
Vacation ownership
and residential
226 254 (11.0) sales and services 613 760 (19.3)
Management fees,
franchise fees and
218 213 2.3 other income 642 599 7.2
Other revenues from
managed and
franchised
516 468 10.3 properties(a) 1,564 1,386 12.8
------- ------- -------- ------- ------- --------
1,535 1,540 (0.3) 4,574 4,543 0.7
Costs and Expenses
Owned, leased and
consolidated joint
437 448 2.5 venture hotels 1,329 1,345 1.2
Vacation ownership
155 183 15.3 and residential 472 563 16.2
Selling, general,
administrative and
113 115 1.7 other 381 359 (6.1)
Restructuring and
other special
22 1 n/m charges, net 32 48 33.3
73 72 (1.4) Depreciation 216 206 (4.9)
10 7 (42.9) Amortization 26 20 (30.0)
Other expenses from
managed and
franchised
516 468 (10.3) properties(a) 1,564 1,386 (12.8)
------- ------- -------- ------- ------- --------
1,326 1,294 (2.5) 4,020 3,927 (2.4)
209 246 (15.0) Operating income 554 616 (10.1)
Equity earnings and
gains and losses
from unconsolidated
3 8 (62.5) ventures, net 14 54 (74.1)
Interest expense,
net of interest
income of $0, $2,
(48) (40) (20.0) $3 and $12 (150) (108) (38.9)
Loss on asset
dispositions and
(12) (23) 47.8 impairments, net (12) (20) 40.0
------- ------- -------- ------- ------- --------
Income from
continuing
operations before
taxes and minority
152 191 (20.4) equity 406 542 (25.1)
(38) (61) 37.7 Income tax expense (106) (145) 26.9
Minority equity in
(1) (1) -- net income (1) -- n/m
------- ------- -------- ------- ------- --------
Income from
continuing
113 129 (12.4) operations 299 397 (24.7)
Discontinued
operations:
Net loss on
-- -- -- dispositions (49) (1) n/m
------- ------- -------- ------- ------- --------
$ 113 $ 129 (12.4) Net income $ 250 $ 396 (36.9)
======= ======= ======== ======= ======= ========
Earnings (Loss) Per
Share - Basic
Continuing
$ 0.63 $ 0.63 -- operations $ 1.64 $ 1.91 (14.1)
Discontinued
-- -- -- operations (0.27) -- n/m
------- ------- -------- ------- ------- --------
$ 0.63 $ 0.63 -- Net income $ 1.37 $ 1.91 (28.3)
======= ======= ======== ======= ======= ========
Earnings (Loss) Per
Share - Diluted
Continuing
$ 0.62 $ 0.61 1.6 operations $ 1.60 $ 1.84 (13.0)
Discontinued
-- -- -- operations (0.27) -- n/m
------- ------- -------- ------- ------- --------
$ 0.62 $ 0.61 1.6 Net income $ 1.33 $ 1.84 (27.7)
======= ======= ======== ======= ======= ========

Weighted average
180 203 number of Shares 182 207
======= ======= ======= =======
Weighted average
number of Shares
183 210 assuming dilution 186 215
======= ======= ======= =======

(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
*T

-0-
*T
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)

September 30, December 31,
2008 2007
------------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 127 $ 162
Restricted cash 194 196
Accounts receivable, net of allowance for
doubtful accounts of $48 and $50 630 616
Inventories 948 714
Prepaid expenses and other 170 136
------------- ------------
Total current assets 2,069 1,824
Investments 384 423
Plant, property and equipment, net 3,717 3,850
Assets held for sale (a) 164 --
Goodwill and intangible assets, net 2,263 2,302
Deferred tax assets 723 729
Other assets (b) 573 494
------------- ------------
$ 9,893 $ 9,622
============= ============
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings and current
maturities of long-term debt (c) $ 541 $ 5
Accounts payable 198 201
Accrued expenses 1,171 1,175
Accrued salaries, wages and benefits 364 405
Accrued taxes and other 343 315
------------- ------------
Total current liabilities 2,617 2,101
Long-term debt (c) 3,533 3,590
Deferred tax liabilities 28 28
Other liabilities 1,812 1,801
------------- ------------
7,990 7,520
Minority interest 25 26
Commitments and contingencies
Stockholders' equity:
Corporation common stock; $0.01 par
value; authorized 1,000,000,000 shares;
outstanding 183,207,031 and 190,998,585
shares at September 30, 2008 and
December 31, 2007, respectively 2 2
Additional paid-in capital 490 868
Accumulated other comprehensive loss (217) (147)
Retained earnings 1,603 1,353
------------- ------------
Total stockholders' equity 1,878 2,076
------------- ------------
$ 9,893 $ 9,622
============= ============

(a) Includes 5 hotels expected to be sold in 2008.

(b) Includes restricted cash of $7 million and $8 million at September
30, 2008 and December 31, 2007, respectively.

