10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2009

OR

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from                      to                     

Commission File Number: 1-7959

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

(Exact name of Registrant as specified in its charter)

Maryland
(State or other jurisdiction
of incorporation or organization)

52-1193298
(I.R.S. employer identification no.)

1111 Westchester Avenue
White Plains, NY 10604
(Address of principal executive
offices, including zip code)

(914) 640-8100
(Registrant’s telephone number,
including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o     No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o  Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     Indicate the number of shares outstanding of the issuer’s classes of common stock, as of the latest practicable date:

     186,656,396 shares of common stock, par value $0.01 per share, outstanding as of April 24, 2009.

TABLE OF CONTENTS

	Page
PART I. Financial Information
Item 1. Financial Statements		2
Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008		3
Consolidated Statements of Income for the Three Months Ended March 31, 2009 and 2008		4
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2009 and 2008		5
Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008		6
Notes to Consolidated Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3. Quantitative and Qualitative Disclosures about Market Risk		32
Item 4. Controls and Procedures		32
PART II. Other Information
Item 1. Legal Proceedings		33
Item 1A. Risk Factors		33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits		33
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-10.5
EX-10.6
EX-10.7
EX-10.8
EX-10.9
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

     The following unaudited consolidated financial statements of Starwood Hotels & Resorts Worldwide, Inc. (the “Company”) are provided pursuant to the requirements of this Item. In the opinion of management, all adjustments necessary for fair presentation, consisting of normal recurring adjustments, have been included. The consolidated financial statements presented herein have been prepared in accordance with the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 filed on February 27, 2009. See the notes to consolidated financial statements for the basis of presentation. Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. The consolidated financial statements should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this filing. Results for the three months ended March 31, 2009 are not necessarily indicative of results to be expected for the full fiscal year ending December 31, 2009.

2

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED BALANCE SHEETS
(In millions, except Share data)

	March 31,			December 31,
	2009			2008
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	76		$	389
Restricted cash		82			96
Accounts receivable, net of allowance for doubtful accounts of $50 and $49		513			552
Inventories		1,025			986
Prepaid expenses and other		168			143
Total current assets		1,864			2,166
Investments		359			372
Plant, property and equipment, net		3,540			3,599
Assets held for sale		10			10
Goodwill and intangible assets, net		2,225			2,235
Deferred tax assets		619			639
Other assets		685			682
	$	9,302		$	9,703
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current maturities of long-term debt	$	5		$	506
Accounts payable		173			171
Accrued expenses		1,099			1,274
Accrued salaries, wages and benefits		269			346
Accrued taxes and other		365			391
Total current liabilities		1,911			2,688
Long-term debt		3,953			3,502
Deferred income taxes		30			26
Other liabilities		1,821			1,843
		7,715			8,059
Commitments and contingencies
Stockholders’ equity:
Common stock; $0.01 par value; authorized 1,000,000,000 shares; outstanding 186,723,517 and 182,827,483 shares at March 31, 2009 and December 31, 2008, respectively		2			2
Additional paid-in capital		490			493
Accumulated other comprehensive loss		(449	)		(391	)
Retained earnings		1,523			1,517
Total Starwood stockholders’ equity		1,566			1,621
Noncontrolling interest		21			23
Total equity		1,587			1,644
	$	9,302		$	9,703

The accompanying notes to financial statements are an integral part of the above statements.

3

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per Share data)
(Unaudited)

	Three Months Ended
	March 31,
	2009			2008
Revenues
Owned, leased and consolidated joint venture hotels	$	386		$	560
Vacation ownership and residential sales and services		135			193
Management fees, franchise fees and other income		165			206
Other revenues from managed and franchised properties		432			507
		1,118			1,466
Costs and Expenses
Owned, leased and consolidated joint venture hotels		334			438
Vacation ownership and residential		106			158
Selling, general, administrative and other		93			130
Restructuring and other special charges, net		17			9
Depreciation		70			71
Amortization		7			7
Other expenses from managed and franchised properties		432			507
		1,059			1,320
Operating income		59			146
Equity earnings and gains and losses from unconsolidated ventures, net		(5	)		6
Interest expense, net of interest income of $0 and $2		(43	)		(47	)
Loss on asset dispositions and impairments, net		(5	)		(1	)
Income from continuing operations before taxes		6			104
Income tax expense		(1	)		(26	)
Income from continuing operations		5			78
Discontinued operations:
Loss on dispositions, net of tax expense of $1 and $47		(1	)		(47	)
Net income	$	4		$	31
Net loss attributable to noncontrolling interests		2			1
Net income attributable to Starwood		6			32
Earnings (Loss) Per Share — Basic
Continuing operations	$	0.04		$	0.43
Discontinued operations		(0.01	)		(0.26	)
Net income	$	0.03		$	0.17
Earnings (Loss) Per Share — Diluted
Continuing operations	$	0.04		$	0.42
Discontinued operations		(0.01	)		(0.25	)
Net income	$	0.03		$	0.17
Amounts attributable to Starwood’s Common Shareholders
Income from continuing operations	$	7		$	79
Discontinued operations		(1	)		(47	)
Net income	$	6		$	32
Weighted average number of shares		179			184
Weighted average number of shares assuming dilution		181			189

The accompanying notes to financial statements are an integral part of the above statements.

4

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)

	Three Months Ended
	March 31,
	2009			2008
Net income	$	4		$	31
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments		(59	)		28
Change in fair value of derivatives and investments		1			(4	)
Comprehensive income (loss)		(54	)		55
Comprehensive loss attributable to noncontrolling interests		2			1
Comprehensive income (loss) attributable to Starwood	$	(52	)	$	56

The accompanying notes to financial statements are an integral part of the above statements.

5

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

	Three Months Ended
	March 31,
	2009			2008
Operating Activities
Net income	$	4		$	31
Adjustments to net income:
Discontinued operations:
Loss on dispositions, net		1			47
Depreciation and amortization		77			78
Amortization of deferred gains		(20	)		(21	)
Non-cash portion of restructuring and other special charges, net		1			—
Loss on asset dispositions and impairments, net		5			1
Stock-based compensation expense		11			18
Distributions in excess of equity earnings		11			8
Gain on the sale of VOI notes receivable		(1	)		—
Non-cash portion of income tax expense		1			15
Other non-cash adjustments to net income		7			2
Decrease (increase) in restricted cash		14			(44	)
Other changes in working capital		(115	)		(69	)
VOI notes receivable activity, net		(19	)		(40	)
Accrued and deferred income taxes and other		(9	)		17
Cash (used for) from operating activities		(32	)		43
Investing Activities
Purchases of plant, property and equipment		(62	)		(109	)
Collection of notes receivable, net		—			4
Proceeds from investments, net		5			15
Other, net		(6	)		(17	)
Cash used for investing activities		(63	)		(107	)
Financing Activities
Revolving credit facility and short-term borrowings (repayments), net		(47	)		503
Long-term debt repaid		(2	)		(1	)
Dividends paid		(164	)		(172	)
Proceeds from employee stock option exercises		—			67
Share repurchases		—			(277	)
Other, net		(3	)		(16	)
Cash from (used for) financing activities		(216	)		104
Exchange rate effect on cash and cash equivalents		(2	)		8
(Decrease) increase in cash and cash equivalents		(313	)		48
Cash and cash equivalents — beginning of period		389			151
Cash and cash equivalents — end of period	$	76		$	199
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest	$	23		$	28
Income taxes, net of refunds	$	16		$	20

The accompanying notes to financial statements are an integral part of the above statements.

6

Note 1. Basis of Presentation

     The accompanying consolidated financial statements represent the consolidated financial position and consolidated results of operations of Starwood Hotels & Resorts Worldwide, Inc. and its subsidiaries (the “Company”).

     The consolidated financial statements include the accounts of the Company and all of its controlled subsidiaries and partnerships. In consolidating, all material intercompany transactions are eliminated.

     Starwood is one of the world’s largest hotel and leisure companies. The Company’s principal business is hotels and leisure, which is comprised of a worldwide hospitality network of approximately 970 full-service hotels, vacation ownership resorts and residential developments primarily serving two markets: luxury and upscale. The principal operations of Starwood Vacation Ownership, Inc. (“SVO”) include the acquisition, development and operation of vacation ownership resorts; marketing and selling vacation ownership interests (“VOIs”) in the resorts; and providing financing to customers who purchase such interests.

Note 2. Recently Issued Accounting Standards

     Adopted Accounting Standards

     In June 2008, the Financial Accounting Standards Board (“FASB”) ratified FASB Staff Position (“FSP”) No. Emerging Issues Task Force (“EITF”) 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (FSP No. EITF 03-6-1), which addresses whether instruments granted in share-based payment awards are participating securities prior to vesting and, therefore, must be included in the earnings allocation in calculating earnings per share under the two-class method described in Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings per Share” (SFAS No. 128). FSP No. EITF 03-6-1 requires that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend-equivalents be treated as participating securities in calculating earnings per share. FSP No. EITF 03-6-1 is effective for the Company beginning with the first interim period of after December 15, 2008, and shall be applied retrospectively to all prior periods. On January 1, 2009 the Company adopted FSP No. EITF 03-6-1, which did not have a material impact on the Company.

     In April 2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of Intangible Assets (“FSP No. 142-3”). FSP No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets.” FSP No. 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. On January 1, 2009, the Company adopted FSP No. 142-3, which did not have any impact on its consolidated financial statements.

     In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosure related to derivatives and hedging activities. SFAS No. 161 must be applied prospectively to all derivative instruments and non-derivative instruments that are designated and qualify as hedging instruments and related hedged items accounted for under SFAS No. 133 for all financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company adopted SFAS No. 161 on January 1, 2009. See Note 12 for enhanced disclosures associated with the adoption of SFAS No. 161.

     Effective January 1, 2008, the Company adopted SFAS No. 157 related to its financial assets and liabilities and elected to defer the option of SFAS No. 157 for non-financial assets and non-financial liabilities as allowed by FSP No. SFAS 157-2 “Effective Date of FASB Statement No. 157,” which was issued in February 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under SFAS No. 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under SFAS No. 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

7

     On January 1, 2009, the Company adopted the provisions of SFAS No. 157 relating to non-financial assets and non-financial liabilities. The adoption of this statement did not have a material impact on the Company’s consolidated financial statements. See Note 8 for additional information.

     In December 2007, the FASB issued SFAS No. 141 (revised 2007),“Business Combinations” (“SFAS 141(R)”), which is a revision of SFAS 141, “Business Combinations.” The primary requirements of SFAS 141(R) are as follows: (i.) Upon initially obtaining control, the acquiring entity in a business combination must recognize 100% of the fair values of the acquired assets, including goodwill, and assumed liabilities, with only limited exceptions even if the acquirer has not acquired 100% of its target. As a consequence, the current step acquisition model will be eliminated. (ii.) Contingent consideration arrangements will be fair valued at the acquisition date and included on that basis in the purchase price consideration. The concept of recognizing contingent consideration at a later date when the amount of that consideration is determinable beyond a reasonable doubt, will no longer be applicable. (iii.) All transaction costs will be expensed as incurred. SFAS 141 (R) is effective as of the beginning of an entity’s first fiscal year beginning after December 15, 2008. The Company adopted SFAS No. 141 on January 1, 2009 and it did not have an impact on its consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51, or SFAS No. 160” (“SFAS No. 160”). SFAS No. 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. Among other items, SFAS No. 160 requires that equity attributable to non-controlling interests be recognized in equity separate from that of the Company’s and that consolidated net income now includes the results of operations attributable to its non-controlling interests. The Company adopted SFAS No. 160 on January 1, 2009 and it did not have a material impact on the Company’s consolidated financial statements. See the financial statements and Note 16 for the presentation and disclosure provisions related to SFAS No. 160.

     Future Adoption of Accounting Standards

     In January 2009, the FASB issued FSP Issue No. FAS No. 132(R)-1 “Employers Disclosures about Pensions and Other Postretirement Benefit Plan Assets” (“FSP FAS No. 132(R)-1”). FSP FAS No. 132(R)-1 amends FAS No. 132 “Employers’ Disclosures about Pensions and Other Postretirement Benefits” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. 0FSP FAS No, 132(R)-1 is effective for fiscal years ending after December 15, 2009. The Company is currently evaluating the impact that FSP FAS No. 132(R)-1 will have on its consolidated financial statements.

     In April 2009, the FASB issued FSP Issue No. FAS No. 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions that are not Orderly” (“FSP FAS No. 157-4”). FSP FAS No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157. This FSP No. 157-4 is effective in reporting periods ending after June 15, 2009. The Company is currently evaluating the impact that FSP FAS No. 157-4 will have on its consolidated financial statements.

     In April 2009, the FASB issued FSP No. FAS No. 107-1 and APB No. 28-1 “Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS No. 107-1 and APB No 28-1”). FSP FAS No. 107-1 and APB No. 28-1 to require disclosures about fair value of financial instruments for annual and interim reporting periods of publicly traded companies. FSP No. 107-1 and APB No. 28-1 are effective in reporting periods ending after June 15, 2009. The Company is currently evaluating the impact that FSP FAS No. 107-1 and APB No. 28-1 will have on its consolidated financial statements.

8

     In April 2009, the FASB issued FSP Issue No. FAS No. 115-2 and FAS No. 124-2 “Recognition and Presentation of Other-Than Temporary Investments” (“FSP FAS No. 115-2 and 124-2”). FSP FAS No. 115-2 and 124-2 amend the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. FSP No. 115-2 and 124-2 are effective in reporting periods ending after June 15, 2009. The Company is currently evaluating the impact that FSP FAS No. 115-2 and 124-2 will have on its consolidated financial statements.

Note 3. Earnings Per Share

     Basic and diluted earnings per share are calculated using income from continuing operations attributable to Starwood’s common shareholders (i.e. excluding amounts attributable to non-controlling interests).

     The following is a reconciliation of basic earnings per share to diluted earnings per share for income from continuing operations (in millions, except per Share data):

	Three Months Ended March 31,
	2009						2008
	Earnings		Shares		Per Share		Earnings		Shares		Per Share
Basic earnings from continuing operations	$	7		179	$	0.04	$	79		184	$	0.43
Effect of dilutive securities:
Employee stock options and restricted stock awards		—		2				—		5
Diluted earnings from continuing operations	$	7		181	$	0.04	$	79		189	$	0.42

     Approximately 12,894,000 shares and 6,041,000 shares were excluded from the computation of diluted shares for the three months ended March 31, 2009 and 2008, respectively, as their impact would have been anti-dilutive.

Note 4. Dispositions

     During the first quarter of 2009, the Company sold the Sheraton hotel in Brussels, Belgium in exchange for a long-term agreement to manage the hotel. The Company recorded a loss of approximately $5 million on the sale.

Note 5. Assets Held for Sale

     During the first quarter of 2008, the Company entered into a purchase and sale agreement for the sale of a hotel for total consideration of $10 million. The Company received a non-refundable deposit from the prospective buyer during the first quarter of 2008. The Company recorded an impairment charge of approximately $1 million in the first quarter of 2008 related to this hotel. In December 2008, the Company and prospective buyer agreed to extend the closing period for up to 12 months and the prospective buyer paid the Company an incremental non-refundable deposit of $1.5 million. The sale is expected to close in the fourth quarter of 2009. The fair value of the asset held for sale is $10.5 million and estimated selling costs are $0.5 million.

Note 6.Other Assets

     Other assets include the following (in millions):

	March 31,		December 31,
	2009		2008
VOI notes receivable, net	$	446	$	444
Other notes receivable, net		30		32
Prepaid taxes		130		130
Deposits and other		79		76
	$	685	$	682

9

Note 7. Notes Receivable Securitizations and Sales

     From time to time, the Company securitizes, without recourse, its fixed rate VOI notes receivable. To accomplish these securitizations, the Company transfers a pool of VOI notes receivable to third-party special purpose entities (together with the special purpose entities in the next sentence, the “SPEs”) and the SPEs transfer the VOI notes receivable to qualifying special purpose entities (“QSPEs”), as defined in SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities — a Replacement of FASB Statement No. 125” (“SFAS No. 140”). The Company continues to service the securitized VOI notes receivable pursuant to servicing agreements negotiated at arms-length based on market conditions; accordingly, the Company has not recognized any servicing assets or liabilities. All of the Company’s VOI notes receivable securitizations to date have qualified to be, and have been, accounted for as sales in accordance with SFAS No. 140.

     With respect to those transactions still outstanding at March 31, 2009, the Company retains economic interests (the “Retained Interests”) in securitized VOI notes receivables through SPE ownership of QSPE beneficial interests. The Retained Interests, which are comprised of subordinated interests and interest only strips in the related VOI notes receivable, provide credit enhancement to the third-party purchasers of the related QSPE beneficial interests. Retained Interests cash flows are limited to the cash available from the related VOI notes receivable, after servicing and other related fees, absorbing 100% of any credit losses on the related VOI notes receivable and QSPE fixed rate interest expense. With respect to those transactions still outstanding at March 31, 2009, the Retained Interests are classified and accounted for as “available-for-sale” securities in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and SFAS No. 140.

     The Company’s securitization agreements provide the Company with the option, subject to certain limitations, to repurchase or replace defaulted VOI notes receivable at their outstanding principal amounts. Such activity totaled $7 million and $6 million during the three months ended March 31, 2009 and 2008, respectively. The Company has been able to resell the VOIs underlying the VOI notes repurchased or replaced under these provisions without incurring significant losses. The Company’s replacement of the defaulted VOI notes receivable under the securitization agreements with new VOI notes receivable resulted in net gains of approximately $1 million during the three months ended March 31, 2009 and 2008, which are included in vacation ownership and residential sales and services in the Company’s consolidated statements of income.

     At March 31, 2009, the aggregate outstanding principal balance of VOI notes receivable that has been securitized was $217 million. The aggregate principal amount of those VOI notes receivables that were more than 90 days delinquent at March 31, 2009 was approximately $5 million.

     Gross credit losses for all VOI notes receivable that have been securitized totaled $9 million and $7 million during the three months ended March 31, 2009 and 2008, respectively.

     The Company received aggregate cash proceeds of $5 million and $7 million from the Retained Interests during the three months ended March 31, 2009 and 2008, respectively, and aggregate servicing fees of $1 million related to these VOI notes receivable in the three months ended March 31, 2009 and 2008.

     At the time of each VOI notes receivable securitization and at the end of each financial reporting period, the Company estimates the fair value of its Retained Interests using a discounted cash flow model. All assumptions used in the models are reviewed and updated, if necessary, based on current trends and historical experience. As of March 31, 2009, the aggregate net present value and carrying value of the Retained Interests for the Company’s three outstanding note securitizations was approximately $20 million, with the following key assumptions used in measuring the fair value: an average discount rate of 17.8%, an average expected annual prepayment rate including defaults of 19.7%, and an expected weighted average remaining life of prepayable notes receivable of 71 months. The change in the fair value of the Retained Interests was determined to be other than temporary and an impairment charge of $1 million was recorded in the first quarter of 2009.

10

     The Company completed a sensitivity analysis on the net present value of the Retained Interests to measure the change in value associated with independent changes in individual key variables. The methodology applied unfavorable changes for the key variables of expected prepayment rates, discount rates and expected gross credit losses as of March 31, 2009. The decreases in value of the Retained Interests that would result from various independent changes in key variables are shown in the chart that follows (in millions). The factors may not move independently of each other.

Annual prepayment rate:
100 basis points-dollars	$	0.4
100 basis points-percentage		2.0	%
200 basis points-dollars	$	0.8
200 basis points-percentage		4.0	%
Discount rate:
100 basis points-dollars	$	0.4
100 basis points-percentage		1.8	%
200 basis points-dollars	$	0.7
200 basis points-percentage		3.6	%
Gross annual rate of credit losses:
100 basis points-dollars	$	3.8
100 basis points-percentage		19.5	%
200 basis points-dollars	$	7.6
200 basis points-percentage		38.4	%

Note 8. Fair Value

     In accordance with SFAS No. 157, the following table represents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2009 (in millions):

	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	—	$	16	$	—	$	16
Retained Interests		—		—		20		20
	$	—	$	16	$	20	$	36
Liabilities:
Forward contracts	$	—	$	3	$	—	$	3

     The forward contracts are over the counter contracts that do not trade on a public exchange. The fair values of the contracts are based on inputs such as foreign currency spot rates and forward points that are readily available on public markets, and as such, are classified as Level 2. The Company considered both its credit risk, as well as its counterparties’ credit risk in determining fair value and no adjustment was made as it was deemed insignificant based on the short duration of the contracts and the Company’s rate of short-term debt.

     The Company estimates the fair value of its Retained Interests using a discounted cash flow model with unobservable inputs, which is considered Level 3. The following key assumptions are used in measuring the fair value: an average discount rate of 17.8%, an average expected annual prepayment rate, including defaults, of 19.7%, and an expected weighted average remaining life of prepayable notes receivable of 71 months. See Note 7 for the impact on the fair value based on changes to the assumptions.

     The following table presents a reconciliation of the Company’s Retained Interests measured at fair value on a recurring basis using significant unobservable inputs (Level 3) from December 31, 2008 to March 31, 2009 (in millions):

Balance at December 31, 2008	$	19
Purchases, issuances, and settlements, net		1
Balance at March 31, 2009	$	20

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Note 9. Debt

     Long-term debt and short-term borrowings consisted of the following (in millions):

	March 31,			December 31,
	2009			2008
Senior Credit Facilities:
Revolving Credit Facility, interest rate of 1.60% at March 31, 2009, maturing 2011	$	166		$	213
Term loan, interest rates ranging from 1.19% to 1.25% at March 31,2009, maturing 2009 and 2010 (weighted average of 1.21% at March 31, 2009)		1,375			1,375
Senior Notes, interest at 7.875%, maturing 2012		799			799
Senior Notes, interest at 6.25%, maturing 2013		601			601
Senior Notes, interest at 7.375%, maturing 2015		449			449
Senior Notes, interest at 6.75%, maturing 2018		400			400
Mortgages and other, interest rates ranging from 5.80% to 8.56%, various maturities		168			171
		3,958			4,008
Less current maturities		(5	)		(506	)
Long-term debt	$	3,953		$	3,502

     On April 27, 2009, the company repaid $500 million of term loans with proceeds from the revolver. See Note 20.

