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  Starwood Reports 7.7% Decline in Third-quarter Earnings;
RevPAR Up 4.4% for the Quarter, with a
Gain of 3.2% in North America
Hotel Operating Statistics
-
WHITE PLAINS, N.Y. - Oct. 30, 2003 -- Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported EPS from continuing operations for the third quarter of 2003 of $0.23, compared to $0.26 in 2002, a decrease of 11.5%. Excluding special items, EPS from continuing operations was $0.24 in 2003 compared to $0.27 in 2002.

Income from continuing operations was $47 million in 2003 compared to $53 million in 2002, a decrease of 11.3%. Excluding special items, income from continuing operations was $49 million in 2003 compared to $55 million in 2002. Net income (including discontinued operations) was $48 million and EPS was $0.23 in 2003 compared to net income of $52 million and EPS of $0.26 in 2002. The third quarter results reflect a 5% tax benefit as compared to a 0% tax rate at the end of the second quarter of 2003. The decline in the tax rate is due to lower than had been expected pre-tax earnings for 2003 and contributed approximately $0.02 of EPS, excluding special items, in the third quarter of 2003.

Third quarter 2003 Highlights:

  • REVPAR at Same-Store Owned Hotels worldwide and in North America increased 4.4% and 3.2%, respectively, when compared to 2002.
  • Excluding the downtown Toronto hotel (impacted by the SARS outbreak), REVPAR at Same-Store Owned Sheraton Hotels in North America increased 4.4% when compared to 2002. Even including owned hotels in Toronto, REVPAR at Same-Store Owned Sheraton Hotels in North America increased 1.4%.
  • Transient travel was up more than 8% in North America when compared to 2002, more than offsetting weakness in group travel.
  • Market share increased significantly during the quarter. At owned hotels in North America, market share increased 340 basis points when compared to 2002.
  • At September 30, 2003, net debt was $4.014 billion compared to $4.571 billion at June 30, 2003. 
Barry S. Sternlicht, Chairman and CEO said, "Though our expectations for this third quarter were modest, we were pleased with our operating performance and with recent trends. Our REVPAR gains in each month of the quarter of 2003 (July +2.9%, August +1.1% and September +5.7%) reflected steady market share gains by nearly every brand in North America as well as the general economic recovery. In addition, in September, we saw modest but uneven rate increases as occupancies rose, and the beginnings of a recovery in the Latin American and Asian markets.

Highlights of the quarter included the strength of our interval ownership business, particularly in the Western US and Hawaii, the 13.5% increase in REVPAR at our W Hotels, the strengthening of the Sheraton brand, which excluding the downtown Toronto hotel affected by SARS, showed a year-over-year 4.4% REVPAR increase in North America as our products and service innovations like our Sheraton Sweet Sleeper and the Sheraton Service Promise begin to resonate with the consumer.

Concluding, Mr. Sternlicht said, "We ended the quarter with net debt of approximately $4 billion as we very successfully managed our capital expenditures and investment programs and retained the cash proceeds from asset sales. Included in our capital spending are substantial timeshare inventory development and the construction of the St. Regis San Francisco, as well as investments in the Boston Convention Center hotel and several other projects that will generate future earnings. With recovery in corporate earnings and the dissipation of the SARS outbreak, we remain optimistic that our industry and our company will see brighter days ahead."

Operating Results:

Cash flow from operations in the third quarter of 2003 was $296 million compared to $252 million in the third quarter of 2002. Total Company Adjusted EBITDA in the third quarter of 2003 was $233 million, compared to $272 million in 2002. The decrease in EBITDA is substantially due to the loss of revenues as a result of the sale of 15 non-strategic domestic hotels and four hotels in Costa Smeralda, Italy sold at the end of the second quarter and during the third quarter of 2003. EBITDA from these hotels in the third quarter of 2002, was approximately $41 million, compared to $4 million in 2003. Total management and franchise fees in the third quarter were $70 million, up $8 million from last year and vacation ownership results were up $11 million despite the absence of vacation ownership notes receivable sale gains in the third quarter of 2003 versus $3 million in the same period of 2002.

REVPAR for Same-Store Owned Hotels worldwide and in the U.S. increased 4.4% and 3.2% respectively, when compared to 2002. For the fourth quarter in a row, total Company market share in North America increased for the Company's owned and managed hotels as well as system-wide hotels. Internationally, Same-Store Owned Hotel REVPAR increased 7.8%, with Europe up 6.1% and Asia Pacific up 40.7%, offset by slight declines in Latin America of 1.9%. Excluding the favorable effects of foreign exchange, REVPAR declined 3.3% internationally.

Vacation Ownership:

Revenues from the vacation ownership business increased 47.9% to $133 million as contract sales were up 26.5% reflecting strong demand at our resorts in Maui and Mission Hills. The average price per timeshare unit sold increased 19.6% to $18,574 in the third quarter of 2003 when compared to 2002. While the Company did not have any vacation ownership notes receivable sales in the third quarter of 2003, it expects to complete a securitization of vacation ownership notes receivable during the fourth quarter of 2003, subject to market conditions.

Development:

During the third quarter, the Company signed four hotel management and franchise contracts (approximately 1,100 rooms) and opened seven new hotels and resorts including: the Westin Kuala Lampur (Kuala Lampur, Malaysia, 452 rooms), the Arabella Sheraton Grand Hotel Cape Town (Cape Town, South Africa, 483 rooms), and the Westin City Center Dallas (Dallas, Texas, 407 rooms). Fourteen new hotel openings scheduled for the fourth quarter of 2003 include: Sheraton Tunis (Tunis, Tunisia, 242 rooms), the Sheraton Porto (Porto, Portugal, 273 rooms), the Westin Zagreb Hotel, (Zagreb, Croatia,367 rooms), the W Mexico City (Mexico City, Mexico, 237 rooms) and the Westin Casuarina Hotel (Las Vegas, Nevada, 795 rooms). Including these properties, through the end of 2004, the Company expects to open 36 new full service hotels and resorts (approximately 10,000 rooms) around the world. Additionally, the development pipeline includes more than a dozen W Hotel projects (3,900 rooms), including the two hotel and residence projects in Dallas and Fort Lauderdale.