(c) Excludes Starwood's share of unconsolidated joint venture debt
aggregating approximately $601 million and $572 million at September
30, 2008 and December 31, 2007, respectively.
*T

-0-
*T
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations - Historical Data
(in millions)

Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
% %
2008 2007 Variance 2008 2007 Variance
------ ------ -------- ------ ------ --------

Reconciliation of Net
Income to EBITDA and
Adjusted EBITDA
$113 $129 (12.4) Net income $ 250 $ 396 (36.9)
53 47 12.8 Interest expense(a) 169 134 26.1
38 61 (37.7) Income tax expense(b) 155 146 6.2
81 79 2.5 Depreciation(c) 238 228 4.4
11 8 37.5 Amortization (d) 28 23 21.7
------ ------ -------- ------ ------ --------
296 324 (8.6) EBITDA 840 927 (9.4)
Loss on asset
dispositions and
12 23 (47.8) impairments, net 12 20 (40.0)
Restructuring and other
22 1 n/m special charges, net 32 48 (33.3)
------ ------ -------- ------ ------ --------
$330 $348 (5.2) Adjusted EBITDA $ 884 $ 995 (11.2)
====== ====== ======== ====== ====== ========

(a) Includes $5 million and $5 million of interest expense related to
unconsolidated joint ventures for the three months ended September
30, 2008 and 2007, respectively, and $16 million and $14 million for
the nine months ended September 30, 2008 and 2007, respectively.

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

(c) Includes $8 million and $7 million of Starwood's share of
depreciation expense of unconsolidated joint ventures for the three
months ended September 30, 2008 and 2007, respectively, and $22
million and $22 million for the nine months ended September 30, 2008
and 2007, respectively.

(d) Includes $1 million and $1 million of Starwood's share of
amortization expense of unconsolidated joint ventures for the three
months ended September 30, 2008 and 2007, respectively, and $2
million and $3 million for the nine months ended September 30, 2008
and 2007, respectively.
*T

-0-
*T
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
December 31, 2008 December 31, 2008
------------------ -----------------

$ 65 Net income $ 365
63 Interest expense 233
29 Income tax expense 135
93 Depreciation and amortization 357
---------------- ----------------
250 EBITDA 1,090
Loss on asset disposition and
-- impairments, net 12
Restructuring and other special
-- charges, net 32
---------------- ----------------
$ 250 Adjusted EBITDA $ 1,134
================ ================
*T

-0-
*T
Three Months Ended Year Ended
December 31, 2008 December 31, 2008
------------------ -----------------

Income from continuing operations
$ 65 before special items $ 384
---------------- ----------------
$ 0.36 EPS before special items $ 2.07
---------------- ----------------

Special Items
Restructuring and other special
-- charges, net (32)
Loss on asset dispositions and
-- impairments, net (12)
---------------- ----------------
-- Total special items - pre-tax (44)
Income tax benefit for special
-- items 25
---------------- ----------------
-- Total special items - after-tax (19)
---------------- ----------------

$ 65 Income from continuing operations $ 365
---------------- ----------------
$ 0.36 EPS including special items $ 1.97
================ ================
*T

-0-
*T
High Case
Three Months Ended Year Ended
December 31, 2008 December 31, 2008
------------------ -----------------

$ 75 Net income $ 375
63 Interest expense 233
34 Income tax expense 140
93 Depreciation and amortization 357
---------------- ----------------
265 EBITDA 1,105
Loss on asset disposition and
-- impairments, net 12
Restructuring and other special
-- charges, net 32
---------------- ----------------
$ 265 Adjusted EBITDA $ 1,149
================ ================
*T

-0-
*T
Three Months Ended Year Ended
December 31, 2008 December 31, 2008
------------------ -----------------

Income from continuing operations
$ 75 before special items $ 394
---------------- ----------------
$ 0.42 EPS before special items $ 2.13
---------------- ----------------

Special Items
Restructuring and other special
-- charges, net (32)
Loss on asset dispositions and
-- impairments, net (12)
---------------- ----------------
-- Total special items - pre-tax (44)
Income tax benefit for special
-- items 25
---------------- ----------------
-- Total special items - after-tax (19)
---------------- ----------------

$ 75 Income from continuing operations $ 375
---------------- ----------------
$ 0.42 EPS including special items $ 2.03
================ ================
*T

-0-
*T
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations - Future Performance
(In millions)

Year Ended
December 31, 2009
-----------------

Net income $ 286
Interest expense 235
Income tax expense 119
Depreciation and amortization 360
----------------
EBITDA $ 1,000
================
*T

-0-
*T
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) Worldwide %
2008 2007 Variance 2008 2007 Variance
------ ------ -------- ------ ------ --------

Revenue
Same-Store Owned
$525 $528 (0.6) Hotels $1,619 $1,553 4.2
Hotels Sold or Closed
in 2008 and 2007 (13
2 29 (93.1) hotels) 11 125 (91.2)
Hotels Without
Comparable Results
41 42 (2.4) (9 hotels) 117 113 3.5
Other ancillary hotel
7 6 16.7 operations 8 7 14.3
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
$575 $605 (5.0) Venture Hotels Revenue $1,755 $1,798 (2.4)
====== ====== ======== ====== ====== ========