Note 10. Deferred Gains

     The Company defers gains realized in connection with the sale of a property that the Company continues to manage through a long-term management agreement and recognizes the gains over the initial term of the related agreement. As of March 31, 2009 and December 31, 2008, the Company had total deferred gains of $1.116 billion and $1.151 billion, respectively, included in accrued expenses and other liabilities in the Company’s consolidated balance sheets. Amortization of deferred gains is included in management fees, franchise fees and other income in the Company’s consolidated statements of income and totaled approximately $20 million and $21 million in the three months ended March 31, 2009 and 2008, respectively.

Note 11. Restructuring and Other Special Charges

     During the three months ended March 31, 2009 and 2008, the Company recorded restructuring charges of $19 million and $8 million, respectively, in connection with its ongoing initiative of rationalizing its cost structure in light of the decline in growth in its business units. The charges in the three months ended March 31, 2009 were partially offset by the $2 million reversal of accruals related to expected severance costs recorded at the time of the Le Méridien acquisition in 2005.

     During the first quarter of 2008, the Company recorded a $1 million charge for demolition costs related to the Sheraton Bal Harbour Resort, which is being redeveloped as a St. Regis hotel with branded residences and fractional units.

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     Restructuring costs and other special charges, net, by segment are as follows (in millions):

	Three Months Ended
	March 31,
	2009		2008
Hotel	$	9	$	4
Vacation Ownership & Residential		8		5
Total	$	17	$	9

     The Company had remaining accruals of $33 million and $41 million at March 31, 2009 and December 31, 2008, respectively, which are primarily recorded in accrued expenses and other liabilities. The following table summarizes activity in the restructuring and other special charges related accruals:

	December 31,		Expenses						Non-cash			March 31,
	2008		(Reversals)			Payments			Other			2009
Retained reserves established by Sheraton Holding prior to its merger with the Company in 1998	$	8		—			—			—		$	8
Le Méridien acquisition reserves		—	$	(2	)	$				2			—
Consulting fees associated with cost reduction initiatives		3		1			(2	)					2
Severance		23		12			(21	)		—			14
Closure of vacation ownership facilities		7		6			(1	)		(3	)		9
Total	$	41	$	17		$	(24	)	$	(1	)	$	33

Note 12. Derivative Financial Instruments

     The Company, based on market conditions, enters into forward contracts to manage foreign exchange risk. Beginning in January 2008, the Company entered into forward contracts to hedge forecasted transactions based in certain foreign currencies, including the Euro and Canadian Dollar. These forward contracts have been designated and qualify as cash flow hedges under the provisions of SFAS No. 133, and their change in fair value is recorded as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods in which the forecasted transaction occurs. The fair value of these contracts has been recorded as a net asset of $7 million at March 31, 2009. The notional dollar amount of the outstanding Euro and Canadian Dollar forward contracts at March 31, 2009 is $46 million and $2 million, respectively, with average exchange rates of 1.6 and 1.0, respectively, with terms of less than one year. The Company reviews the effectiveness of its hedging instruments on a quarterly basis and records any ineffectiveness into earnings. The Company discontinues hedge accounting for any hedge that is no longer evaluated to be highly effective. From time to time, the Company may choose to de-designate portions of hedges when changes in estimates of forecasted transactions occur. Each of these hedges was highly effective in offsetting fluctuations in foreign currencies. An insignificant amount of gain due to ineffectiveness was recorded in the consolidated statements of income during 2009. Additionally, during the three months ended March 31, 2009, five forward contracts were settled and a nominal gain recognized in the consolidated statements of income.

     The Company also enters into forward contracts to manage foreign exchange risk on intercompany loans that are not deemed permanently invested. These forward contracts are not designated as hedges under the provisions of SFAS No. 133, and their change in fair value is recorded in the Company’s consolidated statements of income at each reporting period. The fair value of these contracts has been recorded as a net asset of $6 million at March 31, 2009 and a liability of $3 million at December 31, 2008. For the three months ended March 31, 2009, the Company recorded losses on the forward contracts of $10 million, primarily offset by gains in the revaluation of cross-currency intercompany loans. For the three months ended March 31, 2008, the Company recorded gains of $1 million, primarily offset by losses in the revaluation of cross-currency intercompany loans.

     The following tables summarize the fair value of our derivative instruments, the effect of derivative instruments on our Consolidated Statements of Comprehensive Income, the amounts reclassified from “Other comprehensive income” and the effect on the Consolidated Statements of Income during the quarter.

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Fair Value of Derivative Instruments
(in millions)

	March 31,			December 31,
	2009			2008
	Balance Sheet	Fair		Balance Sheet	Fair
	Location	Value		Location	Value
Derivatives designated as hedging instruments under SFAS No. 133
Asset Derivatives
Foreign exchange contracts	Prepaid and other current assets	$	7	Prepaid and other current assets	$	6
Total assets under SFAS No. 133		$	7		$	6

	March 31,			December 31,
	2009			2008
	Balance Sheet	Fair		Balance Sheet	Fair
	Location	Value		Location	Value
Derivatives not designated as hedging instruments under SFAS No. 133
Asset Derivatives
Foreign exchange contracts	Prepaid and other current assets	$	9	Prepaid and other current assets	$	—
Total assets outside SFAS No. 133		$	9		$	—
Liability Derivatives
Foreign exchange contracts	Accrued expenses	$	3	Accrued expenses	$	3
Total liabilities outside SFAS No. 133		$	3		$	3

The Effect of Derivative Instruments on the Consolidated Statements of Comprehensive Income
for the Three Months Ended March 31, 2009 and 2008
(in millions)

	Amount of Gain or (Loss)
Derivatives in SFAS No.	Recognized in OCI on
133 Cash Flow Hedging	Derivative
Relationships	(Effective Portion)
	2009		2008
Foreign exchange contracts	$	7	$	(4	)
Total gain (loss) recognized in OCI	$	7	$	(4	)

Location of Gain or (Loss)	Amount of Gain or (Loss)
Reclassified from	Reclassified from
Accumulated OCI into Income	Accumulated OCI into Income
(Effective Portion)	(Effective Portion)
	2009		2008
Management fees, franchise fees, and other income	$	1	$	—
Total gain recognized in income	$	1	$	—

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The Effect of Derivative Instruments on the Consolidated Statements of Income
for the Three Months Ended March 31, 2009 and 2008
(in millions)

Derivatives Not
Designated as Hedging	Location of Gain	Amount of Gain
Instruments under	or (Loss) Recognized	or (Loss) Recognized
SFAS No. 133	in Income on Derivative	in Income on Derivative
		2009			2008
Foreign exchange contracts	Interest expense, net	$	(10	)	$	1
	Management fees, franchise fees and other income		1			—
Total (loss) gain included in income		$	(9	)	$	1

     The Company enters into interest rate swap agreements to manage interest expense. The Company’s objective is to manage the impact of interest rates on the results of operations, cash flows and the market value of the Company’s debt. During the first quarter of 2008, the Company terminated its outstanding interest rate swap agreements, resulting in a gain of $0.4 million.

     The counterparties to the Company’s derivative financial instruments are major financial institutions. The Company evaluates the bond ratings of the financial institutions and believes that credit risk is at an acceptable level.

Note 13. Discontinued Operations

     For the three months ended March 31, 2009, the Company recorded a $1 million tax charge in discontinued operations related to a liability recorded by the Company in 2008. The Company had recorded a $47 million charge in the first quarter of 2008 as a result of a 2008 administrative tax ruling for an unrelated taxpayer that impacts the tax liability associated with the disposition of one of the Company’s businesses several years ago.

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Note 14. Pension and Postretirement Benefit Plans

     The following table presents the components of net periodic benefit cost for the three months ended March 31, 2009 and 2008 (in millions):

	Three Months Ended March 31,
	2009							2008
			Foreign							Foreign
	Pension		Pension			Postretirement		Pension		Pension			Postretirement
	Benefits		Benefits			Benefits		Benefits		Benefits			Benefits
Service cost	$	—	$	1.2		$	—	$	—	$	1.1		$	—
Interest cost		0.2		3.1			0.3		0.2		3.0			0.3
Expected return on plan assets		—		(2.2	)		—		—		(2.9	)		(0.1	)
Amortization of:
Actuarial loss		—		1.4			—		—		0.4			—
Prior service income		—		(0.1	)		—		—		(0.1	)		—
Net period benefit cost	$	0.2	$	3.4		$	0.3	$	0.2	$	1.5		$	0.2

     During the three months ended March 31, 2009 and 2008, the Company contributed approximately $8 million and $6 million to its foreign pension plans and $1 million and $1 million to post retirement benefit plans, respectively. For the remainder of 2009, the Company expects to contribute approximately $1 million to domestic pension plans, $10 million to foreign pension plans and $1 million to postretirement benefit plans. A portion of these fundings will be reimbursed for costs related to employees of managed hotels.

Note 15. Income Taxes

     The total amount of unrecognized tax benefits as of March 31, 2009, was $1 billion, of which $150 million would affect the Company’s effective tax rate if recognized. The amount of unrecognized tax benefits includes approximately $499 million related to the February 1998 disposition of ITT World Directories which the Company strongly believes was completed on a tax deferred basis. In 2002, the IRS proposed an adjustment to tax the gain on disposition in 1998, and the issue has progressed to litigation in United States Tax Court. In January 2009, the Company and the IRS reached an agreement in principle to settle the litigation pertaining to the tax treatment of this transaction. In 2009, the Company expects to finalize the details of the agreement and obtain a refund of approximately $200 million for previously paid tax. As a result, the Company expects to decrease its unrecognized tax benefits by approximately $499 millon within the next 12 months. Additionally, the Company is continually under audit by various taxing jurisdictions, and as a result, it is possible that the amount of other unrecognized tax benefits could change within the next 12 months. An estimate of the range of the possible change cannot be made unless or until tax positions are further developed or examinations close.

     The Company recognizes interest and penalties related to unrecognized tax benefits through income tax expense. As of March 31, 2009, the Company had $80 million accrued for the payment of interest and no accrued penalties.

     The Company is subject to taxation in the U.S. federal jurisdiction, as well as various state and foreign jurisdictions. As of March 31, 2009, the Company is no longer subject to examination by U.S. federal taxing authorities for years prior to 2004 and to examination by any U.S. state taxing authority prior to 1998. All subsequent periods remain eligible for examination. In the significant foreign jurisdictions in which the Company operates, the Company is no longer subject to examination by the relevant taxing authorities for any years prior to 2001.

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Note 16. Stockholders’ Equity

     Effect of SFAS No. 160. The following table represents changes in stockholders equity that are attributable to Starwood’s stockholders and non-controlling interests.

	Equity Attributable to Starwood Stockholders
								Accumulated					Equity
					Additional			Other					Attributable to
	Shares				Paid-in			Comprehensive			Retained		Noncontrolling
	Shares		Amount		Capital(b)			Loss(a)			Earnings		Interests			Total
	(In millions)
Balance at December 31, 2008		183	$	2	$	493		$	(391	)	$	1,517	$	23		$	1,644
Net income (loss)		—		—		—			—			6		(2	)		4
Stock option and restricted stock award transactions, net		4		—		(4	)		—			—		—			(4	)
Foreign currency translation		—		—		—			(59	)		—		—			(59	)
Change in fair value of derivatives and investments		—		—		—			1			—		—			1
ESPP stock issuances		—		—		1			—			—		—			1
Balance at March 31, 2009		187	$	2	$	490		$	(449	)	$	1,523	$	21		$	1,587

     Share Issuances and Repurchases. During the three months ended March 31, 2009, the Company issued an insignificant amount of common shares as a result of stock option exercises. Also during the first quarter, the Company did not repurchase any common shares and no repurchase capacities remained available under the Company’s share repurchase authorization.

     Limited Partnership Units. At March 31, 2009, there were approximately 178,000 Operating Limited Partnership (the “Operating Partnership”) units outstanding. The Operating Partnership units are convertible into common shares at the unit holder’s option, provided that the Company has the option to settle conversion requests in cash or common shares.

     Dividends. On January 9, 2009, the Company paid a dividend of $0.90 per share to shareholders of record on December 31, 2008.

Note 17. Stock-Based Compensation

     In accordance with the Company’s 2004 Long-Term Incentive Compensation Plan, during the first quarter of 2009, the Company completed its annual grant of stock options, restricted stock and restricted stock units to executive officers and certain employees. The Company granted approximately 5.3 million stock options that had a weighted average grant date fair value of $4.69 per option. The weighted average exercise price of these options was $11.39. In addition, the Company granted approximately 4.8 million restricted shares and restricted stock units that had a weighted average grant date fair value of $11.33 per share or unit.

     The Company recorded stock-based employee compensation expense, including the estimated impact of reimbursements from third parties, of $11 million and $18 million, in the three months ended March 31, 2009 and 2008, respectively.

     As of March 31, 2009, there was approximately $35 million of unrecognized compensation cost, net of estimated forfeitures, related to non-vested options, which is expected to be recognized over a weighted-average period of 3.66 years on a straight-line basis for grants made in 2006, 2007, 2008 and 2009.

     As of March 31, 2009, there was approximately $183 million of unrecognized compensation cost, net of estimated forfeitures, related to restricted stock and restricted stock units, which is expected to be recognized over a weighted-average period of 2.65 years on a straight-line basis for restricted stock grants outstanding at March 31, 2009.

Note 18. Business Segment Information

     The Company has two operating segments: hotels and vacation ownership and residential. The hotel segment generally represents a worldwide network of owned, leased and consolidated joint venture hotels and resorts operated primarily under the Company’s proprietary brand names including St. Regis^®, The Luxury Collection^®, Sheraton^®, Westin^®, W^®, Le Méridien^®, Aloft^®, Element^®, and Four Points^® by Sheraton as well as hotels and resorts which are managed or franchised under these brand names in exchange for fees. The vacation ownership and residential segment includes the development, ownership and operation of vacation ownership resorts, marketing and selling VOIs, providing financing to customers who purchase such interests and the sale of residential units.

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     The performance of the hotels and vacation ownership and residential segments is evaluated primarily on operating profit before corporate selling, general and administrative expense, interest, gains and losses on the sale of real estate, restructuring and other special (charges) credits, and income taxes. The Company does not allocate these items to its segments.

     The following table presents revenues, operating income, capital expenditures and assets for the Company’s reportable segments (in millions):

	Three Months Ended
	March 31,
	2009			2008
Revenues:
Hotel	$	946		$	1,241
Vacation ownership and residential		172			225
Total	$	1,118		$	1,466
Operating income:
Hotel	$	85		$	186
Vacation ownership and residential		21			23
Total segment operating income		106			209
Selling, general, administrative and other		(30	)		(54	)
Restructuring and other special charges, net		(17	)		(9	)
Operating income		59			146
Equity earnings and gains and losses from unconsolidated ventures, net:
Hotel		(5	)		4
Vacation ownership and residential		—			2
Interest expense, net		(43	)		(47	)
Loss on asset dispositions and impairments, net		(5	)		(1	)
Income from continuing operations before taxes	$	6		$	104
Capital expenditures:
Hotel	$	37		$	56
Vacation ownership and residential		18			28
Corporate		7			25
Total	$	62		$	109
	March 31, 2009			December 31, 2008
Assets:
Hotel(a)	$	6,218		$	6,728
Vacation ownership and residential(b)		2,236			2,183
Corporate		848			792
Total	$	9,302		$	9,703

(a)	Includes $302 million and $315 million of investments in unconsolidated joint ventures at March 31, 2009 and December 31, 2008, respectively.
(b)	Includes $36 million and $38 million of investments in unconsolidated joint ventures at March 31, 2009 and December 31, 2008, respectively.

     During the fourth quarter of 2008 the Company performed its annual impairment test of goodwill for both of its reporting segments and concluded that goodwill was not impaired. However, based on the current economic climate and the deterioration of results in the timeshare industry it is reasonably possible that the carrying value of goodwill related to the vacation ownership segment could become impaired.

Note 19. Commitments and Contingencies

     Variable Interest Entities. Of the over 800 hotels that the Company manages or franchises for third party owners, the Company has evaluated approximately 22 hotels in which it has a variable interest, generally in the form of investments, loans, guarantees, or equity. The Company determines if it is the primary beneficiary of the hotel by considering qualitative and quantitative factors. Qualitative factors include evaluating distribution terms, proportional voting rights, decision making ability, and the capital structure. Quantitatively, the Company evaluates financial forecasts under various scenarios to determine which variable interest holders would absorb over 50% of the expected losses of the hotel. The Company has determined it is not the primary beneficiary of any of the variable interest entities (“VIEs”) and therefore are not consolidated in the Company’s financial statements.

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     In all cases, the VIEs associated with the Company’s variable interests are hotels for which the Company has entered into management or franchise agreements with the hotel owners. The Company is paid a fee primarily based on financial metrics of the hotel. The hotels are financed by the owners, generally in the form of working capital, equity, and debt.

     At March 31, 2009, the Company has approximately $69 million of investments associated with 20 VIEs, equity investments of $10 million associated with one VIE, and a loan balance of $5 million associated with one VIE. As the Company is not obligated to fund future cash contributions under these agreements, the maximum loss equals the carrying value. In addition, the Company has not contributed amounts to the VIEs in excess of their contractual obligations.

     At December 31, 2008, the Company had approximately $66 million of investments associated with 20 VIEs, equity investments of $10 million associated with one VIE, and a loan balance of $5 million associated with one VIE.

     Guaranteed Loans and Commitments. In limited cases, the Company has made loans to owners of or partners in hotel or resort ventures for which the Company has a management or franchise agreement. Loans outstanding under this program totaled $26 million at March 31, 2009. The Company evaluates these loans for impairment, and at March 31, 2009, believes these loans are collectible. Unfunded loan commitments aggregating $61 million were outstanding at March 31, 2009, of which $1 million is expected to be funded in the next twelve months and $40 million is expected to be funded in total. These loans typically are secured by pledges of project ownership interests and/or mortgages on the projects. The Company also has $113 million of equity and other potential contributions associated with managed or joint venture properties, $55 million of which is expected to be funded in the next twelve months.

     During the first quarter of 2008, the Company entered into an agreement with a third party to manage the redevelopment of the Sheraton Bal Harbour resort. The agreement calls for certain base and incentive fees to be paid to the third party, and for the third party to provide a guaranteed maximum price and firm completion dates which are subject to modification under certain circumstances prescribed in the agreement. The agreement can be terminated at the Company’s option; however, upon such termination the Company would be required to pay the costs of the work completed plus a termination fee calculated, depending on the time of the termination, as either a percentage of incurred costs or a percentage of the base fee. As of March 31, 2009, if the Company terminated this agreement, the amounts owed under the termination provision would not be significant.

     Surety bonds issued on behalf of the Company as of March 31, 2009 totaled $91 million, the majority of which were required by state or local governments relating to our vacation ownership operations and by our insurers to secure large deductible insurance programs.

     To secure management contracts, the Company may provide performance guarantees to third-party owners. Most of these performance guarantees allow the Company to terminate the contract rather than fund shortfalls if certain performance levels are not met. In limited cases, the Company is obliged to fund shortfalls in performance levels through the issuance of loans. As of March 31, 2009, excluding the Le Méridien management agreement mentioned below, the Company had four management contracts with performance guarantees with possible cash outlays of up to $74 million, $53 million of which, if required, would be funded over several years and would be largely offset by management fees received under these contracts. Many of the performance tests are multi-year tests, are tied to the results of a competitive set of hotels, and have exclusions for force majeure and acts of war and terrorism. The Company does not anticipate any significant funding under these performance guarantees in 2009. In connection with the acquisition of the Le Méridien brand in November 2005, the Company assumed the obligation to guarantee certain performance levels at one Le Méridien managed hotel for the periods 2007 through 2013. This guarantee is uncapped. However, the Company has estimated its exposure under this guarantee and does not anticipate that payments made under the guarantee will be significant in any single year. The Company has recorded a loss contingency for this guarantee of $7 million reflected in other liabilities in the accompanying consolidated balance sheets at March 31, 2009 and December 31, 2008, respectively. The Company does not anticipate losing a significant number of management or franchise contracts in 2009.

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     In connection with the purchase of the Le Méridien brand in November 2005, the Company was indemnified for certain of Le Méridien’s historical liabilities by the entity that bought Le Méridien’s owned and leased hotel portfolio. The indemnity is limited to the financial resources of that entity. However, at this time, the Company believes that it is unlikely that it will have to fund any of these liabilities.

     In connection with the sale of 33 hotels to a third party in 2006, the Company agreed to indemnify the third party for certain pre-disposition liabilities, including operations and tax liabilities. At this time, the Company believes that it will not have to make any material payments under such indemnities.

     Litigation. The Company is involved in various legal matters that have arisen in the normal course of business, some of which include claims for substantial sums. Accruals have been recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be determined, the Company does not expect that the resolution of all legal matters will have a material adverse effect on its consolidated results of operations, financial position or cash flow. However, depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect the Company’s future results of operations or cash flows in a particular period.

Note 20. Subsequent Events

     On April 27, 2009, the Company amended its revolving credit and term loan facilities (collectively with prior amendments the “Amended Credit Facilities”) with the consent of the lenders thereunder. The Amended Credit Facilities enhance the Company’s financial flexibility by increasing the Company’s maximum Consolidated Leverage Ratio (as defined in the Amended Credit Facilities) from 4.50x to 5.50x. Additionally, the definition of Consolidated EBITDA used in the Amended Credit Facilities has been modified to exclude certain cash severance expenses from Consolidated EBITDA. In connection with the amendment, the Company repaid $500 million of its term loan that was due June 2009 by drawing down on its revolver. This debt has been reclassified as long term in the accompanying Consolidated Balance Sheets.