Dispositions:

In late June and during the third quarter of 2003, the Company completed the sale of 15 non-strategic domestic hotels for gross proceeds of $404 million. The majority of these hotels continue to be part of the Starwood system pursuant to franchise agreements. The Company completed the sale of one additional hotel (the Sheraton North Charleston) in October 2003 and continues to work toward the sale of two additional non-core domestic hotels and expects to close these sales in 2003. The Company incurred a $174 million (pre-tax) charge in the first half of 2003 and an additional $3 million (pre-tax) charge in the third quarter of 2003, primarily related to post-closing adjustments to the sales price of these non-core domestic hotels. The Company has realized approximately $1.1 billion in cash proceeds from the sale of these hotels and the sales in the second quarter of 2003 of the Hotel Principe di Savoia ("Principe") in Milan, Italy and four hotels and a 51% interest in undeveloped land in Costa Smeralda, Italy ("Sardinia Assets").

Capital:

Investment spending during the quarter included approximately $43 million in hotel assets; $32 million in VOI capital assets (primarily inventory build), including VOI construction at Westin Ka'anapali Ocean Resort Villas in Maui, Hawaii; Westin Mission Hills Resort Villas in Rancho Mirage, California and Sheraton's Vistana Villages in Orlando, Florida; and $19 million in other development/corporate capital, including the ongoing development of the St. Regis Museum Tower in San Francisco (269 rooms and 102 condominium units). To date, the Company has invested $126 million in the St. Regis Museum Tower Project, a mixed-use project, which is expected to open in late 2005 or in early 2006. The Company expects to realize gross proceeds of $180 - $200 million from the sale of the project's condominiums.

Balance Sheet:

At September 30, 2003, the Company had total debt of $4.885 billion and cash and cash equivalents (including restricted cash) of $871 million, or net debt of $4.014 billion, compared to net debt of $4.571 billion at the end of the second quarter of 2003.

At September 30, 2003, debt was approximately 68% fixed rate and 32% floating rate and its weighted average maturity was 6.0 years with a weighted average interest rate of 5.50%. The Company had cash (including restricted cash) and availability under domestic and international revolving credit facilities of approximately $1.8 billion.

Special Items:

The Company recorded net charges of $2 million (after-tax) for special items in the third quarter of 2003 comparable to $2 million of net charges (after-tax) in the same period of 2002.

Special items in the third quarter of 2003 primarily relate to the additional loss on 18 domestic non-core hotels held for sale and construction remediation costs at an unconsolidated vacation ownership joint venture.

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

Three Months                                           Nine Months
     Ended                                                  Ended
 September 30,                                          September 30,
---------------                                               ---------------
  2003    2002                                           2003    2002
------- -------                                                ------- -------
                Income from continuing operations
   $49     $55   before special items               $89    $158
------- -------                                                 ------- -------
 $0.24   $0.27  EPS before special items       $0.43   $0.77
------- -------                                                  ------- -------
 

                Special Items:
                Restructuring and other special
     1       2   credits, net(a)                            1       5
                Gain (loss) on asset dispositions and
    (3)      6   impairments, net(b)                     (179)      2
                Foreign exchange gain (loss) from
     -      (3)  Argentina(c)                               -      30
     -       -  Debt extinguishment costs(d)                -     (29)
                Costs associated with construction
    (3)     (5)  remediation   (e)                         (3)     (5)
     -       -  State tax refund                            -       6
------- -------                                        ------- -------
    (5)      -  Total special items - pre-tax            (181)      9
                Income tax benefit/(expense) for
     3      (2)  special items(f)                         109      (5)
------- -------                                        ------- -------
    (2)     (2) Total special items - after-tax           (72)      4
------- -------                                        ------- -------

   $47     $53  Income from continuing operations         $17    $162
------- -------                                        ------- -------

 $0.23   $0.26  EPS including special items             $0.08   $0.79
------- -------                                        ------- -------

(a) During the three and nine month periods ending September 30, 2003,
    the Company collected receivables which were previously deemed
    uncollectible. During the three and nine months ended September
    30, 2002, the Company sold its investments in e-business ventures
    previously deemed impaired and collected receivables which were
    previously deemed uncollectible. Accordingly, the previously
    recorded impairment reserves associated with these assets were
    reversed.

(b) Loss for the three and nine months ended September 30, 2003
    primarily represents the impairment charges recorded due to the
    classification of a portfolio of 18 domestic non-core hotels as
    held for sale, 16 of which have been sold to date, offset in part
    by the gain on the sale of undeveloped land in Sardinia, Italy.
    Gain for the three months ended September 30, 2002 primarily
    represents a gain recorded in connection with the sale of the
    Company's investment in Interval International. For the nine
    months ended September 30, 2002, this gain is partially offset by
    an impairment charge to reduce the carrying value of a hotel,
    which was later sold, to its fair market value.

(c) Amount represents foreign exchange gains and losses resulting from
    the initial devaluation of the Argentine Peso and subsequent
    exchange rate volatility and is reflected in selling, general and
    administrative and other expenses.

(d) In the second quarter of 2002, the Company early adopted Statement
    of Financial Accounting Standards ("SFAS") No. 145, requiring
    costs associated with the early extinguishment of debt to be
    included in income from continuing operations, rather than
    reported as an extraordinary item. This resulted in the inclusion
    of costs related to the early extinguishment of debt and the
    unwinding of the associated interest rate swaps in 2002 in
    interest expense.

(e) Represents the Company's share of costs for construction
    remediation efforts at a property owned by a vacation ownership
    unconsolidated joint venture. Amounts in 2003 and 2002 are
    reflected as a reduction to other hotel and leisure revenues.

(f) In 2003, amount primarily represents various adjustments to tax
    liabilities due to the successful resolution of certain income tax
    matters and taxes on special items at the Company's incremental
    tax rate, primarily associated with the 2003 asset sales. In 2002,
    amount represents taxes on special items at the Company's
    incremental tax rate, with the exception of the construction
    remediation charge which is not tax-effected as the joint-venture
    is in a tax-exempt jurisdiction.

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.

Outlook:

All comments in the following paragraphs and certain comments in this release above are deemed to be forward-looking statements. These statements reflect expectations of the Company's performance given its current base of assets and its current understanding of external economic and geo-political environments. Actual results may differ materially.

The situation in the Middle East, continued weakness in global economies and the threat of terrorist events and their consequent impact on travel make it extremely difficult to predict future results with any degree of precision.