Costs and Expenses
Same-Store Owned
$398 $388 2.6 Hotels $1,215 $1,149 5.7
Hotels Sold or Closed
in 2008 and 2007 (13
2 23 (91.3) hotels) 11 101 (89.1)
Hotels Without
Comparable Results
35 34 2.9 (9 hotels) 100 92 8.7
Other ancillary hotel
2 3 (33.3) operations 3 3 n/m
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
Venture Hotels Costs
$437 $448 (2.5) and Expenses $1,329 $1,345 (1.2)
====== ====== ======== ====== ====== ========

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

Revenue
Same-Store Owned
$321 $326 (1.5) Hotels $1,002 $ 974 2.9
Hotels Sold or Closed
in 2008 and 2007 (13
2 29 (93.1) hotels) 11 125 (91.2)
Hotels Without
Comparable Results
27 26 3.8 (6 hotels) 87 81 7.4
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
$350 $381 (8.1) Venture Hotels Revenue $1,100 $1,180 (6.8)
====== ====== ======== ====== ====== ========

Costs and Expenses
Same-Store Owned
$246 $244 0.8 Hotels $ 754 $ 725 4.0
Hotels Sold or Closed
in 2008 and 2007 (13
2 23 (91.3) hotels) 11 101 (89.1)
Hotels Without
Comparable Results
25 22 13.6 (6 hotels) 73 66 10.6
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
Venture Hotels Costs
$273 $289 (5.5) and Expenses $ 838 $ 892 (6.1)
====== ====== ======== ====== ====== ========

Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
Same-Store Owned Hotels
% International %
2008 2007 Variance 2008 2007 Variance
------ ------ -------- ------ ------ --------

Revenue
Same-Store Owned
$204 $202 1.0 Hotels $ 617 $ 579 6.6
Hotels Sold or Closed
in 2008 and 2007 (0
-- -- n/m hotels) -- -- n/m
Hotels Without
Comparable Results
14 16 (12.5) (3 hotels) 30 32 (6.3)
Other ancillary hotel
7 6 16.7 operations 8 7 14.3
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
$225 $224 0.4 Venture Hotels Revenue $ 655 $ 618 6.0
====== ====== ======== ====== ====== ========

Costs and Expenses
Same-Store Owned
$152 $144 5.6 Hotels $ 461 $ 424 8.7
Hotels Sold or Closed
in 2008 and 2007 (0
-- -- n/m hotels) -- -- n/m
Hotels Without
Comparable Results
10 12 (16.7) (3 hotels) 27 26 3.8
Other ancillary hotel
2 3 (33.3) operations 3 3 n/m
------ ------ -------- ------ ------ --------
Total Owned, Leased and
Consolidated Joint
Venture Hotels Costs
$164 $159 3.1 and Expenses $ 491 $ 453 8.4
====== ====== ======== ====== ====== ========

(1) Same-Store Owned Hotel Results exclude 13 hotels sold or closed in
2008 and 2007 and 9 hotels without comparable results.
*T

-0-
*T
Starwood Hotels & Resorts Worldwide, Inc.
Systemwide(1) Statistics - Same Store
For the Three Months Ended September 30,
UNAUDITED

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

TOTAL HOTELS
REVPAR ($) 128.28 123.98 3.5% 122.10 122.75 -0.5%
ADR ($) 184.18 173.54 6.1% 167.89 165.40 1.5%
Occupancy (%) 69.6% 71.4% -1.8 72.7% 74.2% -1.5

SHERATON
REVPAR ($) 110.04 106.12 3.7% 107.82 109.16 -1.2%
ADR ($) 160.25 150.00 6.8% 149.08 147.36 1.2%
Occupancy (%) 68.7% 70.7% -2.0 72.3% 74.1% -1.8

WESTIN
REVPAR ($) 135.25 132.96 1.7% 130.37 130.64 -0.2%
ADR ($) 189.85 184.19 3.1% 179.13 177.70 0.8%
Occupancy (%) 71.2% 72.2% -1.0 72.8% 73.5% -0.7

ST. REGIS/LUXURY
COLLECTION
REVPAR ($) 271.77 270.64 0.4% 224.76 231.03 -2.7%
ADR ($) 426.11 399.18 6.7% 344.17 337.70 1.9%
Occupancy (%) 63.8% 67.8% -4.0 65.3% 68.4% -3.1

LE MERIDIEN
REVPAR ($) 157.94 145.11 8.8% 244.20 231.63 5.4%
ADR ($) 225.79 201.99 11.8% 301.05 292.83 2.8%
Occupancy (%) 70.0% 71.8% -1.8 81.1% 79.1% 2.0

W
REVPAR ($) 219.26 218.58 0.3% 221.65 223.22 -0.7%
ADR ($) 290.33 287.61 0.9% 287.80 286.08 0.6%
Occupancy (%) 75.5% 76.0% -0.5 77.0% 78.0% -1.0

FOUR POINTS
REVPAR ($) 85.76 79.76 7.5% 83.43 80.22 4.0%
ADR ($) 119.57 108.98 9.7% 113.19 105.30 7.5%
Occupancy (%) 71.7% 73.2% -1.5 73.7% 76.2% -2.5