      In connection with the amendment, the Company agreed to increase the pricing on the outstanding Amended Credit Facilities based upon the Company’s Consolidated Leverage Ratio, the Company’s unsecured debt rating and the type of loan borrowed. The margin increases range from 2.00% to 3.50% for term loans maintained as Eurodollar Loans, 1.75% to 3.00% for revolving loans maintained as Euro Rate Loans, and 0.00% to 1.50% for Base Rate and Canadian Prime Rate Loans. The applicable margin for the Facility Fee ranges from 0.25% to 0.50%. The amendment further modifies the Amended Credit Facilities by (i.) restricting the Company’s ability to pay dividends and repurchase stock depending on the Company’s free cash flow and Consolidated Leverage Ratio and (ii.) decreasing the Company’s permitted lien basket from 10% of Net Tangible Assets (as defined in the Amended Credit Facilities) to 5% of Net Tangible Assets. An amendment fee of 50 basis points was also paid to all consenting lenders who approved the Amended Credit Facilities, with no amendment fee being paid on the repaid portion of the term loan.

     On April 30, 2009, the Company launched and priced a public offering of $500 million of senior notes with a coupon rate of 7.875% (the “Notes”) due October 15, 2014, issued at a discount price of 96.285%. The Company expects to receive net proceeds of approximately $474 million on the settlement date of May 7, 2009. The proceeds will be used to reduce the outstanding borrowings under its Amended Credit Facilities and for general purposes. Interest on the Notes is payable semi-annually on April 15 and October 15. The Company may redeem all or a portion of the Notes at any time at the Company’s option at a discount rate of Treasury plus 50 basis points. The Notes will rank pari passu with all other unsecured and unsubordinated obligations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

     This report includes “forward-looking” statements, as that term is defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases. Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “continue,” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic conditions, our financial and business prospects, our capital requirements, our financing prospects, our relationships with associates and labor unions, and those disclosed as risks in other reports filed by us with the Securities and Exchange Commission, including those described in Part I of our most recently filed Annual Report on Form 10-K. We caution readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Except as required by

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law, we disclaim any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

RESULTS OF OPERATIONS

     Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and costs and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those relating to revenue recognition, bad debts, inventories, investments, plant, property and equipment, goodwill and intangible assets, income taxes, financing operations, frequent guest program liability, self-insurance claims payable, restructuring costs, retirement benefits and contingencies and litigation.

     We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions and conditions.

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CRITICAL ACCOUNTING POLICIES

     We believe the following to be our critical accounting policies:

     Revenue Recognition. Our revenues are primarily derived from the following sources: (1) hotel and resort revenues at our owned, leased and consolidated joint venture properties; (2) management and franchise revenues; (3) vacation ownership and residential revenues; (4) revenues from managed and franchised properties; and (5) other revenues which are ancillary to our operations. Generally, revenues are recognized when the services have been rendered. The following is a description of the composition of our revenues:

• Owned, Leased and Consolidated Joint Ventures — Represents revenue primarily derived from hotel operations, including the rental of rooms and food and beverage sales from owned, leased or consolidated joint venture hotels and resorts. Revenue is recognized when rooms are occupied and services have been rendered. These revenues are impacted by global economic conditions affecting the travel and hospitality industry as well as relative market share of the local competitive set of hotels. Revenue per available room (“REVPAR”) is a leading indicator of revenue trends at owned, leased and consolidated joint venture hotels as it measures the period-over-period growth in rooms revenue for comparable properties.

• Management and Franchise Revenues — Represents fees earned on hotels managed worldwide, usually under long-term contracts, franchise fees received in connection with the franchise of our Sheraton, Westin, Four Points by Sheraton, Le Méridien, St. Regis, W, Luxury Collection, Aloft and Element brand names, termination fees and the amortization of deferred gains related to sold properties for which we have significant continuing involvement, offset by payments by us under performance and other guarantees. Management fees are comprised of a base fee, which is generally based on a percentage of gross revenues, and an incentive fee, which is generally based on the property’s profitability. For any time during the year, when the provisions of our management contracts allow receipt of incentive fees upon termination, incentive fees are recognized for the fees due and earned as if the contract was terminated at that date, exclusive of any termination fees due or payable. Therefore, during periods prior to year-end, the incentive fees recorded may not be indicative of the eventual incentive fees that will be recognized at year-end as conditions and incentive hurdle calculations may not be final. Franchise fees are generally based on a percentage of hotel room revenues. As with hotel revenues discussed above, these revenue sources are affected by conditions impacting the travel and hospitality industry as well as competition from other hotel management and franchise companies.

• Vacation Ownership and Residential — We recognize revenue from Vacation Ownership Interests (“VOIs”) sales and financings and the sales of residential units which are typically a component of mixed use projects that include a hotel. Such revenues are impacted by the state of the global economies and, in particular, the U.S. economy, as well as interest rate and other economic conditions affecting the lending market. Revenue is generally recognized upon the buyer’s demonstration of a sufficient level of initial and continuing involvement. We determine the portion of revenues to recognize for sales accounted for under the percentage of completion method based on judgments and estimates including total project costs to complete. Additionally, we record reserves against these revenues based on expected default levels. Changes in costs could lead to adjustments to the percentage of completion status of a project, which may result in differences in the timing and amount of revenues recognized from the projects. We have also entered into licensing agreements with third-party developers to offer consumers branded condominiums or residences. Our fees from these agreements are generally based on the gross sales revenue of units sold.

• Revenues From Managed and Franchised Properties — These revenues represent reimbursements of costs incurred on behalf of managed hotel properties and franchisees. These costs relate primarily to payroll costs at managed properties where we are the employer. Since the reimbursements are made based upon the costs incurred with no added margin, these revenues and corresponding expenses have no effect on our operating income or our net income.

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     Frequent Guest Program. Starwood Preferred Guest (“SPG”) is our frequent guest incentive marketing program. SPG members earn points based on spending at our properties, as incentives to first time buyers of VOIs and residences and through participation in affiliated programs. Points can be redeemed at substantially all of our owned, leased, managed and franchised properties as well as through other redemption opportunities with third parties, such as conversion to airline miles. Properties are charged based on hotel guests’ qualifying expenditures. Revenue is recognized by participating hotels and resorts when points are redeemed for hotel stays.

     We, through the services of third-party actuarial analysts, determine the fair value of the future redemption obligation based on statistical formulas which project the timing of future point redemption based on historical experience, including an estimate of the “breakage” for points that will never be redeemed, and an estimate of the points that will eventually be redeemed as well as the cost of reimbursing hotels and other third parties in respect of other redemption opportunities for point redemptions. Actual expenditures for SPG may differ from the actuarially determined liability. The total actuarially determined liability as of March 31, 2009 and December 31, 2008 is $665 million and $662 million, respectively. A 10% reduction in the “breakage” of points would result in an estimated increase of $87 million to the liability at March 31, 2009.

     Long-Lived Assets. We evaluate the carrying value of our long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets if certain trigger events occur. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals and, if appropriate, current estimated net sales proceeds from pending offers. We evaluate the carrying value of our long-lived assets based on our plans, at the time, for such assets and such qualitative factors as future development in the surrounding area, status of expected local competition and projected incremental income from renovations. Changes to our plans, including a decision to dispose of or change the intended use of an asset, can have a material impact on the carrying value of the asset.

     Assets Held for Sale. We consider properties to be assets held for sale when management approves and commits to a formal plan to actively market a property or group of properties for sale and a signed sales contract and significant non-refundable deposit or contract break-up fee exist. Upon designation as an asset held for sale, we record the carrying value of each property or group of properties at the lower of its carrying value which includes allocable segment goodwill or its estimated fair value, less estimated costs to sell, and we stop recording depreciation expense. Any gain realized in connection with the sale of properties for which we have significant continuing involvement (such as through a long-term management agreement) is deferred and recognized over the initial term of the related agreement. The operations of the properties held for sale prior to the sale date are recorded in discontinued operations unless we will have continuing involvement (such as through a management or franchise agreement) after the sale.

     Loan Loss Reserves. For the vacation ownership and residential segment, we record an estimate of expected uncollectibility on our VOI notes receivable as a reduction of revenue at the time we recognize profit on a sale of a vacation ownership interest. We hold large amounts of homogeneous VOI notes receivable and therefore assess uncollectibility based on pools of receivables. In estimating our loss reserves, we use a technique referred to as static pool analysis, which tracks uncollectible notes for each year’s sales over the life of the respective notes and projects an estimated default rate that is used in the determination of our loan loss reserve requirements. As of March 31, 2009, the average estimated default rate for our pools of receivables was 8.1%. Given the significance of our respective pools of VOI notes receivable, a change in the projected default rate can have a significant impact to our loan loss reserve requirements, with a 0.1% change estimated to have an impact of approximately $3 million.

     For the hotel segment, we measure the impairment of a loan based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or the estimated fair value of the collateral. For impaired loans, we establish a specific impairment reserve for the difference between the recorded investment in the loan and the present value of the expected future cash flows or the estimated fair value of the collateral. We apply the loan impairment policy individually to all loans in the portfolio and do not aggregate loans for the purpose of applying such policy. For loans that we have determined to be impaired, we recognize interest income on a cash basis.

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     Legal Contingencies. We are subject to various legal proceedings and claims, the outcomes of which are subject to significant uncertainty. Statement of Financial Accounting Standards (“SFAS”) No. 5, “Accounting for Contingencies,” requires that an estimated loss from a loss contingency should be accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. We evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact our financial position or our results of operations.

     Income Taxes. We provide for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes (“SFAS No. 109”). The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. We also follow the provisions of FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN No. 48”), an interpretation of SFAS No. 109, which prescribes a recognition threshold and measurement attribute to determine the amount of tax benefit that should be recognized in the financial statements for a tax position taken or expected to be taken in a tax return. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, interim period accounting and disclosure requirements of uncertain tax positions. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns.

RESULTS OF OPERATIONS

     The following discussion presents an analysis of results of our operations for the three months ended March 31, 2009 and 2008.

     The fourth quarter of 2008 and first quarter of 2009 have imposed significant pressures on the lodging industry. The present economic slowdown and the uncertainty over its breadth, depth and duration have had a negative impact on the hotel and vacation ownership and residential industries resulting in steep declines in demand for our hotel rooms and interval and fractional timeshare products. Businesses participating in the Troubled Asset Relief Program (TARP) face restrictions on the ability to travel and hold conferences or events at resorts and luxury hotels. The negative publicity associated with such companies holding large events has also resulted in cancellations and reduced bookings.

     The current environment has pushed us to be aggressive in cutting costs and more stringent regarding our capital allocation. During the first quarter of 2009, we continued our activity value analysis project to streamline operations and reduce costs at divisional and corporate locations. We are beginning to realize the impacts of these cost cutting measures and expect to realize run rate savings of approximately $100 million annually. We also continued to reduce headcount at our owned hotels to be commensurate with the current demand in the lodging industry.

     At March 31, 2009, we had approximately 400 hotels in the active pipeline representing approximately 95,000 rooms, driven by strong interest in all Starwood brands. Of these rooms, 68% are in the upper upscale and luxury segments and 65% are in international locations. During the first quarter of 2009, we signed 18 hotel management and franchise contracts representing approximately 4,900 rooms of which 17 are new builds and one is a conversion from another brand and opened 16 new hotels and resorts representing approximately 3,500 rooms. By the end of this year, our system of hotels will cross the 1,000 hotel milestone, including 250 new openings and 350 renovated hotels since 2007, positioning us well as the global economy stabilizes.

     Historically, we have derived the majority of our revenues and operating income from our owned, leased and consolidated joint venture hotels and a significant portion of these results are driven by these hotels in North America. However, since early 2006, we have sold a significant number of hotels and, in 2008 and the first quarter of 2009, we sold or closed 10 wholly owned hotels, further reducing our revenues and operating income from owned, leased and consolidated joint venture hotels. The majority of these hotels were sold subject to long-term management or franchise contracts. Total revenues generated from these sold hotels were $5 million and $22 million for the three months ending March 31, 2009 and 2008, respectively.

     An indicator of the performance of our owned, leased and consolidated joint venture hotels is REVPAR, as it measures the period-over-period growth in rooms revenue for comparable properties. This is particularly the case in the United States where there is no impact on this measure from foreign exchange rates.

     We continually update and renovate our owned, leased and consolidated joint venture hotels and include these hotels in our Same-Store Owned Hotel results. We also undertake major repositionings of hotels. While undergoing major repositionings, hotels are generally not operating at full capacity and, as such, these repositionings can negatively impact our hotel revenues and are not included in Same-Store Hotel results. We may continue to reposition our owned, leased and consolidated joint venture hotels as we pursue our brand and quality strategies. In addition, several owned hotels are located in regions which are seasonal and therefore, these hotels do not operate at full capacity throughout the year.

     The following represents our top five markets in the United States by metropolitan area as a percentage of our total owned, leased and consolidated joint venture revenues for the three months ended March 31, 2009 (with comparable data for 2008):

Top Five Metropolitan Areas in the United States as a % of Total Owned
Revenues for the Three Months Ended March 31, 2009 with Comparable Data
for the Same Period in 2008⁽¹⁾

	2009			2008
Metropolitan Area	Revenues			Revenues
New York, NY		12.3	%		12.3	%
Phoenix, AZ		7.0	%		8.4	%
San Francisco, CA		6.2	%		5.7	%
Maui, HI		5.2	%		5.1	%
Atlanta, GA		4.3	%		4.0	%

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     The following represents our top five international markets as a percentage of our total owned, leased and consolidated joint venture revenues for the three months ended March 31, 2009 (with comparable data for 2008):

Top Five International Markets as a % of Total Owned Revenues for the Three
Months Ended March 31, 2009 with Comparable Data for the Same Period in
2008⁽¹⁾

	2009			2008
International Market	Revenues			Revenues
Canada		8.9	%		8.2	%
Mexico		6.9	%		6.5	%
Italy		5.4	%		5.8	%
Australia		4.8	%		5.1	%
Argentina		2.9	%		2.3	%

(1) Includes the revenues of hotels sold for the period prior to their sale.

     The following table summarizes REVPAR⁽¹⁾, ADR and occupancy for our Same-Store Owned Hotels for the three months ended March 31, 2009 and 2008. The results for the three months ended March 31, 2009 and 2008 represent results for 57 owned, leased and consolidated joint venture hotels (excluding 10 hotels sold and 10 hotels undergoing significant repositionings or without comparable results in 2009 and 2008).

	Three Months Ended
	March 31,
	2009			2008			Variance
Worldwide (57 hotels with approximately 20,000 rooms)
REVPAR	$	117.78		$	169.85			(30.7	)%
ADR	$	196.25		$	241.84			(18.9	)%
Occupancy		60.0	%		70.2	%		(10.2	)
North America (30 hotels with approximately 12,000 rooms)
REVPAR	$	125.50		$	178.84			(29.8	)%
ADR	$	203.85		$	252.78			(19.4	)%
Occupancy		61.6	%		70.8	%		(9.2	)
International (27 hotels with approximately 8,000 rooms)
REVPAR	$	105.32		$	155.34			(32.2	)%
ADR	$	183.11		$	223.83			(18.2	)%
Occupancy		57.5	%		69.4	%		(11.9	)

(1) REVPAR is calculated by dividing room revenue, which is derived from rooms and suites rented or leased, by total room nights available for a given period. REVPAR may not be comparable to similarly titled measures such as revenues.

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Three Months Ended March 31, 2009 Compared with Three Months Ended March 31, 2008

Continuing Operations

	Three Months		Three Months		Increase /			Percentage
	Ended		Ended		(decrease)			change
	March 31,		March 31,		from prior			from prior
	2009		2008		year			year
Owned, Leased and Consolidated Joint Venture Hotels	$	386	$	560	$	(174	)		(31.1	)%
Management Fees, Franchise Fees and Other Income		165		206		(41	)		(19.9	)%
Vacation Ownership and Residential		135		193		(58	)		(30.1	)%
Other Revenues from Managed and Franchise Properties		432		507		(75	)		(14.8	)%
Total Revenues	$	1,118	$	1,466	$	(348	)		(23.7	)%

     The decrease in revenues from owned, leased and consolidated joint venture hotels was primarily due to the severe economic crisis in the United States and globally. The decrease was also due to lost revenues from 10 wholly owned hotels sold or closed in 2008 and 2009. These sold or closed hotels had revenues of $5 million in the three months ended March 31, 2009 compared to $22 million in the three months ended March 31, 2008. Revenues at our Same-Store Owned Hotels (57 hotels for the three months ended March 31, 2009 and 2008, excluding the 10 hotels sold or closed and 10 additional hotels undergoing significant repositionings or without comparable results in 2009 and 2008) decreased 29.4%, or $143 million, to $344 million for the three months ended March 31, 2009 when compared to $487 million in the same period of 2008 due primarily to a decrease in REVPAR.

     REVPAR at our worldwide Same-Store Owned Hotels decreased 30.7% to $117.78 for the three months ended March 31, 2009 when compared to the corresponding 2008 period. The decrease in REVPAR at these worldwide Same-Store Owned Hotels resulted from an 18.9% decrease in ADR to $196.25 for the three months ended March 31, 2009 compared to $241.84 for the corresponding 2008 period and a decrease in occupancy rates to 60.0% in the three months ended March 31, 2009 when compared to 70.2% in the same period in 2008. REVPAR at Same-Store Owned Hotels in North America decreased 29.8% for the three months ended March 31, 2009 when compared to the same period of 2008. REVPAR declined in most of our major domestic markets, including Atlanta, Georgia, Kauai, Hawaii and New York, New York. REVPAR at our international Same-Store Owned Hotels decreased by 32.2% for the three months ended March 31, 2009 when compared to the same period of 2008. REVPAR declined in most of our major international markets, including the Australia and Italy. REVPAR for Same-Store Owned Hotels internationally decreased 17.7% excluding the unfavorable effects of foreign currency translation.

     The decrease in management fees, franchise fees and other income was primarily a result of a $26 million decrease in management and franchise revenue to $143 million for the three months ended March 31, 2009. The decrease was due to the significant decline in base and incentive management fees as a result of the global economic crisis, partially offset by the net addition of 51 managed and franchised hotels to our system since the first quarter of 2008. Other income decreased $15 million primarily due to decreases in demand at our Bliss Spa business.

     The decrease in vacation ownership and residential sales and services was primarily due to lower originated contract sales of VOI inventory, which represents vacation ownership revenues before adjustments for percentage of completion accounting and other deferrals. Originated contract sales of VOI inventory decreased 50% in the three months ended March 31, 2009 when compared to the same period in 2008 primarily due to an overall decline in demand as a result of the economic climate, with the number of contracts signed being lower by 34.6% as compared to the same period in 2008. Additionally, the average price per vacation ownership unit sold decreased 24.6% to approximately $18,000, driven by a higher sales mix of lower-priced inventory, including a higher percentage of lower-priced biennial inventory in Hawaii.

     Other revenues from managed and franchised properties decreased primarily due to a decrease in costs, commensurate with the decline in revenues, at our managed and franchised hotels. These revenues represent reimbursements of costs incurred on behalf of managed hotel and vacation ownership properties and franchisees and relate primarily to payroll costs at managed properties where we are the employer. Since the reimbursements are made based upon the costs incurred with no added margin, these revenues and corresponding expenses have no effect on our operating income and our net income.

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	Three Months		Three Months		Increase /			Percentage
	Ended		Ended		(decrease)			change
	March 31,		March 31,		from prior			from prior
	2009		2008		year			year
Selling, General, Administrative and Other	$	93	$	130	$	(37	)		(28.5	)%

     The decrease in selling, general, administrative and other expenses was primarily a result of our focus on reducing our cost structure in light of the declining business conditions in the current economic climate. Beginning in the middle of 2008, we began an activity value analysis project to review our cost structure across a majority of our corporate departments and divisional headquarters. A majority of the our cost containment initiatives were completed and implemented during the latter part of 2008 and the first quarter of 2009.

	Three Months		Three Months		Increase /		Percentage
	Ended		Ended		(decrease)		change
	March 31,		March 31,		from prior		from prior
	2009		2008		year		year
Restructuring and Other Special Charges, Net	$	17	$	9	$	8		n/m

     During the three months ended March 31, 2009 and 2008, we recorded restructuring charges of $19 million and $8 million, respectively, in connection with our ongoing initiative of rationalizing our cost structure in light of the decline in growth in our business units. The charges in the three months ended March 31, 2009 were partially offset by the reversal of $2 million of accruals related to expected severance costs recorded during the Le Méridien acquisition that are no longer needed.

     During the first quarter of 2008, we recorded a $1 million charge for demolition costs related to the Sheraton Bal Harbour Resort, which is being redeveloped as a St. Regis hotel with branded residences and fractional units.

	Three Months		Three Months		Increase /			Percentage
	Ended		Ended		(decrease)			change
	March 31,		March 31,		from prior			from prior
	2009		2008		year			year
Depreciation and Amortization	$	77	$	78	$	(1	)		(1.3	)%

     The decrease in depreciation expense was primarily due to recent asset sales and a lease termination, partially offset by increased depreciation expenses on information technology-related asset additions.

	Three Months		Three Months		Increase /			Percentage
	Ended		Ended		(decrease)			change
	March 31,		March 31,		from prior			from prior
	2009		2008		year			year
Operating Income	$	59	$	146	$	(87	)		(59.6	)%

     The decrease in operating income was primarily due to the decline in our core business units, hotels and vacation ownership, due to the severe impact from the global economic crisis as discussed above. These decreases were partially offset by the reduction in selling, general, administrative and other costs as a result of our activity value analysis costs savings project and other cost savings initiatives.