For the fourth quarter of 2003, if REVPAR at Same-Store Owned Hotels in North America is up 2% versus the same period a year ago:

  • EBITDA would be expected to be approximately $260 million.
  • Net income would be expected to be approximately $68 million.
  • EPS would be expected to be approximately $0.32. 
For the full year 2003, assuming the sale of the 2 remaining domestic non-core hotels at the end of 2003, if REVPAR at Same-Store Owned Hotels in North America declined approximately 1% versus the full year 2002:
  • Adjusted EBITDA would be expected to be approximately $925 million.
  • Income from continuing operations, excluding special items, would be expected to be approximately $157 million.
  • Net income would be expected to be approximately $290 million.
  • EPS from continuing operations, excluding special items, would be expected to be approximately $0.76 at a negative five percent tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2004).
  • EPS is expected to be approximately $1.40.
  • Capital expenditures and timeshare inventory would be approximately $400 million, including approximately $150 million of timeshare spend.
  • For full year the Company expects cash interest expense of approximately $300 million and cash taxes of approximately $25 million. 
For the full year 2004, assuming the sale of the 2 remaining domestic non-core hotels by the end of 2003, if REVPAR at Same-Store Owned Hotels in North America increases approximately 4% to 5% versus the full year 2003:
  • Full year EBITDA would be expected to increase 5% to 8% to approximately $950 - $975 million, when compared to expected 2003 EBITDA of $900 million, after adjusting for the 2003 asset sales.
  • Full year net income would be expected to be approximately $180 - $200 million.
  • Full year EPS, would be expected to be approximately $0.85 -$0.95 at a six to seven percent tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2005).
  • Full year capital expenditures and timeshare inventory would be approximately $600 million, including approximately $200 million of timeshare spend and approximately $90 million for the St. Regis San Francisco multi-use project under construction.
  • For full year the Company expects cash interest expense of approximately $280 million and cash taxes of approximately $70 million. 
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,
--------------------------                  --------------------------
                   %                                            %
  2003    2002   Variance                      2003    2002   Variance
------- ------- ---------                    ------- ------- ---------
                          Revenues
                          Owned, leased and
                           consolidated
                           joint venture
  $735    $796      (7.7)  hotels            $2,288  $2,386      (4.1)
                          Other hotel and
   201     164      22.6   leisure(a)           531     478      11.1
------- ------- ---------                    ------- ------- ---------
   936     960      (2.5)                     2,819   2,864      (1.6)
                          Other revenues
                           from managed and
                           franchised
   204     187       9.1   properties(b)        634     589       7.6
------- ------- ---------                    ------- ------- ---------
 1,140   1,147      (0.6)                     3,453   3,453         -
------- ------- ---------                    ------- ------- ---------
                          Costs and Expenses
                          Owned, leased and
                           consolidated
                           joint venture
   577     583       1.0   hotels             1,781   1,739      (2.4)
                          Selling, general,
                           administrative
   143     123     (16.3)  and other(c)         411     318     (29.2)
                          Restructuring and
                           other special
    (1)     (2)    (50.0)  credits, net          (1)     (5)    (80.0)
   100     123      18.7  Depreciation          309     349      11.5
     5       6      16.7  Amortization           18      16     (12.5)
------- ------- ---------                    ------- ------- ---------
   824     833       1.1                      2,518   2,417      (4.2)
                          Other expenses
                           from managed and
                           franchised
   204     187      (9.1)  properties(b)        634     589      (7.6)
------- ------- ---------                    ------- ------- ---------
 1,028   1,020      (0.8)                     3,152   3,006      (4.9)
   112     127     (11.8) Operating income      301     447     (32.7)
                          Interest expense,
                           net of interest
                           income of $2, $0,
   (69)    (77)     10.4   $3, $1(d)           (219)   (260)     15.8
                          Gain (loss) on
                           asset
                           dispositions and
    (3)      6       n/m   impairments, net    (179)      2       n/m
------- ------- ---------                    ------- ------- ---------
    40      56     (28.6)                       (97)    189       n/m
                          Income tax benefit
     7      (3)      n/m   (expense)            113     (27)      n/m
                          Minority equity in
     -       -         -   net income             1       -       n/m
------- ------- ---------                    ------- ------- ---------
                          Income from
                           continuing
    47      53     (11.3)  operations            17     162     (89.5)
                          Discontinued
                           operations:
                          Loss from
                           operations, net
                           of taxes of $0,
                           $(1), $1
    -       (1)      n/m   and $0 (e)            (1)     (2)     50.0
                          Gain on
                           disposition, net
                           of taxes of $0,
                           $0, $40 and
     1       -       n/m   $(104)               206     104      98.1
------- ------- ---------                    ------- ------- ---------
   $48     $52      (7.7) Net income           $222    $264     (15.9)
======= ======= =========                    ======= ======= =========

                          Earnings Per Share
                           -- Basic
                          Continuing
 $0.23   $0.27     (14.8)  operations         $0.09   $0.81     (88.9)
                          Discontinued
  0.01   (0.01)      n/m   operations          1.01    0.50       n/m
------- ------- ---------                    ------- ------- ---------
 $0.24   $0.26      (7.7) Net income          $1.10   $1.31     (16.0)
======= ======= =========                    ======= ======= =========

                          Earnings Per Share
                           -- Diluted
                          Continuing
 $0.23   $0.26     (11.5)  operations         $0.08   $0.79     (89.9)
                          Discontinued
     -       -         -   operations          1.00    0.50       n/m
------- ------- ---------                    ------- ------- ---------
 $0.23   $0.26     (11.5) Net income          $1.08   $1.29     (16.3)
======= ======= =========                    ======= ======= =========

                          Weighted average
   203     201             number of Shares     202     201
======= =======                              ======= =======
                          Weighted average
                           number of Shares
   208     204             assuming dilution    205     205
======= =======                              ======= =======

------------

(a) Other hotel and leisure revenues include management and franchise
    fees earned from third party hotel owners, the Company's interest
    in unconsolidated joint ventures and the sale and financing of
    VOIs.

(b) 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.

(c) Selling, general, administrative and other expenses include the
    cost of sales of VOIs and other costs of vacation ownership
    operations.

(d) Interest expense is net of $0 and $7 million of discontinued
    operations allocations for the three and nine month periods ended
    September 30, 2003, respectively. Interest expense is net of $4
    million and $11 million of discontinued operations allocations for
    the three and nine month periods ended September 30, 2002,
    respectively. Interest expense for the nine-months ended September
    30, 2002 also includes $29 million of early debt termination
    costs.