OTHER
REVPAR ($) 118.78 126.36 -6.0% 118.78 126.36 -6.0%
ADR ($) 162.11 166.81 -2.8% 162.11 166.81 -2.8%
Occupancy (%) 73.3% 75.8% -2.5 73.3% 75.8% -2.5

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

TOTAL HOTELS
REVPAR ($) 136.30 125.57 8.5%
ADR ($) 207.61 185.11 12.2%
Occupancy (%) 65.7% 67.8% -2.1

SHERATON
REVPAR ($) 112.79 102.33 10.2%
ADR ($) 175.88 153.65 14.5%
Occupancy (%) 64.1% 66.6% -2.5

WESTIN
REVPAR ($) 148.86 139.45 6.7%
ADR ($) 222.40 203.70 9.2%
Occupancy (%) 66.9% 68.5% -1.6

ST. REGIS/LUXURY COLLECTION
REVPAR ($) 300.54 294.93 1.9%
ADR ($) 478.22 437.42 9.3%
Occupancy (%) 62.8% 67.4% -4.6

LE MERIDIEN
REVPAR ($) 150.79 137.92 9.3%
ADR ($) 218.46 193.61 12.8%
Occupancy (%) 69.0% 71.2% -2.2

W
REVPAR ($) 196.35 174.03 12.8%
ADR ($) 320.83 307.83 4.2%
Occupancy (%) 61.2% 56.5% 4.7

FOUR POINTS
REVPAR ($) 91.22 78.66 16.0%
ADR ($) 135.95 118.90 14.3%
Occupancy (%) 67.1% 66.2% 0.9

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

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

-0-
*T
Starwood Hotels & Resorts Worldwide, Inc.
Worldwide Hotel Results - Same Store
For the Three Months Ended September 30,
UNAUDITED

Systemwide (1) Company Operated (2)
--------------------- ---------------------
2008 2007 Var. 2008 2007 Var.
------- ------- ----- ------- ------- -----

TOTAL WORLDWIDE
REVPAR ($) 128.28 123.98 3.5% 142.66 137.83 3.5%
ADR ($) 184.18 173.54 6.1% 203.74 190.55 6.9%
Occupancy (%) 69.6% 71.4% -1.8 70.0% 72.3% -2.3

NORTH AMERICA
REVPAR ($) 122.10 122.75 -0.5% 147.27 150.12 -1.9%
ADR ($) 167.89 165.40 1.5% 196.86 194.51 1.2%
Occupancy (%) 72.7% 74.2% -1.5 74.8% 77.2% -2.4

EUROPE
REVPAR ($) 192.18 177.44 8.3% 203.47 189.15 7.6%
ADR ($) 276.60 245.60 12.6% 286.90 257.88 11.3%
Occupancy (%) 69.5% 72.2% -2.7 70.9% 73.3% -2.4

AFRICA & MIDDLE EAST
REVPAR ($) 113.49 99.95 13.5% 115.54 101.14 14.2%
ADR ($) 172.12 150.35 14.5% 173.35 151.06 14.8%
Occupancy (%) 65.9% 66.5% -0.6 66.7% 67.0% -0.3

ASIA PACIFIC
REVPAR ($) 109.91 104.30 5.4% 106.56 99.71 6.9%
ADR ($) 173.90 156.80 10.9% 171.54 150.19 14.2%
Occupancy (%) 63.2% 66.5% -3.3 62.1% 66.4% -4.3

LATIN AMERICA
REVPAR ($) 82.74 72.70 13.8% 88.37 77.11 14.6%
ADR ($) 135.45 120.27 12.6% 145.02 128.96 12.5%
Occupancy (%) 61.1% 60.4% 0.7 60.9% 59.8% 1.1

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

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

-0-
*T
Starwood Hotels & Resorts Worldwide, Inc.
Owned Hotel Results - Same Store (1)
For the Three Months Ended September 30,
UNAUDITED

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

TOTAL HOTELS 66 Hotels 35 Hotels
----------------------- -----------------------
REVPAR ($) 169.54 169.96 -0.2% 175.45 177.63 -1.2%
ADR ($) 230.29 226.43 1.7% 222.82 223.25 -0.2%
Occupancy (%) 73.6% 75.1% -1.5 78.7% 79.6% -0.9

Total Revenue 525,204 528,271 -0.6% 320,870 326,324 -1.7%
Total Expenses 398,120 387,978 2.6% 246,261 243,751 1.0%

BRANDED HOTELS 57 Hotels 26 Hotels
----------------------- -----------------------
REVPAR ($) 175.95 175.46 0.3% 188.20 189.14 -0.5%
ADR ($) 238.85 234.02 2.1% 235.33 235.18 0.1%
Occupancy (%) 73.7% 75.0% -1.3 80.0% 80.4% -0.4

Total Revenue 483,926 485,795 -0.4% 279,592 283,848 -1.5%
Total Expenses 364,569 355,882 2.4% 212,710 211,655 0.5%

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

TOTAL HOTELS 31 Hotels
-----------------------
REVPAR ($) 160.29 157.90 1.5%
ADR ($) 244.32 232.27 5.2%
Occupancy (%) 65.6% 68.0% -2.4