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	Three Months			Three Months		Increase /			Percentage
	Ended			Ended		(decrease)			change
	March 31,			March 31,		from prior			from prior
	2009			2008		year			year
Equity Earnings and Gains and Losses from Unconsolidated Ventures, Net	$	(5	)	$	6	$	(11	)		n/m

     The decrease in equity earnings and gains and losses from unconsolidated joint ventures was primarily due to decreased operating results at several properties owned by joint ventures in which we hold non-controlling interests. The decrease also relates to a charge of approximately $4 million, in 2009, related to an unfavorable mark-to-market adjustment on a US dollar denominated loan in an unconsolidated venture in Mexico.

	Three Months		Three Months		Increase /			Percentage
	Ended		Ended		(decrease)			change
	March 31,		March 31,		from prior			from prior
	2009		2008		year			year
Net Interest Expense	$	43	$	47	$	(4	)		(8.5	)%

     The decrease in net interest expense was primarily due to lower interest rates on our debt. Our weighted average interest rate was 4.85% at March 31, 2009 as compared to 5.30% at March 31, 2008.

	Three Months			Three Months			Increase /			Percentage
	Ended			Ended			(decrease)			change
	March 31,			March 31,			from prior			from prior
	2009			2008			year			year
Loss on Asset Dispositions and Impairments, Net	$	(5	)	$	(1	)	$	(4	)		n/m

     During the three months ended March 31, 2009, we recorded a net loss on dispositions of $5 million, primarily related to the sale of the Sheraton hotel in Brussels, Belgium.

     During the three months ended March 31, 2008, we recorded a net loss on dispositions of approximately $1 million, primarily related to the write-down of a hotel that had been classified as held for sale.

	Three Months		Three Months		Increase /			Percentage
	Ended		Ended		(decrease)			change
	March 31,		March 31,		from prior			from prior
	2009		2008		year			year
Income Tax Expense	$	1	$	26	$	(25	)		(96.1	)%

     The decrease in income tax expense is primarily related to a decrease in pretax income and certain other one time tax benefits. The effective tax rate from continuing operations decreased to 8.4% in the three months ended March 31, 2009 as compared to 24.9% in 2008. The 2009 tax rate was favorably impacted by a $4 million benefit related to tax benefits associated with an internal reorganization. These benefits were partially offset by an interest accrual related to uncertain tax positions.

Discontinued Operations

     For the three months ended March 31, 2009 and 2008, we recorded tax charges of $1 million and $47 million, respectively, as a result of a 2008 administrative tax ruling for an unrelated taxpayer that impacts the tax liability associated with the disposition of one of our businesses several years ago.

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Seasonality and Diversification

     The hotel and leisure industry is seasonal in nature; however, the periods during which our properties experience higher hotel revenue activities vary from property to property and depend principally upon location. Our revenues historically have generally been lower in the first quarter than in the second, third or fourth quarters.

LIQUIDITY AND CAPITAL RESOURCES

Cash From Operating Activities

     Cash flow from operating activities is generated primarily from management and franchise revenues, operating income from our owned hotels and sales of VOIs and residential units. Other sources of cash are distributions from joint-ventures, servicing financial assets and interest income. These are the principal sources of cash used to fund our operating expenses, interest payments on debt, capital expenditures, dividend payments, property and income taxes and share repurchases. We believe that our existing borrowing availability together with capacity for additional borrowings and cash from operations will be adequate to meet all funding requirements for our operating expenses, principal and interest payments on debt, capital expenditures, dividend payments and share repurchases in the foreseeable future.

     Our cash flow from operating activities has been dramatically impacted by the severe economic crisis in the United States and globally. As a result, we have focused on reducing our cost structure and have significantly reduced our selling, general, administrative and other expenses, which are primarily cash charges. Beginning in the middle of 2008, we began an activity value analysis project to review our cost structure across a majority of our corporate departments and divisional headquarters. A majority of our cost containment initiatives were complete and implemented by the end of the first quarter of 2009. These actions are expected to yield an annual run rate savings of approximately $100 million.

     The majority of our cash flow is derived from corporate and leisure travelers and is dependent on the supply and demand in the lodging industry. In a recessionary economy, we experience significant declines in business and leisure travel. The impact of declining demand in the industry and higher hotel supply in key markets could have a material impact on our sources of cash. Our day-to-day operations are financed through a net working capital deficit, a practice that is common in our industry. The ratio of our current assets to current liabilities was 0.98 and 0.81 as of March 31, 2009 and December 31, 2008, respectively. Consistent with industry practice, we sweep the majority of the cash at our owned hotels on a daily basis and fund payables as needed by drawing down on our existing revolving credit facility.

     State and local regulations governing sales of VOIs and residential properties allow the purchaser of a VOI or property to rescind the sale subsequent to its completion for a pre-specified number of days. In addition, cash payments received from buyers of products under construction are held in escrow during the period prior to obtaining a certificate of occupancy. These payments and the deposits collected from sales during the rescission period are the primary components of our restricted cash balances in our consolidated balance sheets.

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Cash Used for Investing Activities

Gross capital spending during the three months ended March 31, 2009 was as follows (in millions):

Maintenance Capital Expenditures(1):
Owned, Leased and Consolidated Joint Venture Hotels	$	23
Corporate and information technology		8
Subtotal		31
Vacation Ownership and Residential Capital Expenditures (2):
Net capital expenditures for inventory (excluding St. Regis Bal Harbour)		7
Net expenditures for inventory — St. Regis Bal Harbour		47
Subtotal		54
Development Capital		37
Total Capital Expenditures	$	122

(1)	Maintenance capital expenditures include improvements, repairs, and maintenance.
(2)	Represents gross inventory capital expenditures of $76 less cost of sales of $22.

     Gross capital spending during the first quarter of 2009 included approximately $31 million of maintenance capital, and $37 million of development capital. Investment spending on gross vacation ownership interest (“VOI”) and residential inventory was $76 million, primarily in Bal Harbour, Florida, Rancho Mirage, California, Orlando, Florida and Cancun, Mexico.

     As a result of the global economic climate, we have scaled back our plans for capital expenditures in 2009. Our capital expenditure program includes both offensive and defensive capital. Defensive spending is related to repairs, maintenance, and renovations that we believe is necessary to stay competitive in the markets we are in. Other than capital to address fire, life and safety issues, we consider defensive capital to be discretionary, although reductions to this capital program could result in decreases to our cash flow from operations, as hotels in certain markets could become less desirable. The offensive capital expenditures, which are primarily related to new projects that we expect will generate a return, are also considered discretionary. We currently anticipate that our defensive capital expenditures for the full year 2009 (excluding vacation ownership and residential inventory) will be approximately $150 million for maintenance, renovations, and technology capital. The majority of this capital would be discretionary and would be unrelated to fire, life and safety issues. In addition, we currently expect to spend approximately $175 million for investment projects, including construction of the St. Regis Bal Harbour and various joint ventures and other investments.

     In order to secure management or franchise agreements, we have made loans to third-party owners, made non-controlling investments in joint ventures and provided certain guarantees and indemnifications. See Note 19 of the consolidated financial statements for discussion regarding the amount of loans we have outstanding with owners, unfunded loan commitments, equity and other potential contributions, surety bonds outstanding, performance guarantees and indemnifications we are obligated under, and investments in hotels and joint ventures. We intend to finance the acquisition of additional hotel properties (including equity investments), construction of the St. Regis Bal Harbour, hotel renovations, VOI and residential construction, capital improvements, technology spend and other core and ancillary business acquisitions and investments and provide for general corporate purposes (including dividend payments and share repurchases) through our credit facilities described below, through the net proceeds from dispositions, through the assumption of debt, and from cash generated from operations.

     We periodically review our business to identify properties or other assets that we believe either are non-core (including hotels where the return on invested capital is not adequate), no longer complement our business, are in markets which may not benefit us as much as other markets during an economic recovery or could be sold at significant premiums. We are focused on enhancing real estate returns and monetizing investments.

     Since 2006, we have sold 57 hotels realizing proceeds of approximately $5 billion in numerous transactions. There can be no assurance, however, that we will be able to complete future dispositions on commercially reasonable terms or at all.

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Cash Used for Financing Activities

The following is a summary of our debt portfolio (including capital leases) as of March 31, 2009:

	Amount
	Outstanding at		Interest Rate at			Average
	March 31, 2009 (a)		March 31, 2009			Maturity
	(Dollars in millions)					(In years)
Floating Rate Debt
Senior Credit Facilities:
Revolving Credit Facilities	$	166		1.60	%		1.9
Term Loans		1,375		1.21	%		1.6
Mortgages and Other		42		5.80	%		3.8
Total/Average	$	1,583		1.37	%		1.7
Fixed Rate Debt
Senior Notes	$	2,249		7.14	%		5.1
Mortgages and Other		126		7.50	%		9.0
Total/Average	$	2,375		7.16	%		5.3
Total Debt
Total Debt and Average Terms	$	3,958		4.85	%		3.9

(a) Excludes approximately $593 million of our share of unconsolidated joint venture debt, all of which is non-recourse.

     Due to the current credit liquidity crisis, we evaluated the commitments of each of the lenders in our Revolving Credit Facilities (the “Facilities”). In addition, we have reviewed our debt covenants and restrictions and do not anticipate any issues regarding the availability of funds under the Facilities.

     On April 27, 2009, we amended our revolving credit and term loan facilities (collectively with prior amendments the “Amended Credit Facilities”) with the consent of the lenders thereunder. The Amended Credit Facilities enhance our financial flexibility by increasing our maximum Consolidated Leverage Ratio (as defined in the Amended Credit Facilities) from 4.50x to 5.50x. Additionally, the definition of Consolidated EBITDA used in the Amended Credit Facilities has been modified to exclude certain cash severance expenses from consolidated EBITDA. In connection with the amendment, we repaid $500 million of our term loan that was due June 2009 by drawing down on our revolver (see Note 20).

      To further strengthen our liquidity position, on April 30, 2009, we launched and priced a public offering of $500 million of senior notes with a coupon rate of 7.875% (the “Notes”) due October 15, 2014, issued at a discount price of 96.285%. We expect to receive net proceeds of approximately $474 million on the settlement date of May 7, 2009. The proceeds will be used to reduce the outstanding borrowings under our Amended Credit Facilities. Interest on the Notes is payable semi-annually on April 15 and October 15. We may redeem all or a portion of the Notes at any time at our option at a discount rate of Treasury plus 50 basis points. The Notes will rank pari passu with all other unsecured and unsubordinated obligations.

     Our Facilities are used to fund general corporate cash needs. As of March 31, 2009, we have availability of over $1.564 billion under the Facilities, which was reduced to $1.067 billion on April 27, 2009 when we pre-paid the term loan discussed above. Our ability to borrow under the Facilities is subject to compliance with the terms and conditions under the Facilities, including certain leverage and coverage covenants. The covenant which is expected to be the most restrictive, based on the current economic downturn, is the Consolidated Leverage Ratio discussed above. We would expect that this covenant will limit our ability to borrow the full amounts available under the Facilities in 2009 (depending on the use of proceeds from such borrowing).

     Our current credit ratings and outlook are as follows: S&P BB (stable outlook); Moody’s Ba1 (stable outlook); and Fitch BB+ (negative outlook). Our credit ratings were downgraded by Moody’s, S&P and Fitch in the first quarter of 2009, primarily due to the trends in the lodging industry and the impact of the current market conditions on our ability to meet our future debt covenants. The impact of the ratings could impact our current and future borrowing costs, which cannot be currently estimated.

31

     We did not sell any vacation ownership receivables during the first quarter of 2009. However, we are currently in the process of completing sales of vacation ownership receivables and expect to complete these sales in the second quarter of 2009.

     Based upon the current level of operations, management believes that our cash flow from operations, together with our significant cash balances (approximately $164 million at March 31, 2009, including $88 million of short-term and long-term restricted cash), available borrowings under the Facilities and other bank credit facilities (approximately $1.564 billion at March 31, 2009), our expected income tax refund of over $200 million in 2009 (see Note 15 of the consolidated financial statements), our $500 million debt issuance as discussed above and capacity for additional borrowings will be adequate to meet anticipated requirements for scheduled maturities, dividends, working capital, capital expenditures, marketing and advertising program expenditures, other discretionary investments, interest and scheduled principal payments and share repurchases for the foreseeable future. However, there can be no assurance that we will be able to refinance our indebtedness as it becomes due and, if refinanced, on favorable terms. In addition, there can be no assurance that in our continuing business we will generate cash flow at or above historical levels, that currently anticipated results will be achieved or that we will be able to complete dispositions on commercially reasonable terms or at all.

     If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be required to sell additional assets at lower than preferred amounts, reduce capital expenditures, refinance all or a portion of our existing debt or obtain additional financing at unfavorable rates. Our ability to make scheduled principal payments, to pay interest on or to refinance our indebtedness depends on our future performance and financial results, which, to a certain extent, are subject to general conditions in or affecting the hotel and vacation ownership industries and to general economic, political, financial, competitive, legislative and regulatory factors beyond our control.

     We had the following commercial commitments outstanding as of March 31, 2009 (in millions):

			Amount of Commitment Expiration Per Period
			Less Than						After
	Total		1 Year		1-3 Years		3-5 Years		5 Years
Standby letters of credit	$	164	$	161	$	—	$	—	$	3

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

     We enter into forward contracts to manage foreign exchange risk in forecasted transactions based on foreign currencies and to manage foreign exchange risk on intercompany loans that are not deemed permanently invested (see Note 12).

Item 4. Controls and Procedures.

     As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive and principal financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon the foregoing evaluation, our principal executive and principal financial officers concluded that our disclosure controls and procedures were effective and operating to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

     There has been no change in our internal control over financial reporting (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

32

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

     We are involved in various claims and lawsuits arising in the ordinary course of business, none of which, in the opinion of management, is expected to have a material adverse effect on our consolidated financial position or results of operations.

Item 1A. Risk Factors.

     The discussion of our business and operations should be read together with the risk factors set forth below and those contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the Securities and Exchange Commission, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner. Other than as set forth below, there have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2008.

We face risks related to pandemic diseases, which could materially and adversely affect travel and result in reduced demand for our hotel and vacation ownership businesses.

      Our business could be materially and adversely affected by the effect of a pandemic disease on the travel industry. For example, the past outbreaks of SARS and avian flu had a severe impact on the travel industry, and the current outbreak of swine flu in Mexico and the United States threatens to have a similar impact. A prolonged recurrence of SARS, avian flu, swine flu or another pandemic disease also may result in health or other government authorities imposing restrictions on travel. Any of these events could result in a significant drop in demand for our hotel and vacation ownership businesses and adversely affect our financial condition and results of operations.

Item 6. Exhibits.

10.1	Letter Agreement, dated August 22, 2008, between the Company and Matthew Avril. (1)
10.2	Amendment, dated as of December 30, 2008, to employment agreement between the Company and Matthew Avril. (1)
10.3	Amended and Restated Severance Agreement, dated as of December 30, 2008, between the Company and Matthew Avril. (1)
10.4	Letter Agreement, dated February 1, 2008, between the Company and Philip McAveety. (1)
10.5	Amendment, dated as of December 30, 2008, to employment agreement between the Company and Philip McAveety.
10.6	Amended and Restated Severance Agreement, dated as of December 20, 2008, between the Company and Philip McAveety. (1)
10.7	Letter Agreement, dated April 15, 2008, between the Company and Simon Turner. (1)
10.8	Amendment, dated as of December 30, 2008, to employment agreement between the Company and Simon Turner. (1)
10.9	Amended and Restated Severance Agreement, dated as of December 30, 2008, between the Company and Simon Turner. (1)
31.1	Certification Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 — Chief Executive Officer (1)
31.2	Certification Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 — Chief Financial Officer (1)
32.1	Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code — Chief Executive Officer (1)
32.2	Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code — Chief Financial Officer (1)

(1) Filed herewith

33

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
By:	/s/ frits van paasschen
	Frits van Paasschen
	Chief Executive Officer and Director
By:	/s/ Alan M. Schnaid
	Alan M. Schnaid
	Senior Vice President, Corporate Controller and Principal Accounting Officer

Date: May 1, 2009

34

EX-10.1

Exhibit 10.1

August 22, 2008

Matthew E. Avril
c/o Starwood Hotels & Resorts Worldwide, Inc.
1111 Westchester Ave
White Plains, NY 10604

Dear Matt,

The specifics of your assignment with Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”), in connection with your promotion to President — Hotel Operations, are outlined below:

Start Date:

Subject to the terms of this letter, your promotion will be effective as of September 1, 2008 (the “Effective Date”).

Responsibilities:

Your position will be President — Hotel Operations at the Company’s corporate office in White Plains, NY and you shall perform such duties and services as are assigned to you by the Company as requested. You shall devote your full time and attention to the affairs of the Company and to your job duties, and use your best efforts and abilities to promote the Company’s interests. Notwithstanding the foregoing, you shall not be prohibited from investing or trading in stocks, bonds, commodities or other forms of passive investment, including real estate, provided that such activities do not violate section 1 of the confidentiality, non-compete and non-solicitation agreement referred to below. You will initially be reporting to Frits van Paasschen, Chief Executive Officer, though the Company may make changes in your reporting structure, title and job responsibilities at any time. It is expected that the performance your duties will involve extensive travel, both within the United States and internationally.

In performing your duties, you will be expected to comply at all times with all policies, procedures and directives as they currently exist or as they may be adopted or changed from time to time.

Base Salary:

Your base salary will be $725,000.00 annually, paid in semi-monthly intervals of $30,208.33, and subject to applicable withholdings for FICA, state and federal taxes. The Starwood salary program provides performance-based salary reviews for future salary progression.

Annual Incentive (Bonus):

You will be eligible to participate in the Starwood Annual Incentive Plan (AIP) or, at the election of the board’s compensation committee, the Annual Incentive Plan for Certain Executives (AIPCE). In either case, your target incentive is 100% of base salary. Your actual incentive award will be based upon a variety of factors including company and division performance, and your achieving specified performance criteria to be established and approved with your manager. In the event that changes are made to any of the incentive plans, the changes will apply to you as they do other similarly situated employees of the Company.

Please note that the AIP and AIPCE provides that a portion of your annual bonus will be deferred and payable in Starwood stock or stock units.

Payment of your 2008 bonus will be delivered according to the regular annual incentive plan payout schedule and shall be based upon the base salary and bonus target set forth in this letter. An annual bonus shall not be deemed earned by you until the Company has determined your entitlement to such bonus and only if you are employed by the Company at the time such bonus is payable in accordance with the AIP, AIPCE and Company practices. The Company does not pay pro-rata bonuses upon departure.

Long Term Incentive:

You will be eligible to participate in Starwood’s Long Term Incentive Compensation Plan (“LTIP”), subject to the terms and conditions of the LTIP, as it may be changed from time to time. This plan provides for the award of options/restricted shares at the Company’s discretion to high performing executives. For calendar years 2009, 2010 and 2011, as long as annual option and restricted stock grants are made to other senior executives, you will receive equity awards having a minimum value of $1,500,000 on or about the same time as such grants are made to other senior executives (currently February of each year), payable in the same proportions of restricted stock and options as other senior executives of the Company, with the value of options determined by the method then used by the Company for determining grants to such other senior executives. The award agreements governing the terms of your equity grants will be on the same terms and conditions as other senior executives of the Company.

In connection with your promotion, you will receive a one time restricted stock grant under the LTIP having an aggregate value of $1,500,000, awarded as follows:

Effective on the first business day of the month following the execution of this letter agreement, you will be granted that number of shares of restricted stock having a value equal to $1,500,000, based on the Fair Market Value (as defined in the LTIP) on the date of the grant. The restricted shares will vest in accordance with the LTIP and will otherwise be governed by the provisions of the LTIP and the award agreement governing the restricted shares, provided that 100% of the shares will vest on the third anniversary of the date of grant. Further details will be provided in the award notification and agreement to be delivered to you following the grant.

Benefits:

Your original hire date with Starwood will remain the same for benefit accrual purposes. If you promotion necessitates a change in medical plans, information will be provided to you after your new assignment begins. You shall participate in, and be eligible to receive, all other benefits, including 401(k), medical, dental and disability plans coverage, as may be provided by the Company to other senior executive employees from time to time pursuant to the terms and

conditions of such benefit plans, programs and/or policies. In the event that changes are made to any of the benefit plans, the changes will apply to you as they do other employees of the Company.

You will be eligible for 20 days of vacation on an annual basis. In addition, the Company will reimburse you for up to $10,000 in legal fees incurred by you for review of your employment letter with us.

Relocation:

Starwood will pay the reasonable, out-of-pocket costs of relocating from Orlando, Florida to the New York metropolitan area in accordance with the provisions of Starwood’s Relocation Program. Details of Starwood’s Relocation Program are enclosed. To initiate the moving process, please contact your Human Resources office. In an effort to fully utilize our relocation benefit and avoid additional tax liability, we ask that you do not begin your relocation process before being contacted by your assigned relocation company. Your office shall be based in White Plains or such other location at the Company’s headquarters as may exist from time to time. The Company recognizes that you currently reside in Florida and will maintain a residence there.

In the event that you accept this offer of employment and relocation expenses are paid to you or on your behalf, you agree that if you voluntarily terminate your employment within one year, you will repay all such relocation, reduced by 1/12 for each full calendar month actually worked. In addition, eligibility for reimbursement of any and all relocation expenses will cease on the last day of employment and any relocation expenses incurred after that date will not be reimbursed by Starwood and will be your responsibility.

Resolution of Disputes:

From time to time, disagreements and misunderstandings may arise concerning your job responsibilities, performance, compensation, benefits or other matters affecting your employment with the Company, or one of its affiliated companies. We hope that we will be able to resolve such matters through normal discussions with your immediate managers or Human Resources representatives.