(e) For the periods presented, the Principe is reported as a
    discontinued operation as a result of the sale of this hotel with
    no continuing involvement.

n/m = not meaningful
 
 

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

                                           September 30,  December 31,
                                                2003         2002
                                           ------------- -------------
                                            (Unaudited)
Assets
Current assets:
  Cash and cash equivalents                $        787  $        108
     Restricted cash                                 84           108
  Accounts receivable, net of allowance for
   doubtful accounts of $52 and $45                 398           398
  Inventories                                       201           214
  Prepaid expenses and other                        123           108
                                            ------------  ------------
    Total current assets                          1,593           936
Investments                                         400           434
Plant, property and equipment, net                6,946         6,911
Assets held for sale   (a)                           72           839
Goodwill and intangible assets, net               2,476         2,570
Other assets                                        433           500
                                            ------------  ------------
                                           $     11,920  $     12,190
                                            ============  ============

Liabilities and Stockholders' Equity

Current liabilities:
  Short-term borrowings and current
   maturities of long-term debt     (b)    $        442  $        870
  Accounts payable                                  140           171
  Accrued expenses                                  618           723
  Accrued salaries, wages and benefits              224           178
  Accrued taxes and other                           139           188
                                            ------------  ------------
    Total current liabilities                     1,563         2,130
Long-term debt   (b)                              4,443         4,449
Deferred income taxes                               920           986
Other liabilities                                   568           538
                                            ------------  ------------
                                                  7,494         8,103
                                            ------------  ------------
Minority interest                                    38            39
                                            ------------  ------------
Exchangeable units and Class B preferred
 shares, at redemption value of $38.50               33            51
                                            ------------  ------------
Commitments and contingencies
Stockholders' equity:
  Class A exchangeable preferred shares of
   the Trust; $0.01 par value; authorized
   30,000,000 shares; outstanding 481,088
   and 493,968 shares at September 30, 2003
   and December 31, 2002, respectively               --            --
  Corporation common stock; $0.01 par
   value; authorized 1,050,000,000 shares;
   outstanding 202,094,054 and 199,579,542
   shares at September 30, 2003 and
   December 31, 2002, respectively                    2             2
  Trust Class B shares of beneficial
   interest; $0.01 par value; authorized
   1,000,000,000 shares; outstanding
   202,094,054 and 199,579,542 shares at
   September 30, 2003 and December 31,
   2002, respectively                                 2             2
  Additional paid-in capital                      4,962         4,905
  Deferred compensation                             (13)          (14)
  Accumulated other comprehensive income           (396)         (474)
  Accumulated deficit                              (202)         (424)
                                            ------------  ------------
    Total stockholders' equity                    4,355         3,997
                                            ------------  ------------
                                           $     11,920  $     12,190
                                            ============  ============

-------------

(a) Represents the carrying value of the plant, property and equipment
    for the Principe, Sardinia Assets and the 18 non-core domestic
    hotels at December 31, 2002 and the three remaining hotels in the
    portfolio that were not sold as of September 30, 2003.

(b) Excludes Starwood's share of unconsolidated joint venture debt
    aggregating approximately $413 million and $355 million at
    September 30, 2003 and December 31, 2002, 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,
----------------------------                  ------------------------
                                                                %
  2003    2002  % Variance                      2003   2002   Variance
------- ------- -----------                   ------- ------ ---------
                            Reconciliation of
                             Net Income to
                             EBITDA and
                             Adjusted EBITDA
   $48     $52        (7.7) Net income          $222   $264     (15.9)
                            Interest
    76      85       (10.6)  expense(a)          242    284     (14.8)
                            Income tax
                             (benefit)
    (7)      2         n/m   expense (b)         (72)   (77)      6.5
   107     131       (18.3) Depreciation(c)      330    369     (10.6)
     5       6       (16.7) Amortization          18     16      12.5
------- ------- -----------                   ------- ------ ---------
   229     276       (17.0) EBITDA               740    856     (13.6)
                            (Gain) loss on
                             asset
                             dispositions and
     3      (6)        n/m   impairments, net    179     (2)      n/m
                            Discontinued
    (1)     (4)       75.0   operations(d)      (254)   (12)      n/m
                            Restructuring and
                             other special
    (1)     (2)       50.0   credits, net         (1)    (5)     80.0
                            Foreign exchange
                             gains from
     -       3         n/m   Argentina             -    (30)      n/m
                            Costs associated
                             with construction
     3       5       (40.0)  remediation           3      5     (40.0)
------- ------- -----------                   ------- ------ ---------
  $233    $272       (14.3) Adjusted EBITDA     $667   $812     (17.9)
======= ======= ===========                   ======= ====== =========

(a) Includes $5 and $13 million of interest expense related to
    unconsolidated joint ventures for the three and nine month periods
    ended September 30, 2003 and $4 and $12 million for the three and
    nine month periods ended September 30, 2002. Also includes $0 and
    $7 million of interest expense allocated to discontinued
    operations for the three and nine month periods ended September
    30, 2003 and $4 million and $11 million of interest expense
    allocated to discontinued operations for the three and nine month
    periods ended September 30, 2002, respectively.

(b) Includes $0 million and $41 million of taxes recorded,
    respectively, in discontinued operations for the three and nine
    months ended September 30, 2003 and $(1) and $(104) of taxes/(tax
    benefits) recorded in discontinued operations for the three and
    nine months ended September 30, 2002, respectively.

(c) Includes $7 million and $20 million of Starwood's share of
    depreciation expense of unconsolidated joint ventures for the
    three and nine month periods ended September 30, 2003 and $6
    million and $17 million for the three and nine month periods ended
    September 30, 2002. Also includes $0 million and $1 million of
    depreciation expense included in discontinued operations for the
    three and nine months ended September 30, 2003 and $2 million and
    $3 million for the three and nine month periods ended September
    30, 2002.

(d) Excludes the interest expense, taxes, and depreciation balances
    already added back as noted in (a), (b) and (c) above. Includes
    the reversal of a $49 million (pre-tax) liability, in the nine
    months ended September 30, 2003, related to the 1999 divestiture
    of the Company's gaming business which is no longer deemed
    necessary.
 

                                      Three Months      Nine Months
                                           Ended            Ended
                                      September 30,    September 30,
                                     ---------------- ----------------
                                       2003    2002     2003    2002
                                      -------  ------  -------  ------
Cash Flow Data
Net income                           $    48  $   52  $   222  $  264
Exclude:
     Discontinued operations, net         (1)      1     (205)   (102)
                                      -------  ------  -------  ------
Income from continuing operations         47      53       17     162
Adjustment to income from continuing
 operations and changes in working
 capital                                 249     195      499     387
                                      -------  ------  -------  ------
     Cash from continuing operations     296     248      516     549
     Cash from discontinued
      operations                           -       4       10      12
                                      -------  ------  -------  ------
Cash from operating activities       $   296  $  252  $   526  $  561
                                      =======  ======  =======  ======
Cash from (used for) investing
 activities                          $   305  $ (109) $   834  $ (227)
                                      =======  ======  =======  ======
Cash used for financing activities   $  (136) $ (127) $  (690) $ (319)
                                      =======  ======  =======  ======
 