Total Revenue 204,334 201,947 1.2%
Total Expenses 151,859 144,227 5.3%

BRANDED HOTELS 31 Hotels
-----------------------
REVPAR ($) 160.29 157.90 1.5%
ADR ($) 244.32 232.27 5.2%
Occupancy (%) 65.6% 68.0% -2.4

Total Revenue 204,334 201,947 1.2%
Total Expenses 151,859 144,227 5.3%

(1) Hotel Results exclude 13 hotels sold and 9 hotels without
comparable results during 2007 & 2008
*T

-0-
*T
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended September 30,
UNAUDITED ($ millions)

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

Management Fees:
Base Fees 73 70 3 4.3%
Incentive Fees 44 42 2 4.8%
------ ------ ---------- ----------
Total Management Fees 117 112 5 4.5%

Franchise Fees 44 39 5 12.8%
------ ------ ---------- ----------

Total Management & Franchise Fees 161 151 10 6.6%

Other Management & Franchise
Revenues (1) 23 30 (7) -23.3%
------ ------ ---------- ----------

Total Management & Franchise
Revenues 184 181 3 1.7%

Other (2) 34 32 2 6.3%
------ ------ ---------- ----------

Management Fees, Franchise Fees &
Other Income 218 213 5 2.3%
====== ====== ========== ==========

(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.
*T

-0-
*T
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Three Months Ended September 30,
UNAUDITED ($ millions)

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

Originated Sales Revenues (1) -- Vacation
Ownership Sales 129 183 (29.5%)
Other Sales and Services Revenues (2) 51 43 18.6%
Deferred Revenues -- Percentage of Completion 2 24 n/m
Deferred Revenues -- Other (3) 1 2 n/m
------ ------ ----------
Vacation Ownership Sales and Services
Revenues 183 252 (27.4%)
Residential Sales and Services Revenues 43 2 n/m
------ ------ ----------
Total Vacation Ownership & Residential Sales
and Services Revenues 226 254 (11.0%)
====== ====== ==========

Originated Sales Expenses (4) -- Vacation
Ownership Sales 93 113 17.7%
Other Expenses (5) 52 50 (4.0%)
Deferred Expenses -- Percentage of Completion 1 10 n/m
Deferred Expenses -- Other 8 8 n/m
------ ------ ----------
Vacation Ownership Expenses 154 181 14.9%
Residential Expenses 1 2 50.0%
------ ------ ----------
Total Vacation Ownership & Residential
Expenses 155 183 15.3%
====== ====== ==========

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

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

(3) Includes deferral of revenue for contracts still in rescission
period, contracts that do not yet meet the requirements of SFAS No.
66 or SFAS No. 152 and provision for loan loss

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

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

Note: Deferred revenue is calculated based on the Percentage of
Completion ("POC") of the project. Deferred expenses, also based on
POC, include product costs and direct sales and marketing costs only.
Indirect sales and marketing costs are not deferred per SFAS No. 152.

n/m = not meaningful
*T

-0-
*T
Starwood Hotels & Resorts Worldwide, Inc.
Systemwide(1) Statistics - Same Store
For the Nine Months Ended September 30,
UNAUDITED

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

TOTAL HOTELS
REVPAR ($) 129.55 121.28 6.8% 123.01 120.88 1.8%
ADR ($) 187.28 173.04 8.2% 172.80 166.80 3.6%
Occupancy (%) 69.2% 70.1% -0.9 71.2% 72.5% -1.3

SHERATON
REVPAR ($) 110.96 103.59 7.1% 105.41 103.80 1.6%
ADR ($) 162.61 149.67 8.6% 149.70 144.93 3.3%
Occupancy (%) 68.2% 69.2% -1.0 70.4% 71.6% -1.2

WESTIN
REVPAR ($) 141.60 136.29 3.9% 139.34 136.82 1.8%
ADR ($) 198.57 188.16 5.5% 191.02 184.08 3.8%
Occupancy (%) 71.3% 72.4% -1.1 72.9% 74.3% -1.4

ST. REGIS/LUXURY
COLLECTION
REVPAR ($) 256.36 240.96 6.4% 243.27 239.80 1.4%
ADR ($) 395.06 359.53 9.9% 360.98 353.83 2.0%
Occupancy (%) 64.9% 67.0% -2.1 67.4% 67.8% -0.4

LE MERIDIEN
REVPAR ($) 159.25 139.85 13.9% 228.63 220.16 3.8%
ADR ($) 228.66 201.46 13.5% 304.56 290.19 5.0%
Occupancy (%) 69.6% 69.4% 0.2 75.1% 75.9% -0.8

W
REVPAR ($) 217.33 212.04 2.5% 217.04 215.19 0.9%
ADR ($) 294.87 285.08 3.4% 288.86 281.53 2.6%
Occupancy (%) 73.7% 74.4% -0.7 75.1% 76.4% -1.3

FOUR POINTS
REVPAR ($) 81.83 75.72 8.1% 77.68 74.64 4.1%
ADR ($) 116.93 106.94 9.3% 110.85 103.94 6.6%
Occupancy (%) 70.0% 70.8% -0.8 70.1% 71.8% -1.7