In the event those efforts fail, you and the Company agree, except as may be prohibited by law or as otherwise excluded by the terms of the attached Mutual Agreement to Arbitrate (Attachment A), to submit any and all disputes relating to or arising out of this offer letter, your employment with the Company or the termination of that employment to final and binding arbitration pursuant to the employment rules then in effect of the American Arbitration Association, which shall be the sole and exclusive remedy for such disputes. Accordingly, you acknowledge and agree that this offer of employment and the benefits provided herein are contingent upon your execution of the Mutual Agreement to Arbitrate provided to you herewith and incorporated herein by reference. In the event that the Mutual Agreement to Arbitrate is determined by a court with appropriate jurisdiction to be unenforceable, you and the Company waive any right to a trial by jury on the claims that otherwise would have been subject to the Mutual Agreement to Arbitrate.

Employment Term:

While Starwood looks forward to a long and mutually beneficial relationship with you, you should understand that there is no fixed duration for your employment. In accepting this offer,

you acknowledge and agree that your employment with the Company is at will, and may be terminated by Starwood at any time, with or without notice and for any or no reason. By signing below, you acknowledge that except for this letter, there is not and shall not be any written contract between you and the Company concerning this offer of employment or your prospective employment, and that nothing in this letter guarantees employment for any definite or specific term or duration or any particular level of benefits or compensation.

Severance:

In the event that Starwood terminates your employment for any reason other than cause, Starwood will pay to you twelve months of your then current base salary, in a lump sum less all applicable withholdings (the “Severance Payment”), and it will periodically reimburse you for your COBRA expenses minus your last level of normal contribution for up to twelve months commencing on the termination date. In addition, all stock options and restricted stock held by you under the Company’s stock incentive plans that were granted prior to August 19, 2008 shall immediately vest and become exercisable, and may thereafter be exercised, as provided in and in accordance with the terms of the applicable plan and award agreement. All stock options and restricted stock awards granted after August 19, 2008, including the sign-on grant referred to above, shall not be automatically accelerated but shall be governed in accordance with the terms of the applicable plan and award agreement. The Severance Payment and equity acceleration will be in lieu of any compensation, damage or remedy to which you might otherwise be entitled and will be subject to and conditioned upon (a) your continuing compliance with the Non-Compete, Non-Solicitation, Confidentiality and Intellectual Property Agreement referred to below and (b) your signing a written waiver and release of any and all claims against Starwood arising out of or relating to your employment with Starwood, in form and substance satisfactory to Starwood. You will not be eligible for any Severance Payment, equity acceleration or COBRA reimbursement if you resign from your employment with the Company.

For purposes of this paragraph, “cause,” shall mean (i) any material breach by you of any of the duties, responsibilities or obligations of your employment, or any of the policies or practices of Starwood; (ii) your material failure or refusal to properly perform, or the habitual neglect of (both as determined by Starwood in its reasonable discretion and judgment), the duties, responsibilities or obligations of your employment, or to properly perform or follow (as determined by Starwood in its reasonable discretion and judgment) any lawful order or direction by Starwood; (iii) any acts or omissions by you that constitute (as determined by Starwood in its reasonable discretion and judgment) fraud, dishonesty, disloyalty, breach of trust, gross negligence, civil or criminal illegality, or any other misconduct or behavior that could (as determined by Starwood in its reasonable discretion and judgment), subject to civil or criminal liability or otherwise adversely affect the business, interests or reputation of Starwood or any of its affiliates.

Other Conditions and Obligations:

You acknowledge that you are not subject to any currently effective employment contract, or any other contractual or other binding obligations pursuant to which your employment or employment activities with or on behalf of the Company may be subject to any restrictions. Restrictions include, without limitation, any agreements or other obligations or documents relating to non-competition, confidentiality, trade secrets, proprietary information or works for hire. By signing this letter, you represent to the Company that there are no agreements or arrangements, whether written or oral, in effect that would prevent or conflict with your full performance of your employments duties and responsibilities to us.

As a further condition of this offer and your right to receive any of the benefits detailed herein, you agree to execute and be bound by a confidentiality, non-compete and non-solicitation agreement provided to you by the Company (Attachment B).

No Other Assurances:

You acknowledge that in deciding to sign this offer, you have not relied on any promises, commitments, statements or representations, whether spoken or in writing, made to you by any representative of the Company, except for what is expressly stated herein. This offer replaces and cancels all previous agreements, commitments, and understandings, including without limitation, the Amended and Restated Employment Agreement dated as of May 11, 2005 between you and Starwood Vacation Ownership, Inc., a wholly owned subsidiary of the Company, whether spoken or written, if any, that the Company or any representative of the Company may have made in connection with your anticipated employment.

You also acknowledge that this offer is intended as written, and that no marginal notations or other revisions to either this offer, the Mutual Agreement to Arbitrate, or the Non-compete, Non-solicitation, Confidentiality and Intellectual Property Agreement are binding on the Company unless expressly consented to in writing by the Executive Vice President, Human Resources or Starwood’s Chief Administrative Officer and General Counsel. This offer shall be construed, governed by and enforced in accordance with the laws of the State of New York, without regard to its conflicts of laws principles.

By signing and returning this letter, you confirm that this letter accurately sets forth the current understanding between you and Starwood and that you accept and agree to the terms as stated above.

Very truly yours,
By:
	Name:	Jeff Cava
	Title:	EVP — Human Resources

ACCEPTED AND AGREED TO:
Matthew E. Avril	Date: August ___, 2008

Attachment A

MUTUAL AGREEMENT TO ARBITRATE

     In order to gain the benefits of a speedy, impartial, and cost-effective dispute resolution procedure, and for good and valid consideration as covenanted below and in addition to any other consideration, and intending to be legally bound, Starwood Hotels & Resorts Worldwide, Inc. (the “Company”) and I hereby agree that, except as otherwise provided herein, all disputes and claims for which a court otherwise would be authorized by law to grant relief, in any manner, that I may have, now or in the future, during or after my employment with the Company, of any and every kind or nature whatsoever with or against the Company, any of the Company’s affiliated or subsidiary companies, partners, joint venturers, owners of properties that the Company’s affiliates manage, and/or any of his, her, its or their directors, officers, employees or agents , or any disputes and claims that the Company may have against me (collectively, “Claims”), shall be submitted to the American Arbitration Association (“AAA”) to be resolved and determined through final and binding arbitration before a single arbitrator and to be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the AAA. The Company and I agree that the arbitrator will have the authority to grant motions dispositive of all or part of any Claim. The Company shall be responsible for payment of all arbitrator compensation, AAA filing fees and AAA administrative fees, other than the initial AAA filing fee for which I will be responsible to pay up to a maximum of $125, or as otherwise required by law.

     Any reference in this Agreement to the Company also refers to all of the Company’s affiliated entities, benefit plans, the benefit plans’ sponsors, fiduciaries and administrators, and all successors and assigns of any of them.

     The Company and I each have the right to representation by counsel with respect to arbitration of any dispute pursuant to this Agreement. Except as prohibited by law, at the request of either the Company or me, the arbitration proceedings shall be conducted in confidence, and, in such a case, all documents, testimony, and records shall be received, heard, and maintained by the arbitrator in confidence, available for inspection only by me and the Company, our respective attorneys, and experts, who shall agree, in advance and in writing, to receive all such information confidentially and to maintain the secrecy of such information until it shall become generally known. Both parties shall be allowed adequate discovery as part of the arbitration process, including reasonable access to essential documents and witnesses as determined by agreement or the arbitrator.

     The arbitrator shall conduct a full hearing as to all issues and disputes not resolved by dispositive motion. At such hearing, the parties shall be entitled to present evidence and examine and cross-examine witnesses. The arbitrator shall issue a written decision revealing the essential findings and conclusions upon which any award is based. In addition, the arbitrator shall have authority to award equitable relief, damages, costs, and fees to the extent permitted by law, including, but not limited to, any remedy or relief that a governing court might order.

     The Company and I hereby agree that the Claims subject to arbitration shall include but not be limited to any and all Claims that arise out of or are related to the offer of employment, transfer or promotion extended by the Company to me, any withdrawal or rescission of that offer, any aspect of my employment with the Company or the terms and conditions of that employment,

any claim for bonus, vacation pay or other compensation, any termination of that employment and any Claim of discrimination, retaliation, or harassment based upon age, race, religion, sex, creed, ethnicity, pregnancy, veteran status, citizenship status, national origin, disability, handicap, medical condition, sexual orientation or any other unlawful basis, or any other unlawful conduct, under any applicable federal, state, local or other statutes, orders, laws, ordinances, regulations or the like, or case law, that relate to employment or employment practices, including without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Americans with Disabilities Act of 1990, as amended, the Family Medical Leave Act of 1993, as amended, the Employee Retirement Income Security Act of 1990, as amended, the Worker Adjustment Retraining and Notification Act, as amended, the Fair Labor Standards Act, as amended, the Vietnam Era Veterans’ Readjustment Assistance Act, as amended, the Equal Pay Act, as amended, the Rehabilitation Act, as amended, the Immigration Reform and Control Act, and the state and local analogues to the foregoing.

     The Company and I further agree that the Claims subject to arbitration shall exclude any Claims required by any applicable federal, state, local or other statute or benefit or pension plan to be submitted to an administrative forum (for example, a workers’ compensation claim, a claim for unemployment insurance benefits, or an administrative charge of discrimination or retaliation filed with the Equal Employment Opportunity Commission or the state or local analogue to that agency but not litigation arising from such charges), any claims involving any loans or advances paid to me that are subject to any mortgage, promissory note or other similar agreement that I have signed, and any Claims involving solely a monetary dispute within the jurisdiction of a small claims court. The Company and I further agree that the Claims subject to arbitration also shall exclude any Claims to the extent they involve the alleged taking, use or disclosure of trade secrets and similar confidential or proprietary information, Claims involving a failure to pay a retention bonus or relocation expense, Claims involving a failure to repay any unearned portion of a retention bonus or relocation expense, Claims based upon any employee pension or benefit plan the terms of which contain an enforceable arbitration procedure, in which case the procedure of such plan shall apply, and Claims that cannot be compelled to mandatory arbitration under applicable federal law.

     The Company and I agree that any arbitration award rendered as the result of any arbitration under this Agreement shall be final and binding and may be entered and enforced as a court judgment in accordance with applicable law. The Company and I further agree that this Agreement, any arbitration under this Agreement and any arbitration award rendered in such arbitration shall be governed by the Federal Arbitration Act.

     By entering into this Agreement, the Company and I each specifically acknowledge and understand that the right to the determination and/or trial of any Claims in court before a judge or a jury is a valuable right, and that by signing this Agreement, the Company and I hereby knowingly and voluntarily waive any and all rights we may have to assert any Claims in any court of competent jurisdiction and to a determination and/or trial before a judge or a jury.

     I further understand and acknowledge that this Agreement is not intended to be and shall not be deemed to constitute a contract of employment for any specific duration, and that my employment shall be and remain at will, which means that the Company and I shall be free to terminate that employment at any time for any or no reason with or without notice and with or without cause.

     Each party’s promise to resolve Claims by arbitration in accordance with the provisions of this Agreement is consideration for the other party’s like promise. Additionally, I enter into this Agreement in consideration of the Company’s employment, transfer or promotion of me.

     This Agreement shall survive my employer-employee relationship with the Company and shall apply to any covered Claim whether arising or asserted during my employment or after the termination of my employment with the Company. This Agreement can be modified or revoked only by a writing signed by both me and the Company and that expressly refers to this Agreement and specifically states an intent to modify or revoke it. This is the complete agreement of the parties on the subject of arbitration of disputes, except for any arbitration provision contained in a pension or benefit plan or an agreement covering change in control benefits and protections.

EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES CAREFULLY READING THIS AGREEMENT, UNDERSTANDING ITS TERMS, AND ENTERING INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF.

EACH PARTY FURTHER ACKNOWLEDGES HAVING THE OPPORTUNITY TO DISCUSS THE AGREEMENT WITH PERSONAL LEGAL COUNSEL AND HAS USED THAT OPPORTUNITY TO THE EXTENT DESIRED.

Dated: August __, 2008
	NAME: Matthew E. Avril
Dated: August __, 2008
	NAME: Jeff Cava
	TITLE: EVP — Human Resources Starwood Hotels & Resorts Worldwide, Inc.

Attachment B

NON-COMPETE, NON-SOLICITATION, CONFIDENTIALITY AND
INTELLECTUAL PROPERTY AGREEMENT

          This Non-compete, Non-solicitation, Confidentiality and Intellectual Property Agreement (“Agreement”) is entered into as of this ___ day of August 2008, (the “Effective Date”), by and between Starwood Hotels & Resorts Worldwide, Inc. (the “Company”) and Matthew E. Avril (the “Employee”).

          WHEREAS, the Company devotes significant time, resources and effort to the training and advancement of its management, and its management team constitutes a significant asset and important competitive advantage; and

          WHEREAS, the Employee has and will have access to important and sensitive confidential information; and

          WHEREAS, the Company has determined that it is in the best interests of the Company and its shareholders to enter into an agreement with Employee whereby Employee will be prohibited from competing with the Company and/or soliciting employees of the Company in accordance with the terms and conditions of this Agreement; and

          WHEREAS, Employee may create inventions, trade secrets, know-how and documents or other works of authorship and may appear or perform in various promotional materials within the scope of Employee’s employment.

          WHEREAS, in consideration of the Company’s offer of employment, Employee agrees to enter into this Agreement.

          THEREFORE, the Company and Employee agree as follows:

          1. Employee agrees that during the period of Employee’s employment with the Company and for a period of 12 months following the date of any termination of employment from the Company (the “Non-Compete Period”), Employee shall not, without the express written consent of the Board of Directors of the Company, directly or indirectly, whether for his own account or for the account of any other person or entity, engage, participate or make any financial investment in, become employed by or render advisory services to or otherwise assist or be interested in any Competitive Business in any geographic area in which, as of the date of termination of Employee’s employment, the Company or any of its subsidiaries is engaged or planning to be engaged. As used herein, “Competitive Business” shall mean any of the firms, businesses, corporations or enterprises listed on Attachment 1. Notwithstanding the foregoing, Employee may invest in a Competitive Business if its stock is listed for trading on a national stock exchange or traded in the over-the-counter market and Executive’s holdings have an original cost less than $5,000,000 and represent less than five percent of its outstanding stock. In addition, Employee may continue his role and investments in business relationships that he has disclosed to the Company prior to the date hereof, including the activities set forth on Schedule D to the Amended and Restated Employment Agreement dated as of May 11, 2005 between the Company and Employee.

          2. Non-solicitation. During the Non-Compete Period, Employee shall not, without the prior written consent of the Company, except in the course of carrying out Employee’s duties hereunder, directly or indirectly solicit or attempt to solicit for employment with or on behalf of any corporation, partnership, joint venture or other business entity, any person who is, or at any time during the six-month period preceding the solicitation of such person was, a management-level employee of the Company or its affiliates (including, without limitation, for this purpose any director level employee of the Company or its affiliates and any General Manager of any hotel owned (in whole or in part) or managed by the Company or its affiliates).

          3. Confidentiality. Employee acknowledges that during the course of his/her employment with the Company, Employee will receive, and will have access to, “Confidential Information,” as such term is defined below, of the Company and its affiliates and that such information is a special, valuable and unique asset belonging to the Company. Accordingly, Employee is willing to enter into the covenants contained in this Agreement in order to provide the Company and its affiliates with what Employee considers to be reasonable protection for the Company’s interests. All notes, memoranda, papers, documents, correspondence or writings (which shall include information recorded or stored in writing, on magnetic tape or disc, or otherwise recorded or stored for reproduction, whether by mechanical or electronic means and whether or not such reproduction will result in a permanent record being made) (“Documents”) which from time to time may be in Employee’s possession (whether prepared by Employee or not) relating, directly or indirectly, to the business of the Company and its affiliates shall be and remain the property of the Company and shall be delivered by Employee to the Company immediately upon request, and in any event promptly upon termination of Employee’s employment, and Employee shall not make or keep any copies or extracts of the Documents. At any time during or after Employee’s employment with the Company ends, without the prior written consent of the Company, except (i) in the course of carrying out Employee’s duties hereunder or (ii) to the extent required by a court or governmental agency, or by applicable law or under compulsion of legal process, Employee shall not disclose to any third person any information concerning the business of the Company or its affiliates, including, without limitation, any trade secrets, customer lists and details of contracts with or requirements of customers, the identity of any owner of a managed hotel, information relating to any current, past or prospective management agreement or joint venture, information pertaining to business methods, sales plans, design plans and strategies, management organization, computer systems and software, operating policies or manuals, personnel records or information, information relating to current, past or contemplated employee benefits or compensation data or strategies, business, financial, development or marketing plans, or manpower strategies or plans, financial records or other financial, commercial, business or technical information relating to the Company (collectively, “Confidential Information”), unless such Confidential Information has been previously disclosed to the public by the Company or is in the public domain (other than by reason of Employee’s breach of this Section 3). Employee will, prior to making any such disclosure pursuant to subsection (ii), promptly notify the Company of his/her receipt of such process or requirement, consult with the Company on the advisability of taking steps to resist or narrow such request, cooperate with the Company in any attempt that the Company may make to obtain a court order or other reliable assurance that confidential treatment will be accorded to all or designated portions of such information, and not disclose such Confidential Information unless the Company shall have had reasonable opportunity to obtain a court order prohibiting or limiting such disclosure.

               3.1 Employee agrees that, both during and after Employee’s employment with the Company, if Employee is uncertain of whether or not information is

confidential, Employee will treat that information as Confidential Information until Employee has received written verification from an authorized officer of the Company that the information is not Confidential Information.

          4. Intellectual Property and Publicity Rights. Employee acknowledges and agrees that all right, title and interest in and to patents, patent applications, inventions, improvements, discoveries, developments, processes, business methods, technical information, know-how, trade secrets, computer programs, writings, designs, copyrights, maskworks, trademarks, service marks, trade names, trade dress and the like (collectively, “Intellectual Property”), including the right to invoke the benefit of the right of priority provided by any treaty to which the United States is a party, which Employee creates, conceives, develops or obtains, either solely or jointly with others, during Employee’s employment with the Company (a) with the use of the Company’s time, materials, facilities or other resources; or (b) resulting from or suggested by Employee’s work for the Company; or (c) in any way relating to any subject matter relating to the existing or contemplated business, products and services of the Company or the Company’s affiliates, subsidiaries and licensees shall be owned by the Company. Upon request, Employee shall execute all such assignments and other documents and take all such other action as the Company may reasonably request in order to vest in the Company, or its nominee, all of Employee’s right, title, and interest in and to such Intellectual Property. Employee further acknowledges and agrees that the Company shall have the perpetual, worldwide right to use Employee’s name, performance, biography, voice, image, signature and likeness in promotional or any other materials developed by or for the Company during Employee’s employment with the Company. Employee hereby irrevocably and unconditionally waives any and all rights that he/she has or may have in and to the Intellectual Property, including, without limitation, any “moral rights” that he/she has or may have as “author” of the Intellectual Property, and hereby expressly agrees not to make any claim or demand against the Company or any party authorized by the Company to exploit the Intellectual Property.

          5. Equitable Relief.

               5.1 Employee acknowledges that the restrictions and obligations specified in Sections 1, 2, 3 and 4 hereof are reasonable in view of the nature of the business in which the Company is engaged and Employee’s knowledge of, and responsibilities with respect to, the Company’s business, and that any breach of Sections 1, 2, 3 or 4 hereof may cause the Company irreparable harm for which there is no adequate remedy at law, and as a result of this, the Company will be entitled to the issuance by a court of competent jurisdiction of an injunction, restraining order or other equitable relief in favor of the Company, without the necessity of posting a bond, restraining Employee from committing or continuing to commit any such violation. Any right to obtain an injunction, restraining order or other equitable relief hereunder will not be deemed to be a waiver of any right to assert any other remedy the Company may have at law or in equity, including, without limitation, the right to cancel payments to which Employee is otherwise entitled under Employee’s employment agreement.

               5.2 Any proceeding or action seeking equitable relief for violation of Sections 1, 2, 3 and 4 hereof may be commenced in the federal courts in the Southern District of the State of New York, or in the absence of federal jurisdiction in state court in the State of New York. Employee hereby irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees to take any and all future action necessary to submit to the jurisdiction of such courts. Employee irrevocably waives any objection that Employee now has or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waives any claim that any such suit, action or proceeding brought in any such

court has been brought in an inconvenient forum. Final judgment against Employee in any such suit will be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which will be conclusive evidence of the fact and the amount of any liability therein described, or by appropriate proceedings under an applicable treaty or otherwise.

          6. Severability. In the event that any provision of this Agreement conflicts with the law under which this Agreement is to be construed, and/or if any such provision is held invalid by a court with jurisdiction over the parties to this Agreement and the subject matter of this agreement, (a) such provision will be deemed to be restated to reflect as nearly as possible the original intentions of the parties to the fullest extent permitted under applicable law, and (b) the remaining terms and provisions of this Agreement will remain in full force and effect.

          7. Governing Law. This Agreement shall be construed, governed and enforced according to the laws of the State of New York, without regard to the principles of conflicts of laws.

          8. Amendments and Waivers. No failure to act by the Company will waive any right contained in this Agreement. No provision of this Agreement may be amended or waived, except by a written agreement signed by both Employee and an authorized executive officer of the Company. Any waiver by the Company of strict performance of any provision of this Agreement shall not be a waiver of or prejudice the Company’s right to require strict performance of that same provision or any other provision of the Agreement in the future.

     Employee acknowledges that he/she has had a reasonable opportunity to review and consider the terms described above and to consult with an attorney if he/she so chooses prior to signing this Agreement. Fully understanding the above terms, Employee is entering into this letter agreement knowingly and voluntarily.

          IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first above written.

Dated: August __, 2008
	NAME: Matthew E. Avril
Dated: August __, 2008
	NAME: Jeff Cava
	TITLE: EVP — Human Resources Starwood Hotels & Resorts Worldwide, Inc.

EX-10.2

Exhibit 10.2

AMENDMENT TO EMPLOYMENT LETTER

Effective December 30, 2008

     Starwood Hotels & Resorts Worldwide, Inc. Inc. (“Company”) set out the terms of its offer of employment to the executive named below (“Executive”) pursuant to a letter with the date specified below (“Offer Letter”). The Company and the Executive desire to amend the severance provisions of the Offer Letter (“Amendment”) in order to evidence documentary compliance with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulatory guidance thereunder, effective on the date specified above.

Executive:	Matthew E. Avril
Date of Offer Letter:	August 22, 2008

     In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. The section entitled “Long Term Incentive” is modified to clarify that if the Compensation Committee of the Board of Directors makes the annual option and restricted stock grants for 2009, 2010 and 2011 referenced in such section, the grants for each specified year will be made in that year.

2. The section entitled “Long Term Incentive”, “Benefits” and “Relocation Expenses” are modified to clarify that the $1,500,000 one time restricted stock award, legal expense reimbursement and relocation expense reimbursement specified in these sections were paid in 2008.

3. The first paragraph of the section entitled “Severance” is modified to read as follows:

In the event that Starwood terminates your employment for any reason other than cause, Starwood will pay to you twelve months of your then current base salary, in a lump sum less all applicable withholdings (the “Severance Payment”), plus an amount equal to 12 times the COBRA charge on the payment date for the type of Company-provided group health plan coverage in effect for you (e.g., family coverage) on the date of your employment termination less the active employee charge for such coverage in effect on the date of your employment termination, in a lump sum less all applicable withholdings (the “COBRA Payment”). In addition, all stock options and restricted stock held by you under the Company’s stock incentive plans that were granted prior to August 19, 2008, shall immediately vest and become exercisable, and may thereafter be exercised, as provided in and in accordance with the terms of the applicable plan and award agreement (the “Equity Acceleration”). All stock options and restricted stock awards granted after August 19, 2008, including the sign-on grant referred to above, shall not be automatically accelerated but shall be governed in accordance with the terms of the applicable plan and award agreement. The Severance Payment and Equity Acceleration will be subject to and conditioned upon your

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continuing compliance with the Non-Compete, Non- Solicitation, Confidentiality and Intellectual Property Agreement referred to below. In addition, the Company must deliver to you a customary release agreement (the “Release”) on the date of your employment termination, and as a condition to receipt of the Severance Benefit you must (i) sign the Release and return the signed Release to the Company within the following number of days after the date on which the Company delivers the Release to you: 14 days if you are under age 40 on the date of your termination of employment, 21 days if you are at least age 40 on the date of your termination of employment and if your termination of employment is not part of a group termination program within the meaning Section 7(f)(1)(F)(ii) of the Age Discrimination in Employment Act of 1967, as amended, and 45 days if you are at least age 40 on the date of your termination of employment and your termination is part of such a group termination program (the “Release Period”); and (ii) not revoke the Release within any seven-day revocation period that applies to you under the Age Discrimination in Employment Act of 1967, as amended (the “Revocation Period”). The Company will then pay the Severance Benefit to you in a lump sum 53 days following the date of your termination of employment, except as provided in the section entitled “Section 409A” below. The Company will provide the Equity Acceleration to you after you have returned the executed Release to the Company and any Revocation Period specified above has expired. In the event you decline or fail for any reason to timely execute and deliver the Release or you revoke the Release, then you will not be entitled to the Severance Benefit or the Equity Acceleration. The Company will pay the COBRA Payment to you within 30 days following the date of your employment termination. You will not be eligible for any Severance Payment, Equity Acceleration or COBRA Payment if you resign from your employment with the Company.

4. A new section entitled “Section 409A” is added to read as follows:

This letter agreement will be construed and administered to preserve the exemption from Section 409A of payments that qualify as short-term deferrals pursuant to Treas. Reg. §1.409A-1(b)(4) or that qualify for the two-times compensation exemption of Treas. Reg. §1.409A-1(b)(9)(iii). With respect to any amounts that are subject to Section 409A, it is intended, and this Agreement will be so construed, that such amounts and the Company’s and your exercise of authority or discretion hereunder shall comply with the provisions of Section 409A so as not to subject you to the payment of interest and additional tax that may be imposed under Section 409A. For purposes of any payment in this Agreement that is subject to Section 409A and triggered by your “termination of employment”, (i) “termination of employment” shall have the same meaning as “separation from service” under Section 409A(a)(2)(A)(i) of the Code, and (ii) in the event you are a “specified employee” on the date of your termination of employment (with such status determined by the Company in accordance with rules established by the Company in writing in advance of the “specified employee identification date” that relates to the date of your termination of employment or, if later, by December 31, 2008, or in the absence of such rules

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established by the Company, under the default rules for identifying specified employees under Section 409A), any payment that is subject to Section 409A, such payment shall not be paid earlier than six months after such termination of employment (if you die after the date of your termination of employment but before any payment has been made, such remaining payments that were or could have been delayed will be paid to your estate without regard to such six-month delay). You acknowledge and agree that the Company has made no representation to you as to the tax treatment of the compensation and benefits provided pursuant to this Agreement and that you are solely responsible for all taxes due with respect to such compensation and benefits.

          IN WITNESS WHEREOF, the Parties have executed this Amendment on the day and year first above written.

Dated: December 30, 2008
	Matthew E. Avril
	Starwood Hotels & Resorts Worldwide, Inc.
Dated: December 30, 2008	BY:
		NAME: Jeffrey Cava
		TITLE: EVP — Human Resources

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EX-10.3

Exhibit 10.3

SEVERANCE AGREEMENT

          THIS AGREEMENT, dated December 30, 2008 the “Effective Date”), is made by and between Starwood Hotels and Resorts Worldwide, Inc., a Maryland corporation (the “Company”), and Matthew E. Avril (the “Executive”).

          WHEREAS, the Executive is employed by the Company as President — Hotel Operations; and

          WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and

          WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of senior management personnel to the detriment of the Company and its stockholders; and

          WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s senior management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; and

          WHEREAS, the Company and the Executive entered into an employment agreement (the “Original Agreement”) dated August ___, 2008; and

          WHEREAS, the Company and the Executive hereby amend and restate the Original Agreement in its entirety (the “Agreement”) in order to evidence documentary compliance with section 409A of Code and the guidance thereunder (collectively “Section 409A”);

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree as follows:

     1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in Section 16 hereof.

     2. Term of Agreement. The Term of this Agreement shall commence on the Effective Date and shall continue in effect through the third anniversary of the Effective Date; provided, however, that on each anniversary of the Effective Date during the Term of this Agreement, the Term shall automatically be extended for one additional year unless, not later than 90 days prior to any such anniversary, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control or a Potential Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24)

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months beyond the month in which such Change in Control or a Potential Change in Control occurred.

     3. Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 10 hereof, no Severance Payments shall be payable under this Agreement unless during the Term there shall have been (or, under the terms of the second sentence of Section 6 hereof, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

     4. The Executive’s Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event a Potential Change in Control occurs during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of such Potential Change of Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

     5. Compensation Other Than Severance Payments.

          a. Payment of Salary During Disability. Following a Change in Control and during the Term, during any period that the Executive is unable to perform the Executive’s full-time duties with the Company as a result of:

          (1) a period of 409A Disability, the Executive shall continue to receive his base salary in accordance with the Company’s standard payroll practices at the rate in effect at the commencement of any such period, together with any compensation payable to the Executive under the Company’s short-term and long-term disability plans for salaried employees during such period and any benefit coverages customarily provided to disabled salaried employees, until the Executive’s employment is terminated on account of the Executive’s General Disability; or

          (2) a period of General Disability, the Executive shall receive any compensation payable to the Executive under the Company’s short-term and long-term disability plans for salaried employees during such period, as well as any benefit coverages customarily provided to disabled salaried employees, until the Executive’s employment is terminated on account of the Executive’s General Disability.

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Thereafter the Executive’s benefits shall be determined under the Company’s retirement, insurance and other compensation programs then in effect in accordance with the terms of such programs.

          b. Accrued Salary. If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive such Executive’s full salary through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

          c. Post-Termination Benefits. If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason.

          d. Time of Payment. Upon termination of the Executive’s employment following a Change in Control and during the Term, the Executive shall receive the payments or benefits to which he may be entitled under Section 5(b) and 5(c) and which constitute deferred compensation subject to Section 409A either (A) at the time when due hereunder, or (B) if a payment date sufficient to satisfy Section 409A is not otherwise stated for such payment or benefit, on the date of Executive’s termination of employment, except as provided in Section 14 below.

     6. Severance Payments.

          a. If the Executive’s employment is terminated following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6 (“Severance Payments”) and Section 7, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which

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would constitute a Change in Control (an “Acquiring Person”), (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of an Acquiring Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct.

          (1) Lump Sum Payment. In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive under the terms of his offer letter from the Company, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the average of the annual bonuses earned by the Executive in the three fiscal years ending immediately prior to the fiscal year in which occurs the Date of Termination or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. For purposes of the preceding sentence, in determining any bonus amount for any fiscal year, bonuses paid with respect to any year in which employment of the Executive commenced shall be annualized based on the number of days employed by the Company during such year. In the event the date of the Executive’s termination of employment occurs on or within two years following an event that constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of section 409A(a)(2)(a)(vi) of the Code, such amount will be paid in a lump sum within 30 days following the date of the Executive’s termination of employment, except as set forth in Section 14 below; otherwise, such amount will be paid 53 days following the date of the Executive’s termination of employment, except as provided by Section 14 below.

          (2) Continuation of Welfare Benefits. Subject to Paragraph 15 in the case of any benefits that are not exempt from Section 409A, for the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, disability, and accident insurance benefits and other benefits and perquisites (including employee stay rates) substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance

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constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence. Benefits otherwise receivable by the Executive pursuant to this Section 6(a)(2) shall be reduced to the extent benefits of the same type are received by the Executive from another employer during the twenty-four (24) month period following the Executive’s termination of employment; provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.

          (3) Health Benefits. For the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive with group health coverage substantially similar to that which the Executive was receiving immediately prior to the Notice of Termination. The premium charge to the Executive for each month of such coverage will equal the Company’s monthly COBRA charge for such coverage in which the Executive, his spouse and covered dependents (as applicable) is enrolled from time to time (less the amount of any administrative charge typically assessed by the Company as part of its COBRA charge) and the Executive will be required to pay such monthly premium charge in accordance with the Company’s standard COBRA premium payment requirements. The Company will pay Executive a lump sum in cash equal to an initial multiple that is increased by a percentage. For this purpose, the initial multiple is 24 times the difference that results from calculating (i) the Company’s monthly COBRA charge on the Date of Termination for family coverage with respect to the highest value health coverage provided to salaried employees, minus (ii) the amount the Company charges active salaried employees for such coverage on Executive’s Date of Termination. In addition, for this purpose, the percentage is the sum of (I) 1% for each month in the 24-month period that will fall in the calendar year following Executive’s Date of Termination, plus (II) 2% for each month in the 24-month period that will fall in the second calendar year following Executive’s Date of Termination. The Company will make such payment within 30 days following the date of the Executive’s termination of employment, except as provided by Section 14 below.

          (4) Incentive Compensation. Notwithstanding any provision of any annual or long-term incentive plan to the contrary, the Company shall pay to the Executive in cash the following amounts:

          (A) A lump sum equal to any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, paid during the fiscal year of termination when bonuses for such completed fiscal year are paid to senior executives (but not later than 2-1/2 months after such completed fiscal

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year, except as provided by Section 14 below; and

          (B) the value of each contingent incentive compensation award allocated or awarded to the Executive for a then uncompleted period under any such plan that the Executive would have earned on the last day of the performance award period, assuming the achievement, at the target level, of the individual and corporate performance goals established with respect to such award, paid in the year following the end of such performance period when awards for such performance period are paid to senior executives (but not later than 2-1/2 months after the end of such performance period, except as provided by Section 14 below. Awards for uncompleted periods shall be prorated based upon the number of days the Executive is employed by the Company during such year.

          (5) Accelerated Vesting of Stock Options. All stock options and restricted stock held by the Executive under any stock option or incentive plan maintained by the Company (including the Company’s 2004 Long-Term Incentive Plans) shall immediately vest and become exercisable as of the Date of Termination, to be exercised in accordance with the terms of the applicable plan

          (6) Outplacement Services. The Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of two (2) years following the date of the Executive’s termination of employment or, if earlier, until the first acceptance by the Executive of an offer of employment. The cost of such outplacement services shall not exceed twenty percent (20%) of the Executive’s base salary in effect on the Date of Termination.

          (7) 401(k) Contributions. The Company shall pay the Executive an amount equal to the unvested portion (if any) of the Executive’s account balance under the Company’s 401(k) Plan that is forfeited by reason of the Executive’s termination of employment. Such payment shall be made within 30 days following the date of the Executive’s termination of employment, except as provided by Section 14 below.

     7. 280G Cap.

          a. Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter called “Total Payments”) would not be deductible (in whole or part), by the Company, an affiliate or Person making such payment or providing such benefit as a result of section 280G of the Code, then, the Total Payments shall be reduced (with the cash Severance Payments being

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reduced first (if necessary, to zero) in the order in which they appear in Section 6 above, and all other Severance Payments shall thereafter be reduced (if necessary, to zero) in the order in which they appear in Section 6 above provided that extended health benefits will be reduced last to the minimum extent necessary such that, after deducting the amount of any Excise Tax imposed on such Total Payments (as so reduced) from such Total Payments (as so reduced), the amount of the Total Payments (after such reduction) will be greater if such reduction is made than it would be without such reduction. All determinations, including the order and timing of any such reduction shall be determined by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”).

          b. For purposes of this limitation, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the Auditor, does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of the Code and (iii) the value of any noncash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

     8. Termination Procedures and Compensation During Dispute.

          a. Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 12 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provisions indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail.

          b. Date of Termination. “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (1) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated

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for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).

          c. Dispute Concerning Termination. If the Executive reasonably believe in good faith the Company is not providing the Executive with a benefit or payment to which the Executive is entitled under the terms of this Agreement, the Executive may notify the Company, within forty-five (45) days after the Date of Termination or, if any such payment or benefit is due after such 45-day period, within 45 days following such payment date, that a dispute exists concerning the termination and/or the amount of such payment or benefit. In this event, the Company shall act within fifteen (15) days to restore fully the disputed benefits and payments (so that all benefits and payments are provided as of such date as would have been provided had there been no delay in providing such benefits and payments) and to continue to provide such benefits and payments as contemplated by this Agreement thereafter (provided, however, that in all events any payment or benefit shall not be paid or provided to the Executive before the payment date set forth in this Agreement or any applicable document), but subject to termination and recapture from the Executive of these disputed benefits and payments in accordance with the terms of a mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected).

     9. No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminated during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 8(d) hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than Section 6(a)(2) hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

     10. Successors; Binding Agreement.

          a. In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to terminate his employment with the Company and receive compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive’s employment for Good Reason after a Change in

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Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.

          b. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

     11. Indemnification. The Company shall indemnify and hold Executive harmless for acts and omissions in his capacity as an officer, director or employee of the Company to the maximum extent permitted under applicable law. The Company shall maintain a Director’s and Officer’s Liability Insurance Policy, which shall provide liability coverage for Executive’s benefit, and the Executive shall remain covered under such policy for a period of at least six (6) years following the earlier of termination of employment or the occurrence of a Change in Control.

     12. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address inserted below the Executive’s signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:
Starwood Hotels and Resorts Worldwide, Inc.
1111 Westchester Avenue
White Plains, NY 10604
Attention: Chief Administrative Officer and General Counsel

     13. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the

9

Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6, 7, 8, and 9 hereof) shall survive such expiration.

     14. Code Section 409A. This Agreement will be construed and administered to preserve the exemption from Section 409A of payments that qualify as short-term deferrals pursuant to Treas. Reg. §1.409A-1(b)(4) or that qualify for the two-times compensation exemption of Treas. Reg. §1.409A-1(b)(9)(iii). With respect to any amounts that are subject to Section 409A, it is intended, and this Agreement will be so construed, that such amounts and the Company’s and the Executive’s exercise of authority or discretion hereunder shall comply with the provisions of Section 409A so as not to subject the Executive to the payment of interest and additional tax that may be imposed under Section 409A. For purposes of any payment in this Agreement that is subject to Section 409A and triggered by the Executive’s “termination of employment”, (i) “termination of employment” shall have the same meaning as “separation from service” under Section 409A(a)(2)(A)(i) of the Code, and (ii) in the event the Executive is a “specified employee” on the date of the Executive’s termination of employment (with such status determined by the Company in accordance with rules established by the Company in writing in advance of the “specified employee identification date” that relates to the date of the Executive’s termination of employment or, if later, by December 31, 2008, or in the absence of such rules established by the Company, under the default rules for identifying specified employees under Section 409A), any payment that is subject to Section 409A, such payment shall not be paid earlier than six months after such termination of employment (if the Executive dies after the date of the Executive’s termination of employment but before any payment has been made, such remaining payments that were or could have been delayed will be paid to the Executive’s estate without regard to such six-month delay). The Executive acknowledges and agrees that the Company has made no representation to the Executive as to the tax treatment of the compensation and benefits provided pursuant to this Agreement and that the Executive is solely responsible for all taxes due with respect to such compensation and benefits.

     15. Expense Reimbursements. To the extent that any expense reimbursement provided for by this Agreement does not qualify for exclusion from Federal income taxation, except as specified otherwise in this Agreement, the Company will make the reimbursement only if the Executive incurs the corresponding expense during the term of this Agreement and submits the request for reimbursement no later than two months prior to the last day of the calendar year following the calendar year in which the expense was incurred so that the Company can (and it thereby will) make the reimbursement on or before the last day of the calendar year following the calendar year in which the expense was incurred. In the case of any such expense reimbursement and

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any in-kind benefit provided for by this Agreement that does not qualify for exclusion from Federal income taxation, the amount of expenses eligible for such reimbursement (and the amount of in-kind benefits provided) during a calendar year will not affect the amount of expenses eligible for such reimbursement (or benefits provided) in another calendar year; and the right to such reimbursement or in-kind benefit is not subject to liquidation or exchange for another benefit from the Company.

     16. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

     17. Settlement of Disputes: Arbitration.

          a. All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.

          b. Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in New York, in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

     18. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

          a. “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

          b. “Auditor” shall have the meaning set forth in Section 7 hereof.

          c. “Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.

          d. “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

          e. “Board” shall mean the Board of Directors of the Company.

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          f. “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, and Executive has not cured any such failure that is capable of being cured in all material respects within ten (10) days of receiving such written demand, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists.

          g. A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

          (1) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (3) below; or

          (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

          (3) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any

12

subsidiary of the Company, at least 70% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation and in proportion to their relative voting power immediately prior to such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

          (4) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 70% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

          h. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

          i. “Company” shall mean Starwood Hotels and Resorts Worldwide, Inc., and, except in determining under Section 17(g) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

          j. “Date of Termination” shall have the meaning set forth in Section 8 hereof.

          k. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

          l. “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

          m. “Executive” shall mean the individual named in the first paragraph of this Agreement.

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          n. The Executive will be deemed to have a “409A Disability” if (A) the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (B) the Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Company employees; or (C) the Executive is determined to be totally disabled by the Social Security Administration.

          o. “General Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.

          p. “Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses (ii) and (iii) of the second sentence of Section 6(a) hereof (treating all references in paragraphs (1) through (7) below to a “Change in Control” as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (1), (5), (6) or (7) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

          (1) the assignment to the Executive of any duties inconsistent with the Executive’s status as a senior executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to the Change in Control;

          (2) a reduction by the Company in the Executive’s annual base salary as in effect on the date hereof or as the same may be increased from time to time;

          (3) the relocation of the Executive’s principal place of employment to a location more than 35 miles from the Executive’s principal place of employment immediately prior to the Change in Control or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

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          (4) the failure by the Company to pay to the Executive any portion of the Executive’s current compensation, or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

          (5) the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive’s total compensation, including but not limited to the Company’s stock option, bonus and other plans or any substitute plans adopted prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other participants, as existed immediately prior to the Change in Control;

          (6) the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, savings, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control, the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy or any employment agreement in effect at the time of the Change in Control; or

          (7) any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 8(a) hereof; for purposes of this Agreement, no such purported termination shall be effective.

     The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

     For purposes of any determination regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that Good Reason does not exist.

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          q. “Notice of Termination” shall have the meaning set forth in Section 8 hereof.

          r. “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

          s. “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(1)	the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;
(2)	the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;
(3)	any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% 14 or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or
(4)	the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

          t. “Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

          u. “Severance Payments” shall have the meaning set forth in Section 6 hereof.

          v. “Tax Counsel” shall have the meaning set forth in Section 7 hereof.

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          w. “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

          x. “Total Payments” shall mean those payments so described in Section 7 hereof.

          y.

          IN WITNESS WHEREOF, the parties have caused this Supplement to be duly executed as of the date first written above.

STARWOOD HOTELS AND RESORTS WORLDWIDE, INC.
By
	NAME: Jeffrey Cava
	TITLE: EVP — Human Resources Dated: December 30, 2008

EXECUTIVE
 

Matthew E. Avril
 

Dated: December 30, 2008 

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EX-10.4

Exhibit 10.4

February 1, 2008

Phil McAveety
Calle Cotoner 49, 2a
07013 Palma de Mallorca
Spain

Dear Phil,

We are delighted to confirm to you our offer of employment with Starwood Hotels & Resorts Worldwide, Inc. as Executive Vice President & Chief Marketing Officer. We recognize that a successful organization is the reflection of a talented workforce and we look forward to your contributions.