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

                                                             Twelve
                                                 Twelve      Months
                                                  Months      Ended
                    Three Months Twelve Months    Ended     December
                       Ended         Ended      December       31,
                    December 31, December 31,    31, 2004     2004
                        2003          2003      (Low End)  (High End)
                    ------------ ------------- ----------- -----------
 

Net income          $        68  $        290  $      180  $      200
Interest expense             77           319         295         295
Income tax expense
 (benefit)                   (3)          (75)         10          15
Depreciation and
 amortization               118           464         465         465
                     -----------  ------------  ----------  ----------
EBITDA                      260           998         950         975
Loss on asset
 dispositions and
 impairments, net             -           179          --          --
Discontinued
 operations                   -          (254)         --          --
Restructuring and
 other special
 credits                      -            (1)          -          --
Costs associated
 with construction
 remediation                  -             3           -          --
                     -----------  ------------  ----------  ----------
Adjusted EBITDA     $       260  $        925  $      950  $      975
                     ===========  ============  ==========  ==========

-0-

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                    Hotel Resorts - Same Store (1)
             For the Three Months Ended September 30, 2003
                               UNAUDITED
 
 

                                 WORLDWIDE
                       -----------------------------
                            2003     2002    Var.
                       ---------- -------- ---------

                                 140 Hotels
                       -----------------------------
OWNED HOTELS
       REVPAR ($)          99.43    95.25       4.4%
       ADR ($)            144.81   145.23      -0.3%
       OCCUPANCY (%)        68.7%    65.6%      3.1

                                    60
                       -----------------------------
SHERATON
       REVPAR ($)          81.34    78.95       3.0%
       ADR ($)            122.23   124.19      -1.6%
       OCCUPANCY (%)        66.6%    63.6%      3.0

                                    36
                       -----------------------------
WESTIN
       REVPAR ($)         111.57   107.08       4.2%
       ADR ($)            152.92   151.82       0.7%
       OCCUPANCY (%)        73.0%    70.5%      2.5

                                    12
                       -----------------------------
LUXURY COLLECTION
       REVPAR ($)         169.67   161.33       5.2%
       ADR ($)            305.48   309.79      -1.4%
       OCCUPANCY (%)        55.5%    52.1%      3.4

                                    12
                       -----------------------------
W
       REVPAR ($)         142.52   125.56      13.5%
       ADR ($)            192.61   190.81       0.9%
       OCCUPANCY (%)        74.0%    65.8%      8.2

                                    20
                       -----------------------------
OTHER
       REVPAR ($)          78.44    80.05      -2.0%
       ADR ($)            112.50   115.63      -2.7%
       OCCUPANCY (%)        69.7%    69.2%      0.5
 

                               NORTH AMERICA
                       -----------------------------
                            2003     2002    Var.
                       ---------- -------- ---------

                                 95 Hotels
                       -----------------------------
OWNED HOTELS
       REVPAR ($)          98.81    95.75       3.2%
       ADR ($)            138.20   140.81      -1.9%
       OCCUPANCY (%)        71.5%    68.0%      3.5

                                    37
                       -----------------------------
SHERATON
       REVPAR ($)          86.46    85.23       1.4%
       ADR ($)            121.85   125.97      -3.3%
       OCCUPANCY (%)        71.0%    67.7%      3.3

                                    22
                       -----------------------------
WESTIN
       REVPAR ($)          99.67    96.45       3.3%
       ADR ($)            132.22   133.63      -1.1%
       OCCUPANCY (%)        75.4%    72.2%      3.2

                                    5
                       -----------------------------
LUXURY COLLECTION
       REVPAR ($)         155.56   148.10       5.0%
       ADR ($)            274.46   296.11      -7.3%
       OCCUPANCY (%)        56.7%    50.0%      6.7

                                    12
                       -----------------------------
W
       REVPAR ($)         142.52   125.56      13.5%
       ADR ($)            192.61   190.81       0.9%
       OCCUPANCY (%)        74.0%    65.8%      8.2

                                    19
                       -----------------------------
OTHER
       REVPAR ($)          77.72    83.62      -7.1%
       ADR ($)            115.23   122.45      -5.9%
       OCCUPANCY (%)        67.5%    68.3%     -0.8
 
 

                             INTERNATIONAL(2)
                       -----------------------------
                          2003      2002      Var.
                       ---------- -------- ---------

                                 45 Hotels
                       -----------------------------
OWNED HOTELS
       REVPAR ($)         101.16    93.84       7.8%
       ADR ($)            166.90   159.95       4.3%
       OCCUPANCY (%)        60.6%    58.7%      1.9

                                    23
                       -----------------------------
SHERATON
       REVPAR ($)          71.03    66.28       7.2%
       ADR ($)            123.16   119.82       2.8%
       OCCUPANCY (%)        57.7%    55.3%      2.4

                                    14
                       -----------------------------
WESTIN
       REVPAR ($)         149.03   142.55       4.5%
       ADR ($)            228.23   219.16       4.1%
       OCCUPANCY (%)        65.3%    65.0%      0.3

                                    7
                       -----------------------------
LUXURY COLLECTION
       REVPAR ($)         191.14   181.48       5.3%
       ADR ($)            355.21   328.65       8.1%
       OCCUPANCY (%)        53.8%    55.2%     -1.4
 

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

                                    1
                       -----------------------------
OTHER
       REVPAR ($)          83.44    55.71      49.8%
       ADR ($)             97.57    73.63      32.5%
       OCCUPANCY (%)        85.5%    75.7%      9.8
 

(1) Hotel Results exclude 25 hotels sold or closed during 2002 and 2003

(2) See next page for breakdown by division.
 
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                    Hotel Resorts - Same Store (1)
             For the Three Months Ended September 30, 2003
                               UNAUDITED
 
 
 

                               EUROPE
                  --------------------------------
                    2003       2002        Var.
                  ---------- ---------- ----------

                              29 Hotels
                  --------------------------------
OWNED HOTELS
    REVPAR ($)       143.45     135.22        6.1%
    ADR ($)          227.76     214.20        6.3%
    OCCUPANCY (%)      63.0%      63.1%      -0.1

                                11
                  --------------------------------
SHERATON
    REVPAR ($)        98.68      92.31        6.9%
    ADR ($)          151.26     146.01        3.6%
    OCCUPANCY (%)      65.2%      63.2%       2.0

                                11
                  --------------------------------
WESTIN
    REVPAR ($)       181.26     172.21        5.3%
    ADR ($)          282.51     258.11        9.5%
    OCCUPANCY (%)      64.2%      66.7%      -2.5

                                 7
                  --------------------------------
LUXURY COLLECTION
    REVPAR ($)       191.14     181.48        5.3%
    ADR ($)          355.21     328.65        8.1%
    OCCUPANCY (%)      53.8%      55.2%      -1.4
 