OTHER
REVPAR ($) 104.09 104.96 -0.8% 104.09 104.96 -0.8%
ADR ($) 159.92 158.43 0.9% 159.92 158.43 0.9%
Occupancy (%) 65.1% 66.2% -1.1 65.1% 66.2% -1.1

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

TOTAL HOTELS
REVPAR ($) 138.18 121.80 13.4%
ADR ($) 207.71 181.96 14.2%
Occupancy (%) 66.5% 66.9% -0.4

SHERATON
REVPAR ($) 117.89 103.32 14.1%
ADR ($) 179.89 156.06 15.3%
Occupancy (%) 65.5% 66.2% -0.7

WESTIN
REVPAR ($) 147.94 134.82 9.7%
ADR ($) 221.79 200.90 10.4%
Occupancy (%) 66.7% 67.1% -0.4

ST. REGIS/LUXURY COLLECTION
REVPAR ($) 265.04 241.73 9.6%
ADR ($) 419.14 363.39 15.3%
Occupancy (%) 63.2% 66.5% -3.3

LE MERIDIEN
REVPAR ($) 153.17 132.80 15.3%
ADR ($) 221.44 192.87 14.8%
Occupancy (%) 69.2% 68.9% 0.3

W
REVPAR ($) 220.13 181.84 21.1%
ADR ($) 367.05 332.78 10.3%
Occupancy (%) 60.0% 54.6% 5.4

FOUR POINTS
REVPAR ($) 94.73 79.07 19.8%
ADR ($) 135.95 116.81 16.4%
Occupancy (%) 69.7% 67.7% 2.0

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

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

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*T
Starwood Hotels & Resorts Worldwide, Inc.
Worldwide Hotel Results - Same Store
For the Nine Months Ended September 30,
UNAUDITED

Systemwide (1) Company Operated (2)
--------------------- ---------------------
2008 2007 Var. 2008 2007 Var.
------- ------- ----- ------- ------- -----

TOTAL WORLDWIDE
REVPAR ($) 129.55 121.28 6.8% 145.55 135.31 7.6%
ADR ($) 187.28 173.04 8.2% 207.41 190.90 8.6%
Occupancy (%) 69.2% 70.1% -0.9 70.2% 70.9% -0.7

NORTH AMERICA
REVPAR ($) 123.01 120.88 1.8% 149.95 147.73 1.5%
ADR ($) 172.80 166.80 3.6% 203.88 197.30 3.3%
Occupancy (%) 71.2% 72.5% -1.3 73.5% 74.9% -1.4

EUROPE
REVPAR ($) 173.90 154.04 12.9% 184.03 163.54 12.5%
ADR ($) 260.01 226.19 15.0% 268.18 236.09 13.6%
Occupancy (%) 66.9% 68.1% -1.2 68.6% 69.3% -0.7

AFRICA & MIDDLE EAST
REVPAR ($) 139.08 116.67 19.2% 141.30 118.17 19.6%
ADR ($) 197.56 168.86 17.0% 199.23 170.06 17.2%
Occupancy (%) 70.4% 69.1% 1.3 70.9% 69.5% 1.4

ASIA PACIFIC
REVPAR ($) 117.86 106.22 11.0% 113.30 101.34 11.8%
ADR ($) 182.41 160.41 13.7% 176.74 154.01 14.8%
Occupancy (%) 64.6% 66.2% -1.6 64.1% 65.8% -1.7

LATIN AMERICA
REVPAR ($) 91.68 81.25 12.8% 98.13 87.40 12.3%
ADR ($) 141.38 130.43 8.4% 152.03 141.48 7.5%
Occupancy (%) 64.8% 62.3% 2.5 64.5% 61.8% 2.7

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

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

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*T
Starwood Hotels & Resorts Worldwide, Inc.
Owned Hotel Results - Same Store (1)
For the Nine Months Ended September 30,
UNAUDITED

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

TOTAL HOTELS 66 Hotels 35 Hotels
------------------------ ----------------------
REVPAR ($) 172.14 163.85 5.1% 177.54 171.11 3.8%
ADR ($) 238.20 225.62 5.6% 235.71 226.48 4.1%
Occupancy (%) 72.3% 72.6% -0.3 75.3% 75.6% -0.3

Total Revenue 1,619,230 1,553,273 4.2% 1,002,258 973,740 2.9%
Total Expenses 1,214,556 1,148,611 5.7% 753,770 724,732 4.0%

BRANDED HOTELS 57 Hotels 26 Hotels
------------------------ ----------------------
REVPAR ($) 180.74 171.29 5.5% 194.04 185.96 4.3%
ADR ($) 247.01 233.28 5.9% 249.99 239.51 4.4%
Occupancy (%) 73.2% 73.4% -0.2 77.6% 77.6% 0.0

Total Revenue 1,506,843 1,441,712 4.5% 889,871 862,179 3.2%
Total Expenses 1,117,428 1,055,027 5.9% 656,642 631,148 4.0%

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

TOTAL HOTELS 31 Hotels
--------------------
REVPAR ($) 163.63 152.38 7.4%
ADR ($) 242.59 224.12 8.2%
Occupancy (%) 67.4% 68.0% -0.6