Please review the attached documents specifically stating the terms of our offer of employment to you. If those terms are acceptable, kindly signify your acceptance by signing and returning all of the attached documents to me. If you have any questions concerning the terms of this offer, please contact me.

Again, we look forward to you joining our team.

Ken Siegel
Chief Administrative Officer & General Counsel
Starwood Hotels & Resorts Worldwide, Inc.

February 1, 2008

Phil McAveety
Calle Cotoner 49, 2a
07013 Palma de Mallorca
Spain

Dear Phil,

We are pleased to offer your employment with Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) under the terms and conditions stated below:

Start Date:

Subject to the terms of this letter and the issuance of an employment authorized VISA, your employment with Starwood will begin on or about March 31, 2008 (the “Effective Date”). On or within thirty (30) days after the Effective Date, you shall relocate yourself to housing in the New York/Connecticut area. The Company will sponsor and pay all costs associated with obtaining an employment authorized VISA on your behalf. The Company will apply for the most appropriate VISA based upon VISA availability, current U.S. Immigration law requirements and your academic and professional background. Subject to satisfactory job performance and the Company’s policy regarding Permanent Residence Sponsorship, the Company will support a Petition for U.S. Permanent Residence on your behalf at a future, to be determined date. You agree to provide services to the Company from Europe, upon the reasonable request of the Company, during the period of time that the Company’s VISA application on your behalf is pending.

Responsibilities:

Initially, your position will be Executive Vice President & Chief Marketing Offer at the Corporate office and you shall perform such duties and services as are assigned to you by the Company as requested. In your role, you shall be responsible for the Company’s global marketing programs and positioning. You shall devote your full time and attention to the affairs of the Company and to your job duties, and use your best efforts and abilities to promote Starwood’s interests. You will initially be reporting to Frits Van Paasschen, Chief Executive Officer, though the Company may make changes in your title and job responsibilities at any time.

In performing your duties, you will be expected to comply at all times with all Starwood policies, procedures and directives as they currently exist or as they may be adopted or changed from time to time.

Base Salary:

Your base salary will be $500,000 annually, paid in semi-monthly intervals of $20,833.33, and subject to applicable withholdings for FICA, state and federal taxes. The Starwood salary program provides performance-based salary reviews for future salary progression.

Annual Incentive (Bonus):

You will be eligible to participate in the Starwood Annual Incentive Plan (AIP) or, at the election of the board’s compensation committee, the Annual Incentive Plan for Certain Executives (AIPCE). In either case, your target incentive is 75% of base salary. Your actual incentive award will be based upon a variety of factors including company and division performance, and your achieving specified performance criteria to be established and approved with your manager, provided that the component of your bonus payment related to the financial performance of the Company for the 2008 performance period shall be calculated at no less than target. In the event that changes are made to any of the incentive plans, the changes will apply to you as they do other similarly situated employees of the Company

Please note that the AIP and AIPCE provides that a portion of your annual bonus will be deferred and payable in Starwood stock or stock units. The current deferral portion of the bonus is 25% and is payable in Starwood stock having a value on the date of deferral equal to 133% of the amount deferred.

Payment of your 2008 bonus will be delivered according to the regular annual incentive plan payout schedule and your bonus will assume you were employed with Starwood for the full year. An annual bonus shall not be deemed earned by you until the Company has determined your entitlement to such bonus and only if you are employed by the Company at the time such bonus is payable in accordance with the AIP, AIPCE and Company practices. The Company does not pay pro-rata bonuses upon departure.

Long Term Incentive:

You will be eligible to participate in Starwood’s Long Term Incentive Compensation Plan (“LTIP”) beginning in 2009. This plan provides for the award of options/restricted shares at the Company’s discretion to high performing executives. The actual number of shares granted, if any, will be based upon your performance and the metrics used for other senior executives of the Company.

Sign-on Stock Equity:

In connection with your employment with the Company you will receive an equity grant under the LTIP having an aggregate value of $1,800,000, determined as follows:

Sign on Options:

Effective the first day of the month following the Effective Date, you will be granted stock options having an aggregate value (computed pursuant to the current methods used by the Company) of $450,000 pursuant to the terms of the LTIP. The options will have an exercise price equal to the average of the high and low sales prices of Starwood common stock as reported in the New York Stock Exchange Composite Transactions on the date of grant. The stock options will vest in four equal annual installments beginning with the first anniversary of the grant date and otherwise and will otherwise be governed by the provisions of the LTIP.

Further details will be provided in the award notification to be delivered to you following your employment.

Sign-on Restricted Stock:

Effective the first day of the month following the Effective Date, you will be granted that number of shares of restricted stock having a value equal to $1,350,000, based on the Fair Market Value (as defined in the LTIP) on the date of the grant. The restricted shares will vest 100% on the third anniversary of the grant date and will otherwise be governed by the provisions of the LTIP and the award agreement governing the restricted shares. Further details will be provided in the award notification and agreement to be delivered to you following your employment.

Sign-on Bonus:

You will be paid a one-time sign-on bonus of $494,000 (gross), to be disbursed to you within the first month of your employment. Your right to retain the sign-on bonus is conditional upon remaining employed by Starwood for at least one year. In the event that you voluntarily resign from Starwood or are terminated for cause within this one year period, you would be obligated to repay the entire amount (net of taxes) of the sign-on bonus.

Other Benefits:

(a) You will also be entitled to salary reimbursement at your base salary pending the issuance of your United States employment authorized VISA. The reimbursement shall cover the period of time from the last day of employment by your current employer until your employment authorized VISA is granted and shall be disbursed to you within the first month of your employment. Your right to retain the salary reimbursement is conditional upon remaining employed by Starwood for at least one year. In the event that you voluntarily resign from Starwood or are terminated for cause within this one year period, you would be obligated to repay the entire amount (net of taxes) of the salary reimbursement.

(b) The Company shall reimburse you for the costs associated with preparing your 2008 tax returns.

Benefits:

Starwood offers “StarShare”, a comprehensive array of employee benefit programs, that are aimed at a variety of personal concerns. New employees are eligible for the StarShare health and welfare benefit programs and the 401(k) plan on the first day of the month following 90 days of continuous employment. You and your eligible dependents will be covered by these benefits as per your coverage elections. In order to provide health care coverage during this period, you will be covered under Starwood’s Foreign Service Plan from the Effective Date until you are eligible for benefits under Starwood’s standard plans.

Information on these plans and other benefit programs such as the HOT Rates (the employee discount room rates program), short-term disability, long-term disability, employee life insurance, and vacation programs will be provided to you after you begin your employment with us. As we discussed, you will be eligible for 20 days of vacation on an annual basis.

In the event that changes are made to any of the benefit plans, the changes will apply to you as they do other similarly situated employees of the Company.

Relocation:

Starwood will pay the reasonable, out-of-pocket costs of relocating your family and household furnishings from Palma, Spain to the New York metropolitan area in accordance with the provisions of Starwood’s Relocation Program, provided that you shall only be eligible for reimbursement of rental agency fees and other agency commissions related to your first rental property in the New York/Connecticut area and you shall not eligible for reimbursement for costs

associated with the purchase of a residence in the United Stated. Details of Starwood’s Relocation Program are enclosed. To initiate the moving process, please contact your Human Resources office. In an effort to fully utilize our relocation benefit and avoid additional tax liability, we ask that you do not begin your relocation process before being contacted by your assigned relocation company.

In the event that you accept this offer of employment and relocation expenses are paid to you or on your behalf, you agree that if you voluntarily terminate your employment within one year after your first day of employment, you will repay all such relocation, reduced by 1/12 for each full calendar month actually worked. In addition, eligibility for reimbursement of any and all relocation expenses will cease on the last day of employment and any relocation expenses incurred after that date will not be reimbursed by Starwood and will be your responsibility.

Resolution of Disputes:

From time to time, disagreements and misunderstandings may arise concerning your job responsibilities, performance, compensation, benefits or other matters affecting your employment with Starwood, or one of its affiliated companies. We hope that we will be able to resolve such matters through normal discussions with your immediate managers or Human Resources representatives.

In the event those efforts fail, you and Starwood agree, except as may be prohibited by law or as otherwise excluded by the terms of the attached Mutual Agreement to Arbitrate (Attachment A), to submit any and all disputes relating to or arising out of this offer letter, your employment with Starwood or the termination of that employment to final and binding arbitration pursuant to the employment rules then in effect of the American Arbitration Association, which shall be the sole and exclusive remedy for such disputes. Accordingly, you acknowledge and agree that this offer of employment and the benefits provided herein are contingent upon your execution of the Mutual Agreement to Arbitrate provided to you herewith and incorporated herein by reference. In the event that the Mutual Agreement to Arbitrate is determined by a court with appropriate jurisdiction to be unenforceable, you and Starwood Hotels & Resorts Worldwide, Inc. waive any right to a trial by jury on the claims that otherwise would have been subject to the Mutual Agreement to Arbitrate.

Employment Term:

While Starwood looks forward to a long and mutually beneficial relationship with you, you should understand that there is no fixed duration for your employment. In accepting this offer, you acknowledge and agree that your employment with the Company is at will, and may be terminated by Starwood at any time, including prior to the issuance of an employment authorized VISA, with or without notice and for any or no reason. By signing below, you acknowledge that except for this letter, there is not and shall not be any written contract between you and the Company concerning this offer of employment or your prospective employment, and that nothing in this letter guarantees employment for any definite or specific term or duration or any particular level of benefits or compensation.

Severance:

In the event that Starwood terminates your employment for any reason other than cause, Starwood will pay to you twelve months of your then current base salary, in a lump sum less all applicable withholdings (the “Severance Payment”), and it will (i) periodically reimburse you for your COBRA expenses minus your last level of normal contribution for up to twelve months commencing on the termination date and (ii) also pay the reasonable costs of personal and goods re-location back to Europe should you relocate to Europe within one year of the termination of

your employment. In the event that your employment is terminated by Starwood for any reason other than cause prior to the issuance of an employment authorized VISA, Starwood will also pay to you the (i) salary reimbursement up to the date of termination and (ii) sign-on bonus of $494,000 (gross). The Severance Payment will be in lieu of any compensation, damage or remedy to which you might otherwise be entitled and will be subject to and conditioned upon (a) your continuing compliance with the Non-Compete, Non-Solicitation, Confidentiality and Intellectual Property Agreement referred to below and (b) your signing a written waiver and release of any and all claims against Starwood arising out of or relating to your employment with Starwood, in form and substance satisfactory to Starwood. You will not be eligible for any Severance Payment or COBRA reimbursement if you resign from your employment with the Company.

For purposes of this paragraph, “cause,” shall mean (i) any material breach by you of any of the duties, responsibilities or obligations of your employment, or any of the policies or practices of Starwood; (ii) your failure or refusal to properly perform, or the habitual neglect of (both as determined by Starwood in its reasonable discretion and judgment), the duties, responsibilities or obligations of your employment, or to properly perform or follow (as determined by Starwood in its reasonable discretion and judgment) any lawful order or direction by Starwood; (iii) any acts or omissions by you that constitute (as determined by Starwood in its reasonable discretion and judgment) fraud, dishonesty, disloyalty, breach of trust, gross negligence, civil or criminal illegality, or any other misconduct or behavior that could (as determined by Starwood in its reasonable discretion and judgment), subject to civil or criminal liability or otherwise adversely affect the business, interests or reputation of Starwood or any of its affiliates.

Other Conditions and Obligations:

You acknowledge that you are not subject to any currently effective employment contract, or any other contractual or other binding obligations pursuant to which your employment or employment activities with or on behalf of the Company may be subject to any restrictions. Restrictions include, without limitation, any agreements or other obligations or documents relating to non-competition, confidentiality, trade secrets, proprietary information or works for hire. By signing this letter, you represent to Starwood that there are no agreements or arrangements, whether written or oral, in effect that would prevent or conflict with your full performance of your employments duties and responsibilities to us.

This offer is contingent on satisfactory results of the Company’s pre-employment investigation, testing and verification and is subject to you having the legal right to work in the United States. Please be prepared to show appropriate identification and proof of eligibility to work on the first day that you report to work. Please contact the undersigned if you have any questions regarding these requirements.

As a further condition of this offer and your right to receive any of the benefits detailed herein, you agree to execute and be bound by a confidentiality, non-compete and non-solicitation agreement provided to you by the Company (Attachment B).

No Other Assurances:

You acknowledge that in deciding to sign this offer, you have not relied on any promises, commitments, statements or representations, whether spoken or in writing, made to you by any representative of the Company, except for what is expressly stated herein. This offer replaces and cancels all previous agreements, commitments, and understandings whether spoken or written, if any, that the Company or any representative of the Company may have made in connection with your anticipated employment.

You also acknowledge that this offer is intended as written, and that no marginal notations or other revisions to either this offer, the Mutual Agreement to Arbitrate, or the Non-compete, Non-solicitation, Confidentiality and Intellectual Property Agreement are binding on the Company unless expressly consented to in writing by the Senior Vice President, Human Resources or Starwood’s General Counsel. This offer shall be construed, governed by and enforced in accordance with the laws of the State of New York, without regard to its conflicts of laws principles.

You should not resign from your current employment until you have received notification from the Company of the completion of all pre-employment investigation, testing and verification.

By signing and returning this letter, you confirm that this letter accurately sets forth the current understanding between you and Starwood and that you accept and agree to the terms as stated above.

Very truly yours,

Kenneth S. Siegel
Chief Administrative Officer & General Counsel

ACCEPTED AND AGREED TO:
Phil McAveety	January      , 2008 Date

Attachment A

MUTUAL AGREEMENT TO ARBITRATE

     In order to gain the benefits of a speedy, impartial, and cost-effective dispute resolution procedure, and for good and valid consideration as covenanted below and in addition to any other consideration, and intending to be legally bound, Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”) and I hereby agree that, except as otherwise provided herein, all disputes and claims for which a court otherwise would be authorized by law to grant relief, in any manner, that I may have, now or in the future, during or after my employment with Starwood, of any and every kind or nature whatsoever with or against Starwood, any of Starwood’s affiliated or subsidiary companies, partners, joint venturers, owners of properties Starwood manages, and/or any of his, her, its or their directors, officers, employees or agents , or any disputes and claims that Starwood may have against me (collectively, “Claims”), shall be submitted to the American Arbitration Association (“AAA”) to be resolved and determined through final and binding arbitration before a single arbitrator and to be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the AAA. Starwood and I agree that the arbitrator will have the authority to grant motions dispositive of all or part of any Claim. Starwood shall be responsible for payment of all arbitrator compensation, AAA filing fees and AAA administrative fees, other than the initial AAA filing fee for which I will be responsible to pay up to a maximum of $125, or as otherwise required by law.

     Any reference in this Agreement to Starwood also refers to all of Starwood’s affiliated entities, benefit plans, the benefit plans’ sponsors, fiduciaries and administrators, and all successors and assigns of any of them.

     Starwood and I each have the right to representation by counsel with respect to arbitration of any dispute pursuant to this Agreement. Except as prohibited by law, at the request of either Starwood or me, the arbitration proceedings shall be conducted in confidence, and, in such a case, all documents, testimony, and records shall be received, heard, and maintained by the arbitrator in confidence, available for inspection only by me and Starwood, our respective attorneys, and experts, who shall agree, in advance and in writing, to receive all such information confidentially and to maintain the secrecy of such information until it shall become generally known. Both parties shall be allowed adequate discovery as part of the arbitration process, including reasonable access to essential documents and witnesses as determined by agreement or the arbitrator.

     The arbitrator shall conduct a full hearing as to all issues and disputes not resolved by dispositive motion. At such hearing, the parties shall be entitled to present evidence and examine and cross-examine witnesses. The arbitrator shall issue a written decision revealing the essential findings and conclusions upon which any award is based. In addition, the arbitrator shall have authority to award equitable relief, damages, costs, and fees to the extent permitted by law, including, but not limited to, any remedy or relief that a governing court might order.

     Starwood and I hereby agree that the Claims subject to arbitration shall include but not be limited to any and all Claims that arise out of or are related to the offer of employment, transfer or promotion extended by Starwood to me, any withdrawal or rescission of that offer, any aspect of my employment with Starwood or the terms and conditions of that employment, any claim for bonus, vacation pay or other compensation, any termination of that employment and any Claim of

discrimination, retaliation, or harassment based upon age, race, religion, sex, creed, ethnicity, pregnancy, veteran status, citizenship status, national origin, disability, handicap, medical condition, sexual orientation or any other unlawful basis, or any other unlawful conduct, under any applicable federal, state, local or other statutes, orders, laws, ordinances, regulations or the like, or case law, that relate to employment or employment practices, including without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Americans with Disabilities Act of 1990, as amended, the Family Medical Leave Act of 1993, as amended, the Employee Retirement Income Security Act of 1990, as amended, the Worker Adjustment Retraining and Notification Act, as amended, the Fair Labor Standards Act, as amended, the Vietnam Era Veterans’ Readjustment Assistance Act, as amended, the Equal Pay Act, as amended, the Rehabilitation Act, as amended, the Immigration Reform and Control Act, and the state and local analogues to the foregoing.

     Starwood and I further agree that the Claims subject to arbitration shall exclude any Claims required by any applicable federal, state, local or other statute or benefit or pension plan to be submitted to an administrative forum (for example, a workers’ compensation claim, a claim for unemployment insurance benefits, or an administrative charge of discrimination or retaliation filed with the Equal Employment Opportunity Commission or the state or local analogue to that agency but not litigation arising from such charges), any claims involving any loans or advances paid to me that are subject to any mortgage, promissory note or other similar agreement that I have signed, and any Claims involving solely a monetary dispute within the jurisdiction of a small claims court. Starwood and I further agree that the Claims subject to arbitration also shall exclude any Claims to the extent they involve the alleged taking, use or disclosure of trade secrets and similar confidential or proprietary information, Claims involving a failure to pay a retention bonus or relocation expense, Claims involving a failure to repay any unearned portion of a retention bonus or relocation expense, Claims based upon any employee pension or benefit plan the terms of which contain an enforceable arbitration procedure, in which case the procedure of such plan shall apply, and Claims that cannot be compelled to mandatory arbitration under applicable federal law.

     Starwood and I agree that any arbitration award rendered as the result of any arbitration under this Agreement shall be final and binding and may be entered and enforced as a court judgment in accordance with applicable law. Starwood and I further agree that this Agreement, any arbitration under this Agreement and any arbitration award rendered in such arbitration shall be governed by the Federal Arbitration Act.

     By entering into this Agreement, Starwood and I each specifically acknowledge and understand that the right to the determination and/or trial of any Claims in court before a judge or a jury is a valuable right, and that by signing this Agreement Starwood and I hereby knowingly and voluntarily waive any and all rights we may have to assert any Claims in any court of competent jurisdiction and to a determination and/or trial before a judge or a jury.

     I further understand and acknowledge that this Agreement is not intended to be and shall not be deemed to constitute a contract of employment for any specific duration, and that my employment shall be and remain at will, which means that Starwood and I shall be free to terminate that employment at any time for any or no reason with or without notice and with or without cause.

     Each party’s promise to resolve Claims by arbitration in accordance with the provisions of this Agreement is consideration for the other party’s like promise. Additionally, I enter into this Agreement in consideration of Starwood’s employment, transfer or promotion of me.

     This Agreement shall survive my employer-employee relationship with Starwood and shall apply to any covered Claim whether arising or asserted during my employment or after the termination of my employment with the Company. This Agreement can be modified or revoked only by a writing signed by both Starwood’s Chief Administrative Officer & General Counsel and that expressly refers to this Agreement and specifically states an intent to modify or revoke it. This is the complete agreement of the parties on the subject of arbitration of disputes, except for any arbitration provision contained in a pension or benefit plan or an agreement covering change in control benefits and protections.

EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES CAREFULLY READING THIS AGREEMENT, UNDERSTANDING ITS TERMS, AND ENTERING INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF.

EACH PARTY FURTHER ACKNOWLEDGES HAVING THE OPPORTUNITY TO DISCUSS THE AGREEMENT WITH PERSONAL LEGAL COUNSEL AND HAS USED THAT OPPORTUNITY TO THE EXTENT DESIRED.

Dated:
	Phil McAveety
	Starwood Hotels & Resorts Worldwide, Inc.
Dated:	By:
		Kenneth S. Siegel
		Chief Administrative Officer & General Counsel

Attachment B

NON-COMPETE, NON-SOLICITATION, CONFIDENTIALITY AND
INTELLECTUAL PROPERTY AGREEMENT

          This Non-compete, Non-solicitation, Confidentiality and Intellectual Property Agreement (“Agreement”) is entered into as of this       day of,                     , (the “Effective Date”), by and between Starwood Hotels & Resorts Worldwide, Inc. (the “Company”) and Phil McAveety (the “Employee”).

          WHEREAS, the Company devotes significant time, resources and effort to the training and advancement of its management, and its management team constitutes a significant asset and important competitive advantage; and

          WHEREAS, the Employee has and will have access to important and sensitive confidential information; and

          WHEREAS, the Company has determined that it is in the best interests of the Company and its shareholders to enter into an agreement with Employee whereby Employee will be prohibited from competing with the Company and/or soliciting employees of the Company in accordance with the terms and conditions of this Agreement; and

          WHEREAS, Employee may create inventions, trade secrets, know-how and documents or other works of authorship and may appear or perform in various promotional materials within the scope of Employee’s employment.

          WHEREAS, in consideration of the Company’s offer of employment, Employee agrees to enter into this Agreement.