 

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

                           LATIN AMERICA
                  --------------------------------
                       2003       2002     Var.
                  ---------- ---------- ----------

                              12 Hotels
                  --------------------------------
OWNED HOTELS
    REVPAR ($)        44.84      45.72       -1.9%
    ADR ($)           88.77      93.87       -5.4%
    OCCUPANCY (%)      50.5%      48.7%       1.8

                                 9
                  --------------------------------
SHERATON
    REVPAR ($)        40.47      42.99       -5.9%
    ADR ($)           87.22      92.92       -6.1%
    OCCUPANCY (%)      46.4%      46.3%       0.1

                                 3
                  --------------------------------
WESTIN
    REVPAR ($)        63.76      58.71        8.6%
    ADR ($)           93.32      97.34       -4.1%
    OCCUPANCY (%)      68.3%      60.3%       8.0
 

LUXURY COLLECTION
    REVPAR ($)
    ADR ($)
    OCCUPANCY (%)
 
 

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

                            ASIA PACIFIC
                  --------------------------------
                       2003       2002     Var.
                  ---------- ---------- ----------

                              4 Hotels
                  --------------------------------
OWNED HOTELS
    REVPAR ($)        94.65      67.26       40.7%
    ADR ($)          117.91      97.08       21.5%
    OCCUPANCY (%)      80.3%      69.3%      11.0

                                 3
                  --------------------------------
SHERATON
    REVPAR ($)       101.53      74.48       36.3%
    ADR ($)          131.78     114.08       15.5%
    OCCUPANCY (%)      77.0%      65.3%      11.7
 

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

LUXURY COLLECTION
    REVPAR ($)
    ADR ($)
    OCCUPANCY (%)
 

                                 1
                  --------------------------------
OTHER
    REVPAR ($)        83.44      55.71       49.8%
    ADR ($)           97.57      73.63       32.5%
    OCCUPANCY (%)      85.5%      75.7%       9.8
 

(1) Hotel Results exclude 25 hotels sold or closed during 2002 and 2003
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                    Hotel Resorts - Same Store (1)
             For the Nine Months Ended September 30, 2003
                               UNAUDITED
 

                                 WORLDWIDE
                      --------------------------------
                        2003       2002        Var.
                      ---------- ---------- ----------

                                 140 Hotels
                      --------------------------------
OWNED HOTELS
        REVPAR ($)        96.91      97.38       -0.5%
        ADR ($)          149.83     151.04       -0.8%
        OCCUPANCY (%)      64.7%      64.5%       0.2

                                    60
                      --------------------------------
SHERATON
        REVPAR ($)        78.01      80.44       -3.0%
        ADR ($)          125.38     129.00       -2.8%
        OCCUPANCY (%)      62.2%      62.4%      -0.2

                                    36
                      --------------------------------
WESTIN
        REVPAR ($)       110.91     109.03        1.7%
        ADR ($)          157.91     155.30        1.7%
        OCCUPANCY (%)      70.2%      70.2%       0.0

                                    12
                      --------------------------------
LUXURY COLLECTION
        REVPAR ($)       184.51     191.37       -3.6%
        ADR ($)          327.12     328.86       -0.5%
        OCCUPANCY (%)      56.4%      58.2%      -1.8

                                    12
                      --------------------------------
W
        REVPAR ($)       136.69     126.77        7.8%
        ADR ($)          197.47     199.08       -0.8%
        OCCUPANCY (%)      69.2%      63.7%       5.5

                                    20
                      --------------------------------
OTHER
        REVPAR ($)        68.24      71.35       -4.4%
        ADR ($)          109.86     112.45       -2.3%
        OCCUPANCY (%)      62.1%      63.5%      -1.4
 
 
 
 

                               NORTH AMERICA
                      --------------------------------
                        2003       2002        Var.
                      ---------- ---------- ----------

                                  95 Hotels
                      --------------------------------
OWNED HOTELS
        REVPAR ($)        97.30      99.09       -1.8%
        ADR ($)          145.43     149.85       -2.9%
        OCCUPANCY (%)      66.9%      66.1%       0.8

                                    37
                      --------------------------------
SHERATON
        REVPAR ($)        82.51      86.34       -4.4%
        ADR ($)          126.31     132.75       -4.9%
        OCCUPANCY (%)      65.3%      65.0%       0.3

                                    22
                      --------------------------------
WESTIN
        REVPAR ($)       100.86     100.62        0.2%
        ADR ($)          139.22     140.44       -0.9%
        OCCUPANCY (%)      72.4%      71.6%       0.8

                                     5
                      --------------------------------
LUXURY COLLECTION
        REVPAR ($)       193.75     208.88       -7.2%
        ADR ($)          323.15     349.15       -7.4%
        OCCUPANCY (%)      60.0%      59.8%       0.2

                                    12
                      --------------------------------
W
        REVPAR ($)       136.69     126.77        7.8%
        ADR ($)          197.47     199.08       -0.8%
        OCCUPANCY (%)      69.2%      63.7%       5.5

                                    19
                      --------------------------------
OTHER
        REVPAR ($)        68.24      73.87       -7.6%
        ADR ($)          113.69     119.17       -4.6%
        OCCUPANCY (%)      60.0%      62.0%      -2.0
 
 
 
 

                              INTERNATIONAL(2)
                      --------------------------------
                        2003       2002        Var.
                      ---------- ---------- ----------

                                  45 Hotels
                      --------------------------------
OWNED HOTELS
        REVPAR ($)        95.79      92.45        3.6%
        ADR ($)          164.30     154.86        6.1%
        OCCUPANCY (%)      58.3%      59.7%      -1.4

                                    23
                      --------------------------------
SHERATON
        REVPAR ($)        68.89      68.46        0.6%
        ADR ($)          123.18     120.28        2.4%
        OCCUPANCY (%)      55.9%      56.9%      -1.0

                                    14
                      --------------------------------
WESTIN
        REVPAR ($)       143.31     136.99        4.6%
        ADR ($)          227.13     209.41        8.5%
        OCCUPANCY (%)      63.1%      65.4%      -2.3

                                     7
                      --------------------------------
LUXURY COLLECTION
        REVPAR ($)       170.46     164.74        3.5%
        ADR ($)          334.21     295.72       13.0%
        OCCUPANCY (%)      51.0%      55.7%      -4.7
 

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

                                     1
                      --------------------------------
OTHER
        REVPAR ($)        68.19      54.21       25.8%
        ADR ($)           89.13      73.80       20.8%
        OCCUPANCY (%)      76.5%      73.5%       3.0
 
 
 
 

(1) Hotel Results exclude 25 hotels sold or closed during 2002 and
    2003

(2) See next page for breakdown by division.