Total Revenue 616,972 579,533 6.5%
Total Expenses 460,786 423,879 8.7%

BRANDED HOTELS 31 Hotels
--------------------
REVPAR ($) 163.63 152.38 7.4%
ADR ($) 242.59 224.12 8.2%
Occupancy (%) 67.4% 68.0% -0.6

Total Revenue 616,972 579,533 6.5%
Total Expenses 460,786 423,879 8.7%

(1) Hotel Results exclude 13 hotels sold and 9 hotels without
comparable results during 2007 & 2008
*T

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

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

Management Fees:
Base Fees 217 204 13 6.4%
Incentive Fees 121 105 16 15.2%
---- ---- ---------- ----------
Total Management Fees 338 309 29 9.4%

Franchise Fees 127 109 18 16.5%
---- ---- ---------- ----------

Total Management & Franchise Fees 465 418 47 11.2%

Other Management & Franchise Revenues
(1) 72 73 (1) -1.4%
---- ---- ---------- ----------

Total Management & Franchise Revenues 537 491 46 9.4%

Other (2) 105 108 (3) -2.8%
---- ---- ---------- ----------

Management Fees, Franchise Fees & Other
Income 642 599 43 7.2%
==== ==== ========== ==========

(1) Other Management & Franchise Revenues primarily includes the
amortization of deferred gains of approximately $63 million in 2008
and $60 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.
*T

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

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

Originated Sales Revenues (1) -- Vacation
Ownership Sales 434 549 (20.9%)
Other Sales and Services Revenues (2) 156 134 16.4%
Deferred Revenues -- Percentage of Completion (27) 59 n/m
Deferred Revenues -- Other (3) 3 6 n/m
----- ---- ----------
Vacation Ownership Sales and Services Revenues 566 748 (24.3%)
Residential Sales and Services Revenues 47 12 n/m
----- ---- ----------
Total Vacation Ownership & Residential Sales and
Services Revenues 613 760 (19.3%)
===== ==== ==========

Originated Sales Expenses (4) -- Vacation
Ownership Sales 305 348 12.4%
Other Expenses (5) 155 153 (1.3%)
Deferred Expenses -- Percentage of Completion (14) 28 n/m
Deferred Expenses -- Other 21 24 n/m
----- ---- ----------
Vacation Ownership Expenses 467 553 15.6%
Residential Expenses 5 10 50.0%
----- ---- ----------
Total Vacation Ownership & Residential Expenses 472 563 16.2%
===== ==== ==========

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

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

(3) Includes deferral of revenue for contracts still in rescission
period, contracts that do not yet meet the requirements of SFAS No.
66 or SFAS No. 152 and provision for loan loss

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

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

Note: Deferred revenue is calculated based on the Percentage of
Completion ("POC") of the project. Deferred expenses, also based on
POC, include product costs and direct sales and marketing costs only.
Indirect sales and marketing costs are not deferred per SFAS No. 152.

n/m = not meaningful
*T

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*T
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotels without Comparable Results & Other Selected Items
As of September 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
element Lexington Lexington, MA
aloft Lexington Lexington, MA
aloft Philadelphia Airport Philadelphia, PA

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
Sheraton Hamilton Hamilton, Ontario
*T

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*T
Selected Balance Sheet and Cash Flow Items:

Cash and cash equivalents (including restricted cash of $201
million) $ 328
Debt $ 4,074

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 $ 5 $ 4 $ 2 $ - $ 11
Expenses (excluding depreciation) $ 5 $ 4 $ 2 $ - $ 11

2007
Revenues $ 4 $ 5 $ 5 $ 5 $ 19
Expenses (excluding depreciation) $ 4 $ 5 $ 5 $ 5 $ 19

(1) Results consist of 2 hotels 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.
*T

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*T
Starwood Hotels & Resorts Worldwide, Inc.
Divisional Hotel Inventory Summary by Ownership by Brand
As of September 30, 2008
UNAUDITED

----------------------------------------------
NAD EAME LAD
----------------------------------------------
Hotels Rooms Hotels Rooms Hotels Rooms
----------------------------------------------
Owned
Sheraton 8 4,464 8 1,727 5 2,713
Westin 5 2,849 5 1,065 3 743
Four Points 3 579 - - - -
W 9 3,172 - - - -
Luxury Collection 1 643 7 828 1 180
St. Regis 3 668 1 161 - -
aloft 2 272 - - - -
element 1 123 - - - -
Other 9 2,454 - - - -
----------------------------------------------
Total Owned 41 15,224 21 3,781 9 3,636
----------------------------------------------

Managed & UJV
Sheraton 45 30,263 71 20,875 15 2,934
Westin 49 26,773 15 4,090 - -
Four Points 2 646 8 1,536 3 427
W 11 3,187 1 134 1 237
Luxury Collection 9 1,802 10 1,712 7 250
St. Regis 4 900 1 95 - -
Le Meridien 5 749 68 16,935 1 130
Other 1 - 1 - - -
----------------------------------------------
Total Managed & UJV 126 64,320 175 45,377 27 3,978
----------------------------------------------