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                    Hotel Resorts - Same Store (1)
             For the Nine Months Ended September 30, 2003
                               UNAUDITED
 
 
 

                                   EUROPE
                      --------------------------------
                        2003       2002        Var.
                      ---------- ---------- ----------

                                  29 Hotels
                      --------------------------------
OWNED HOTELS
        REVPAR ($)       132.86     126.07        5.4%
        ADR ($)          224.32     200.34       12.0%
        OCCUPANCY (%)      59.2%      62.9%      -3.7

                                      11
                      --------------------------------
SHERATON
        REVPAR ($)        94.88      91.57        3.6%
        ADR ($)          155.17     141.79        9.4%
        OCCUPANCY (%)      61.1%      64.6%      -3.5

                                      11
                      --------------------------------
WESTIN
        REVPAR ($)       166.07     154.42        7.5%
        ADR ($)          274.54     240.92       14.0%
        OCCUPANCY (%)      60.5%      64.1%      -3.6

                                      7
                      --------------------------------
LUXURY COLLECTION
        REVPAR ($)       170.46     164.74        3.5%
        ADR ($)          334.21     295.72       13.0%
        OCCUPANCY (%)      51.0%      55.7%      -4.7
 
 

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

                               LATIN AMERICA
                      --------------------------------
                           2003       2002     Var.
                      ---------- ---------- ----------

                                  12 Hotels
                      --------------------------------
OWNED HOTELS
        REVPAR ($)        51.49      56.58       -9.0%
        ADR ($)           97.61     106.73       -8.5%
        OCCUPANCY (%)      52.7%      53.0%      -0.3

                                      9
                      --------------------------------
SHERATON
        REVPAR ($)        44.32      50.02      -11.4%
        ADR ($)           90.73     100.79      -10.0%
        OCCUPANCY (%)      48.8%      49.6%      -0.8

                                      3
                      --------------------------------
WESTIN
        REVPAR ($)        83.14      87.86       -5.4%
        ADR ($)          118.80     127.05       -6.5%
        OCCUPANCY (%)      70.0%      69.2%       0.8
 

LUXURY COLLECTION
        REVPAR ($)
        ADR ($)
        OCCUPANCY (%)
 
 

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

                                ASIA PACIFIC
                      --------------------------------
                        2003       2002        Var.
                      ---------- ---------- ----------

                                  4 Hotels
                      --------------------------------
OWNED HOTELS
        REVPAR ($)        77.53      62.95       23.2%
        ADR ($)          109.80      95.38       15.1%
        OCCUPANCY (%)      70.6%      66.0%       4.6

                                      3
                      --------------------------------
SHERATON
        REVPAR ($)        83.30      68.42       21.7%
        ADR ($)          124.39     111.56       11.5%
        OCCUPANCY (%)      67.0%      61.3%       5.7
 

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

LUXURY COLLECTION
        REVPAR ($)
        ADR ($)
        OCCUPANCY (%)
 

                                      1
                      --------------------------------
OTHER
        REVPAR ($)        68.19      54.21       25.8%
        ADR ($)           89.13      73.80       20.8%
        OCCUPANCY (%)      76.5%      73.5%       3.0
 
 
 
 

(1) Hotel Results exclude 25 hotels sold or closed during 2002 and
    2003

-0-

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                        Debt Portfolio Summary
                       As of September 30, 2003
                               UNAUDITED
 
 

                                                              Avg
                            Balance                         Maturity
                  Interest    (in       % of     Interest     (in
      Debt         Terms    millions)  Portfolio   Rate      years)
----------------- -------- ---------- ---------- -------- ------------

Floating Rate
 Debt:

  Senior credit
    facility
  Revolving credit CBA +
   facility         187.5        $22          1%    4.61%      3.0
  Term loan       LIBOR +
                    187.5        300          6%    3.00%      2.3
                           ---------- ---------- -------- ---------
                                 322          7%    3.11%      2.3

  Mortgages and
    other         Various        237          5%    4.79%      1.6

  Interest rate
    swaps         Various      1,003         20%    5.08%
                           ---------- ---------- --------

    Total Floating             1,562         32%    4.63%      2.0

Fixed Rate Debt:

  Sheraton Holding
   public debt  (1)            1,322         27%    6.52%      7.5

  Senior notes  (2)            1,541         32%    7.04%      6.3

  Convertible debt
   - Series B                    324          7%    3.25%      3.0 (3)

  Convertible debt
   - 2003                        360          7%    3.50%      2.6

  Mortgages and
   other                         779         15%    7.14%      8.4

  Interest rate
   swaps                      (1,003)       -20%    7.25%
                           ---------- ---------- --------

    Total Fixed                3,323         68%    5.91%      6.5
                           ---------- ---------- --------

      Total Debt              $4,885        100%    5.50%      6.0
                           ========== ========== ========
 
 
 
 

                                --------------------------------------
                                              Maturities
                                --------------------------------------
                                    less than 1 year   $          442
                                           2-3 years            1,123
                                           4-5 years            1,245
                                greater than 5 years            2,075
                                                       ---------------
                                                       $        4,885
                                                       ===============

                                --------------------------------------
 

(1) Balance consists of outstanding public debt of $1.297 billion and
a $16 million fair value adjustment related to the unamortized gain on
fixed to floating interest rate swaps terminated in September 2002 and
a $9 million fair value adjustment related to current fixed to
floating interest rate swaps.

(2) Balance consists of outstanding public debt of $1.495 billion and
a $32 million fair value adjustment related to the unamortized gain on
fixed to floating interest rate swaps terminated in September 2002 and
a $14 million fair value adjustment related to current fixed to
floating interest rate swaps.