Franchised
Sheraton 154 44,703 27 6,815 9 2,500
Westin 53 17,624 5 2,030 3 600
Four Points 88 14,647 12 1,670 8 1,395
Luxury Collection 3 577 14 1,796 - -
Le Meridien 5 1,553 7 2,119 1 213
aloft 8 1,223 - - - -
----------------------------------------------
Total Franchised 311 80,327 65 14,430 21 4,708
----------------------------------------------

Systemwide
Sheraton 207 79,430 106 29,417 29 8,147
Westin 107 47,246 25 7,185 6 1,343
Four Points 93 15,872 20 3,206 11 1,822
W 20 6,359 1 134 1 237
Luxury Collection 13 3,022 31 4,336 8 430
St. Regis 7 1,568 2 256 - -
Le Meridien 10 2,302 75 19,054 2 343
aloft 10 1,495 - - - -
element 1 123 - - - -
Other 10 2,454 1 - - -
----------------------------------------------
Total Systemwide 478 159,871 261 63,588 57 12,322
==============================================

--------------------------------
ASIA Total
--------------------------------
Hotels Rooms Hotels Rooms
--------------------------------
Owned
Sheraton 2 821 23 9,725
Westin 1 273 14 4,930
Four Points 1 630 4 1,209
W - - 9 3,172
Luxury Collection - - 9 1,651
St. Regis - - 4 829
aloft - - 2 272
element - - 1 123
Other - - 9 2,454
--------------------------------
Total Owned 4 1,724 75 24,365
--------------------------------

Managed & UJV
Sheraton 53 18,774 184 72,846
Westin 16 5,978 80 36,841
Four Points 7 1,789 20 4,398
W 3 723 16 4,281
Luxury Collection - - 26 3,764
St. Regis 4 1,008 9 2,003
Le Meridien 21 5,395 95 23,209
Other - - 2 -
--------------------------------
Total Managed & UJV 104 33,667 432 147,342
--------------------------------

Franchised
Sheraton 14 5,651 204 59,669
Westin 7 1,939 68 22,193
Four Points 2 235 110 17,947
Luxury Collection 7 2,022 24 4,395
Le Meridien 2 554 15 4,439
aloft - - 8 1,223
--------------------------------
Total Franchised 32 10,401 429 109,866
--------------------------------

Systemwide
Sheraton 69 25,246 411 142,240
Westin 24 8,190 162 63,964
Four Points 10 2,654 134 23,554
W 3 723 25 7,453
Luxury Collection 7 2,022 59 9,810
St. Regis 4 1,008 13 2,832
Le Meridien 23 5,949 110 27,648
aloft - - 10 1,495
element - - 1 123
Other - - 11 2,454
--------------------------------
Total Systemwide 140 45,792 936 281,573
================================
*T

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*T
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three and Nine Months Ended September 30, 2008
UNAUDITED ($ millions)

Q3 YTD
---- -----
Capital Expenditures:
Owned, Leased and Consolidated Joint Venture Hotels 72 190
Corporate/IT 21 64
---- -----
Subtotal 93 254

Vacation Ownership Capital Expenditures:
Capital expenditures (includes land acquisitions) 26 80
Net capital expenditures for inventory (excluding St.
Regis Bal Harbour) (1) 17 92
Net capital expenditures for inventory - St. Regis Bal
Harbour(1) 25 101
---- -----
Subtotal 68 273

Development Capital 4 32
---- -----

Total Capital Expenditures 165 559
==== =====

(1) Represents gross inventory capital expenditures of $78 and $304 in
the three and nine months ended September 30, 2008, respectively,
less cost of sales of $36 and $111 in the three and nine months ended
September 30, 2008, respectively.
*T

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*T
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership Inventory Pipeline
As of September 30, 2008
UNAUDITED

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

Sheraton 8 6 7
Westin 12 7 8
St. Regis 2 2 2
The Luxury Collection 1 1 1
Unbranded 3 3 1
-----------------------------
Total SVO, Inc. 26 19 19
-----------------------------

Unconsolidated Joint Ventures (UJV's) 2 1 1
-----------------------------
Total including UJV's 28 20 20
----------------------------------------------------------------------

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

----------------------------------------------------------------------
# of Units (1)
-----------------------------------------------------
Pre-sales/ Future Total at
Brand Completed(3) Development(4) Capacity(5),(6) Buildout
----------------------------------------------------------------------

Sheraton 2,781 298 1,394 4,473
Westin 1,333 229 972 2,534
St. Regis 63 - - 63
The Luxury
Collection 6 - 6 12
Unbranded 124 - 1 125
-----------------------------------------------------
Total SVO, Inc. 4,307 527 2,373 7,207
-----------------------------------------------------

Unconsolidated
Joint Ventures
(UJV's) 198 - 40 238
-----------------------------------------------------
Total including
UJV's 4,505 527 2,413 7,445
----------------------------------------------------------------------

----------------------------------------------------------------------
Total Intervals
Including UJV's
(7) 234,260 27,404 125,476 387,140
----------------------------------------------------------------------

(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.
*T

Starwood Hotels & Resorts Worldwide, Inc.
Jason Koval, 914-640-4429

Copyright Business Wire 2008