(3) Average maturity reflects the maturity date of the revolving
credit facility which would be used to refinance the amount put to the
Company.
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
       Hotels without Comparable Results & Other Selected Items
                       As of September 30, 2003
                        UNAUDITED ($ millions)
 

Properties sold or closed in 2003:

Property                               Location
--------                               --------
Lenox Inn                              Atlanta, GA
Sheraton Mofarrej                      Sao Paulo, Brazil
Hotel Cala di Volpe                    Costa Smeralda, Italy
Hotel Pitrizza                         Costa Smeralda, Italy
Hotel Romazzino                        Costa Smeralda, Italy
Cervo Hotel & Conference Center        Costa Smeralda, Italy
Hotel Principe di Savoia               Milan, Italy
Hilton Novi                            Novi, MI
Westin Southfield                      Southfield, MI
Residence Inn Tyson's Corner           Vienna, VA
Sheraton Buckhead                      Atlanta, GA
Sheraton College Park                  Beltsville, MD
Sheraton Chicago Northwest             Arlington Heights, IL
Sheraton Norfolk                       Norfolk, VA
Hilton Sonoma County                   Santa Rosa, CA
Westin Stamford                        Stamford, CT
Wayfarer Inn                           Bedford, NH
Sheraton Ferncroft                     Danvers, MA
Sheraton Danbury                       Danbury, CT
Sheraton Gainesville                   Gainesville, FL
Baltimore Marriott                     Baltimore, MD
Arlington Marriott                     Arlington, VA
North Charleston Sheraton              Charleston, SC
 

Properties sold or closed in 2002:

Property                               Location
--------                               --------
Clarion Hotel Allentown                Allentown, PA
Doubletree Hotel Minneapolis Airport   Minneapolis, MN
 

Selected Balance Sheet and Cash Flow Items:
 

Cash and cash equivalents (including restricted cash of
 $84 million)                                              $       871
Debt level                                                 $     4,885
 
 
 

Revenues and Expenses Associated with Assets Held For Sale or Sold in
2003 (1):
 

                       Q1       Q2       Q3       Q4    Full Year
                   -----------------------------------------------
2003
Revenues             $   49   $   68   $   14     N/A   $     131
Expenses             $   43   $   50   $   11     N/A   $     104

2002
Revenues             $   49   $   72   $  103   $  55   $     279
Expenses             $   40   $   50   $   59   $  43   $     192

(1) Results consist of 20 hotels (excludes the Hotel Principe di
    Savoia reported in discontinued operations) that have been sold in
    2003 and 2 hotels that are currently held for sale. These amounts
    are included in the revenues and expenses from owned, leased and
    consolidated joint venture hotels.
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                         Capital Expenditures
        For the Three and Nine Months Ended September 30, 2003
                        UNAUDITED ($ millions)
 
 

                                              QTD         YTD
 Capital Expenditures:
 Owned, Leased and Consolidated Joint
  Venture Hotels                          $       43   $     101
 Corporate/IT                                      6          18
                                           ----------   ---------
 Subtotal                                         49         119

 Vacation Ownership Capital Expenditures:
 Capital expenditures (includes land
  acquisition)                                    10          40
 Inventory                                        22          64
                                           ----------   ---------
 Subtotal                                         32         104

Development Capital (1)                           13          50
                                           ----------   ---------

 Total Capital Expenditures               $       94   $     273
                                           ==========   =========
 

(1) Includes St. Regis San Francisco additions of $10 QTD and $36 YTD
 

               STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
            Summary of Portfolio by Properties & Rooms (1)
                       As of September 30, 2003
                               UNAUDITED
 

                                               PROPERTIES
                                  ------------------------------------
                                                           Lux. Col./
 Ownership Type                     Sheraton     Westin    St. Regis
--------------------------------- ----------- ----------- -----------

Owned, leased & consolidated JVs          58          36          14
Unconsolidated joint ventures             28          10           2
                                  ----------- ----------- -----------
   Equity interest properties             86          46          16
Managed (third-party owned)              144          46          21
Franchised, represented & referral       164          28          12
                                  ----------- ----------- -----------
   Total                                 394         120          49
                                  =========== =========== ===========
 

                                                  ROOMS
                                  ------------------------------------
                                                           Lux. Col./
 Ownership Type                     Sheraton     Westin    St. Regis
--------------------------------- ----------- ----------- -----------

Owned, leased & consolidated JVs      24,081      13,638       3,056
Unconsolidated joint ventures         10,515       4,495         441
                                  ----------- ----------- -----------
   Equity interest properties         34,596      18,133       3,497
Managed (third-party owned)           49,617      23,383       3,317
Franchised, represented & referral    49,808       9,430       1,412
                                  ----------- ----------- -----------
   Total                             134,021      50,946       8,226
                                  =========== =========== ===========
 
 
 
 
 

                                               PROPERTIES
                                  ------------------------------------
                                    Four
 Ownership Type                     Points     W     Other     Total
--------------------------------- --------- ------ --------- ---------

Owned, leased & consolidated JVs         7     12        13       140
Unconsolidated joint ventures            1      -         1        42
                                  --------- ------ --------- ---------
   Equity interest properties            8     12        14       182
Managed (third-party owned)             21      5         4       241
Franchised, represented & referral     109      -         -       313
                                  --------- ------ --------- ---------
   Total                               138     17        18       736
                                  ========= ====== ========= =========
 

                                                  ROOMS
                                  ------------------------------------
                                    Four
 Ownership Type                     Points     W     Other     Total
--------------------------------- --------- ------ --------- ---------

Owned, leased & consolidated JVs     1,769  4,371     3,250    50,165
Unconsolidated joint ventures          128      -       132    15,711
                                  --------- ------ --------- ---------
   Equity interest properties        1,897  4,371     3,382    65,876
Managed (third-party owned)          3,803    856     1,029    82,005
Franchised, represented & referral  19,284      -         -    79,934
                                  --------- ------ --------- ---------
   Total                            24,984  5,227     4,411   227,815
                                  ========= ====== ========= =========
 

(1) Summary reflects the sale of the Sheraton North Charleston Hotel
    in October 2003, which is now franchised.

Definitions:

All references to EPS, unless otherwise noted, reflect earnings (losses) per diluted share from continuing operations. 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 ability to service debt, fund capital expenditures, pay income taxes and pay cash distributions. It also facilitates comparisons between the Company and its competitors. The Company's management has historically adjusted EBITDA ("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 the special items described on page 3 and 4 of this release, 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 recent 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 accounting principles generally accepted in the United States (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 hotels sold to date and under significant renovation or for which comparable results are not available. REVPAR is defined as revenue per available room. ADR is defined as average daily rate.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with more than 740 properties in more than 80 countries and 105,000 employees at its owned and managed properties. With internationally renowned brands, Starwood is a fully integrated owner, operator and franchisor of hotels and resorts including: St. Regis®, The Luxury Collection®, Sheraton®, Westin®, Four Points® by Sheraton, W® brands, as well as Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. 

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. 

Contact:

Starwood Hotels & Resorts Worldwide, Inc.
Allison Reid
914/640-8514


 
Also See Starwood 3rd Quarter Net Income $52 million Versus $30 million; Cuts in Half Fourth Quarter Target for Room Revenue Growth / Oct 2002
Starwood Reports Loss of $117 million Compared with a profit of $32 million for Last Year 1st Qtr/ Hotel Operating Statistics / April 2003


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