          THEREFORE, the Company and Employee agree as follows:

          1. Employee agrees that during the period of Employee’s employment with the Company and for a period of 24 months following the date of any termination of employment from the Company (the “Non-Compete Period”), Employee shall not, without the express written consent of the Board of Directors of the Company, directly or indirectly, whether for his own account or for the account of any other person or entity, engage, participate or make any financial investment in, become employed by or render advisory services to or otherwise assist or be interested in any Competitive Business in any geographic area in which, as of the date of termination of Employee’s employment, the Company or any of its subsidiaries is engaged or planning to be engaged. As used herein, “Competitive Business” shall mean any business engaged in the hotel, hospitality or timeshare businesses, as well as any corporation, partnership or other entity that derives 33% or more of its total earnings before interest, taxes, depreciation and amortization (determined, as of the Effective Date, in accordance with generally accepted accounting principals consistently applied) from the hotel, hospitality or timeshare businesses. Notwithstanding the foregoing, Employee may invest in a Competitive Business if its stock is listed for trading on a national stock exchange or traded in the over-the-counter market and Executive’s holdings have an original cost less than $5,000,000 and represent less than five percent of its outstanding stock.

          2. Non-solicitation. During the Non-Compete Period, Employee shall not, without the prior written consent of the Company, except in the course of carrying out Employee’s duties hereunder, directly or indirectly solicit or attempt to solicit for employment with or on behalf of any corporation, partnership, joint venture or other business entity, any person who is, or at any time during the six-month period preceding the solicitation of such person was, a management-level employee of the Company (including, without limitation, for this purpose any director level employee of the Company and any General Manager of any hotel owned (in whole or in part) or managed by the Company).

          3. Confidentiality. Employee acknowledges that during the course of his/her employment with the Company, Employee will receive, and will have access to, “Confidential Information,” as such term is defined below, of the Company and that such information is a special, valuable and unique asset belonging to the Company. Accordingly, Employee is willing to enter into the covenants contained in this Agreement in order to provide the Company with what Employee considers to be reasonable protection for the Company’s interests. All notes, memoranda, papers, documents, correspondence or writings (which shall include information recorded or stored in writing, on magnetic tape or disc, or otherwise recorded or stored for reproduction, whether by mechanical or electronic means and whether or not such reproduction will result in a permanent record being made) (“Documents”) which from time to time may be in Employee’s possession (whether prepared by Employee or not) relating, directly or indirectly, to the business of the Company shall be and remain the property of the Company and shall be delivered by Employee to the Company immediately upon request, and in any event promptly upon termination of Employee’s employment, and Employee shall not make or keep any copies or extracts of the Documents. At any time during or after Employee’s employment with the Company ends, without the prior written consent of the Company, except (i) in the course of carrying out Employee’s duties hereunder or (ii) to the extent required by a court or governmental agency, or by applicable law or under compulsion of legal process, Employee shall not disclose to any third person any information concerning the business of the Company, including, without limitation, any trade secrets, customer lists and details of contracts with or requirements of customers, the identity of any owner of a managed hotel, information relating to any current, past or prospective management agreement or joint venture, information pertaining to business methods, sales plans, design plans and strategies, management organization, computer systems and software, operating policies or manuals, personnel records or information, information relating to current, past or contemplated employee benefits or compensation data or strategies, business, financial, development or marketing plans, or manpower strategies or plans, financial records or other financial, commercial, business or technical information relating to the Company (collectively, “Confidential Information”), unless such Confidential Information has been previously disclosed to the public by the Company or is in the public domain (other than by reason of Employee’s breach of this Section 3). Employee will, prior to making any such disclosure pursuant to subsection (ii), promptly notify the Company of his/her receipt of such process or requirement, consult with the Company on the advisability of taking steps to resist or narrow such request, cooperate with the Company in any attempt that the Company may make to obtain a court order or other reliable assurance that confidential treatment will be accorded to all or designated portions of such information, and not disclose such Confidential Information unless the Company shall have had reasonable opportunity to obtain a court order prohibiting or limiting such disclosure.

               3.1 Employee agrees that, both during and after Employee’s employment with the Company, if Employee is uncertain of whether or not information is confidential, Employee will treat that information as Confidential Information until Employee has

received written verification from an authorized officer of the Company that the information is not Confidential Information.

          4. Intellectual Property and Publicity Rights. Employee acknowledges and agrees that all right, title and interest in and to patents, patent applications, inventions, improvements, discoveries, developments, processes, business methods, technical information, know-how, trade secrets, computer programs, writings, designs, copyrights, maskworks, trademarks, service marks, trade names, trade dress and the like (collectively, “Intellectual Property”), including the right to invoke the benefit of the right of priority provided by any treaty to which the United States is a party, which Employee creates, conceives, develops or obtains, either solely or jointly with others, during Employee’s employment with the Company (a) with the use of the Company’s time, materials, facilities or other resources; or (b) resulting from or suggested by Employee’s work for the Company; or (c) in any way relating to any subject matter relating to the existing or contemplated business, products and services of the Company or the Company’s affiliates, subsidiaries and licensees shall be owned by the Company. Upon request, Employee shall execute all such assignments and other documents and take all such other action as the Company may reasonably request in order to vest in the Company, or its nominee, all of Employee’s right, title, and interest in and to such Intellectual Property. Employee further acknowledges and agrees that the Company shall have the perpetual, worldwide right to use Employee’s name, performance, biography, voice, image, signature and likeness in promotional or any other materials developed by or for the Company during Employee’s employment with the Company. Employee hereby irrevocably and unconditionally waives any and all rights that he/she has or may have in and to the Intellectual Property, including, without limitation, any “moral rights” that he/she has or may have as “author” of the Intellectual Property, and hereby expressly agrees not to make any claim or demand against the Company or any party authorized by the Company to exploit the Intellectual Property.

          5. Equitable Relief.

               5.1 Employee acknowledges that the restrictions and obligations specified in Sections 1, 2, 3 and 4 hereof are reasonable in view of the nature of the business in which the Company is engaged and Employee’s knowledge of, and responsibilities with respect to, the Company’s business, and that any breach of Sections 1, 2, 3 or 4 hereof may cause the Company irreparable harm for which there is no adequate remedy at law, and as a result of this, the Company will be entitled to the issuance by a court of competent jurisdiction of an injunction, restraining order or other equitable relief in favor of the Company, without the necessity of posting a bond, restraining Employee from committing or continuing to commit any such violation. Any right to obtain an injunction, restraining order or other equitable relief hereunder will not be deemed to be a waiver of any right to assert any other remedy the Company may have at law or in equity, including, without limitation, the right to cancel payments to which Employee is otherwise entitled under Employee’s employment agreement.

               5.2 Any proceeding or action seeking equitable relief for violation of Sections 1, 2, 3 and 4 hereof may be commenced in the federal courts in the Southern District of the State of New York, or in the absence of federal jurisdiction in state court in the State of New York. Employee hereby irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees to take any and all future action necessary to submit to the jurisdiction of such courts. Employee irrevocably waives any objection that Employee now has or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against Employee in any such

suit will be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which will be conclusive evidence of the fact and the amount of any liability therein described, or by appropriate proceedings under an applicable treaty or otherwise.

          6. Severability. In the event that any provision of this Agreement conflicts with the law under which this Agreement is to be construed, and/or if any such provision is held invalid by a court with jurisdiction over the parties to this Agreement and the subject matter of this agreement, (a) such provision will be deemed to be restated to reflect as nearly as possible the original intentions of the parties to the fullest extent permitted under applicable law, and (b) the remaining terms and provisions of this Agreement will remain in full force and effect.

          7. Governing Law. This Agreement shall be construed, governed and enforced according to the laws of the State of New York, without regard to the principles of conflicts of laws.

          8. Amendments and Waivers. No failure to act by the Company will waive any right contained in this Agreement. No provision of this Agreement may be amended or waived, except by a written agreement signed by both Employee and an authorized executive officer of the Company. Any waiver by the Company of strict performance of any provision of this Agreement shall not be a waiver of or prejudice the Company’s right to require strict performance of that same provision or any other provision of the Agreement in the future.

     Employee acknowledges that he/she has had a reasonable opportunity to review and consider the terms described above and to consult with an attorney if he/she so chooses prior to signing this Agreement. Fully understanding the above terms, Employee is entering into this letter agreement knowingly and voluntarily.

          IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first above written.

Dated:
	Phil McAveety
	Starwood Hotels & Resorts Worldwide, Inc.
Dated:	By:
		Kenneth S. Siegel
		Chief Administrative Officer & General Counsel

EX-10.5

Exhibit 10.5

AMENDMENT TO EMPLOYMENT LETTER

Effective December 30, 2008

     Starwood Hotels & Resorts Worldwide, Inc. (“Company”) set out the terms of its offer of employment to the executive named below (“Executive”) pursuant to a letter with the date specified below (“Offer Letter”). The Company and the Executive desire to amend the severance provisions of the Offer Letter (“Amendment”) in order to evidence documentary compliance with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulatory guidance thereunder, effective on the date specified above.

Executive:	Phil McAveety
Date of Offer Letter:	February 1, 2008

     In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. The section entitled “Annual Incentive (Bonus)” is amended to specify that payment of your 2008 bonus will be delivered in 2009, no later than March 15, 2009 (except to the extent that a portion of the bonus is deferred pursuant to the terms of the applicable annual incentive plan).

2. The sections entitled “State Date”, “Sign-on Equity”, “Sign on Bonus”, “Other Benefits” and “Relocation” are modified to clarify that the VISA expense reimbursements, stock options, restricted stock, sign on bonus, salary reimbursement and relocation benefits specified in these sections were paid in 2008.

3. The section entitled “Other Benefits” is modified to clarify that the tax return preparation reimbursement will be paid in 2009.

4. The first paragraph of the section entitled “Severance” is modified to read as follows:

In the event that Starwood terminates your employment for any reason other than cause, Starwood will pay to you twelve months of your then current base salary, in a lump sum less all applicable withholdings (the “Severance Payment”), plus an amount equal to 12 times the COBRA charge on the payment date for the type of Company-provided group health plan coverage in effect for you (e.g., family coverage) on the date of your employment termination less the active employee charge for such coverage in effect on the date of your employment termination, in a lump sum less all applicable withholdings (the “COBRA Payment”). The Severance Payment will be subject to and conditioned upon your continuing compliance with the Non-Compete, Non- Solicitation, Confidentiality and Intellectual Property Agreement referred to below. In addition, the Company must deliver to you a customary release agreement (the “Release”) on the date of your employment termination, and as a condition to receipt of the Severance Benefit you must (i) sign the Release and return the signed Release to the

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Company within the following number of days after the date on which the Company delivers the Release to you: 14 days if you are under age 40 on the date of your termination of employment, 21 days if you are at least age 40 on the date of your termination of employment and if your termination of employment is not part of a group termination program within the meaning Section 7(f)(1)(F)(ii) of the Age Discrimination in Employment Act of 1967, as amended, and 45 days if you are at least age 40 on the date of your termination of employment and your termination is part of such a group termination program (the “Release Period”); and (ii) not revoke the Release within any seven-day revocation period that applies to you under the Age Discrimination in Employment Act of 1967, as amended (the “Revocation Period”). The Company will then pay the Severance Benefit to you in a lump sum 53 days following the date of your termination of employment, except as provided in the section entitled “Section 409A” below. In the event you decline or fail for any reason to timely execute and deliver the Release or you revoke the Release, then you will not be entitled to the Severance Benefit. The Company will pay the COBRA Payment to you within 30 days following the date of your employment termination, except as provided in the section entitled “Section 409A” below.

In addition, in the event that Starwood terminates your employment for any reason other than cause, Starwood will pay the reasonable costs of personal and good re-location back to Europe should you relocate to Europe within one year of the termination of your employment; to the extent that any such payment does not qualify for exclusion from Federal income taxation, the Company will make the payment only if you incur the corresponding expense within two years after the date of your employment termination and submit the request for payment no later than two months prior to the last day of the calendar year following the calendar year in which the expense was incurred so that the Company can, and will, make the payment on or before the last day of the calendar year following the calendar year in which the expense was incurred; the amount of expenses eligible for such payment during a calendar year will not affect the amount of expenses eligible for such payment in another calendar year, and the right to such payment is not subject to liquidation or exchange for another benefit from the Company.

You will not be eligible for any Severance Payment, COBRA Payment or relocation expense payments if you resign from your employment with the Company.

5. A new section entitled “Section 409A” is added to read as follows:

This letter agreement will be construed and administered to preserve the exemption from Section 409A of payments that qualify as short-term deferrals pursuant to Treas. Reg. §1.409A-1(b)(4) or that qualify for the two-times compensation exemption of Treas. Reg. §1.409A-1(b)(9)(iii). With respect to any amounts that are subject to Section 409A, it is intended, and this Agreement will be so construed, that such amounts and the Company’s and your exercise of authority or discretion hereunder shall comply with the provisions of Section 

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409A so as not to subject you to the payment of interest and additional tax that may be imposed under Section 409A. For purposes of any payment in this Agreement that is subject to Section 409A and triggered by your “termination of employment”, (i) “termination of employment” shall have the same meaning as “separation from service” under Section 409A(a)(2)(A)(i) of the Code, and (ii) in the event you are a “specified employee” on the date of your termination of employment (with such status determined by the Company in accordance with rules established by the Company in writing in advance of the “specified employee identification date” that relates to the date of your termination of employment or, if later, by December 31, 2008, or in the absence of such rules established by the Company, under the default rules for identifying specified employees under Section 409A), any payment that is subject to Section 409A, such payment shall not be paid earlier than six months after such termination of employment (if you die after the date of your termination of employment but before any payment has been made, such remaining payments that were or could have been delayed will be paid to your estate without regard to such six-month delay). You acknowledge and agree that the Company has made no representation to you as to the tax treatment of the compensation and benefits provided pursuant to this Agreement.

          IN WITNESS WHEREOF, the Parties have executed this Amendment on the day and year first above written.

Dated: December 30, 2008
	Phil McAveety
	Starwood Hotels & Resorts Worldwide, Inc.
Dated: December 30, 2008	BY:
		NAME: Jeffrey Cava
		TITLE: EVP — Human Resources

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EX-10.6

Exhibit 10.6

SEVERANCE AGREEMENT

          THIS AGREEMENT, dated December 30, 2008 the “Effective Date”), is made by and between Starwood Hotels and Resorts Worldwide, Inc., a Maryland corporation (the “Company”), and Phil McAveety (the “Executive”).

          WHEREAS, the Executive is employed by the Company as EVP and Chief Brand Officer; and

          WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and

          WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of senior management personnel to the detriment of the Company and its stockholders; and

          WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s senior management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; and

          WHEREAS, the Company and the Executive entered into an employment agreement (the “Original Agreement”) dated February 1, 2008; and

          WHEREAS, the Company and the Executive hereby amend and restate the Original Agreement in its entirety (the “Agreement”) in order to evidence documentary compliance with section 409A of Code and the guidance thereunder (collectively “Section 409A”);

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree as follows:

     1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in Section 16 hereof.

     2. Term of Agreement. The Term of this Agreement shall commence on the Effective Date and shall continue in effect through the third anniversary of the Effective Date; provided, however, that on each anniversary of the Effective Date during the Term of this Agreement, the Term shall automatically be extended for one additional year unless, not later than 90 days prior to any such anniversary, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control or a Potential Change in Control shall have occurred during the Term, the Term shall expire no

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earlier than twenty-four (24) months beyond the month in which such Change in Control or a Potential Change in Control occurred.

     3. Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 10 hereof, no Severance Payments shall be payable under this Agreement unless during the Term there shall have been (or, under the terms of the second sentence of Section 6 hereof, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

     4. The Executive’s Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event a Potential Change in Control occurs during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of such Potential Change of Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

     5. Compensation Other Than Severance Payments.

          a. Payment of Salary During Disability. Following a Change in Control and during the Term, during any period that the Executive is unable to perform the Executive’s full-time duties with the Company as a result of:

          (1) a period of 409A Disability, the Executive shall continue to receive his base salary in accordance with the Company’s standard payroll practices at the rate in effect at the commencement of any such period, together with any compensation payable to the Executive under the Company’s short-term and long-term disability plans for salaried employees during such period and any benefit coverages customarily provided to disabled salaried employees, until the Executive’s employment is terminated on account of the Executive’s General Disability; or

          (2) a period of General Disability, the Executive shall receive any compensation payable to the Executive under the Company’s short-term and long-term disability plans for salaried employees during such period, as well as any benefit coverages customarily provided to disabled salaried employees, until the Executive’s employment is terminated on account of the Executive’s General Disability.

Thereafter the Executive’s benefits shall be determined under the Company’s retirement, insurance and other compensation programs then in effect in accordance with the terms of such programs.

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          b. Accrued Salary. If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive such Executive’s full salary through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

          c. Post-Termination Benefits. If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason.

          d. Time of Payment. Upon termination of the Executive’s employment following a Change in Control and during the Term, the Executive shall receive the payments or benefits to which he may be entitled under Section 5(b) and 5(c) and which constitute deferred compensation subject to Section 409A either (A) at the time when due hereunder, or (B) if a payment date sufficient to satisfy Section 409A is not otherwise stated for such payment or benefit, on the date of Executive’s termination of employment, except as provided in Section 14 below.

     6. Severance Payments.

          a. If the Executive’s employment is terminated following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6 (“Severance Payments”) and Section 7, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control (an “Acquiring Person”), (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of an Acquiring Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in

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anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct.

     (1) Lump Sum Payment. In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive under the terms of his offer letter from the Company, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the average of the annual bonuses earned by the Executive in the three fiscal years ending immediately prior to the fiscal year in which occurs the Date of Termination or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. For purposes of the preceding sentence, in determining any bonus amount for any fiscal year, bonuses paid with respect to any year in which employment of the Executive commenced shall be annualized based on the number of days employed by the Company during such year. In the event the date of the Executive’s termination of employment occurs on or within two years following an event that constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of section 409A(a)(2)(a)(vi) of the Code, such amount will be paid in a lump sum within 30 days following the date of the Executive’s termination of employment, except as set forth in Section 14 below; otherwise, such amount will be paid 53 days following the date of the Executive’s termination of employment, except as provided by Section 14 below.

     (2) Continuation of Welfare Benefits. Subject to Paragraph 15 in the case of any benefits that are not exempt from Section 409A, for the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, disability, and accident insurance benefits and other benefits and perquisites (including employee stay rates) substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence. Benefits otherwise receivable by the Executive pursuant to this Section 6(a)(2) shall be reduced to the extent benefits of the same type are received by the Executive from another employer during the twenty-four (24) month period following the Executive’s termination of employment; provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.

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     (3) Health Benefits. For the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive with group health coverage substantially similar to that which the Executive was receiving immediately prior to the Notice of Termination. The premium charge to the Executive for each month of such coverage will equal the Company’s monthly COBRA charge for such coverage in which the Executive, his spouse and covered dependents (as applicable) is enrolled from time to time (less the amount of any administrative charge typically assessed by the Company as part of its COBRA charge) and the Executive will be required to pay such monthly premium charge in accordance with the Company’s standard COBRA premium payment requirements. The Company will pay Executive a lump sum in cash equal to an initial multiple that is increased by a percentage. For this purpose, the initial multiple is 24 times the difference that results from calculating (i) the Company’s monthly COBRA charge on the Date of Termination for family coverage with respect to the highest value health coverage provided to salaried employees, minus (ii) the amount the Company charges active salaried employees for such coverage on Executive’s Date of Termination. In addition, for this purpose, the percentage is the sum of (I) 1% for each month in the 24-month period that will fall in the calendar year following Executive’s Date of Termination, plus (II) 2% for each month in the 24-month period that will fall in the second calendar year following Executive’s Date of Termination. The Company will make such payment within 30 days following the date of the Executive’s termination of employment, except as provided by Section 14 below.

     (4) Incentive Compensation. Notwithstanding any provision of any annual or long-term incentive plan to the contrary, the Company shall pay to the Executive in cash the following amounts:

     (A) A lump sum equal to any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, paid during the fiscal year of termination when bonuses for such completed fiscal year are paid to senior executives (but not later than 2-1/2 months after such completed fiscal year, except as provided by Section 14 below; and

     (B) the value of each contingent incentive compensation award allocated or awarded to the Executive for a then uncompleted period under any such plan that the Executive would have earned on the last day of the performance award period, assuming the achievement, at the target level, of the individual and corporate performance goals established with respect to such award, paid in the year following the end of such performance period when awards for such performance period are paid to senior executives (but not later than 2-1/2 months after the end of such performance period, except as provided by Section 14 below. Awards for uncompleted periods shall be prorated based upon the number of days the Executive is employed by the Company during such year.

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     (5) Accelerated Vesting of Stock Options. All stock options and restricted stock held by the Executive under any stock option or incentive plan maintained by the Company (including the Company’s 2004 Long-Term Incentive Plans) shall immediately vest and become exercisable as of the Date of Termination, to be exercised in accordance with the terms of the applicable plan

     (6) Outplacement Services. The Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of two (2) years following the date of the Executive’s termination of employment or, if earlier, until the first acceptance by the Executive of an offer of employment. The cost of such outplacement services shall not exceed twenty percent (20%) of the Executive’s base salary in effect on the Date of Termination.

     (7) 401(k) Contributions. The Company shall pay the Executive an amount equal to the unvested portion (if any) of the Executive’s account balance under the Company’s 401(k) Plan that is forfeited by reason of the Executive’s termination of employment. Such payment shall be made within 30 days following the date of the Executive’s termination of employment, except as provided by Section 14 below.

     7. 280G Cap.

          a. Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Executive in connection with a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company (within the meaning of section 280G(b)(2)(A)(i) of the Code (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in such change in ownership or effective control or in the ownership of Company assets or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter called “Total Payments”) would not be deductible (in whole or part), by the Company, an affiliate or Person making such payment or providing such benefit as a result of section 280G of the Code, then, the Total Payments shall be reduced (with the cash Severance Payments being reduced first (if necessary, to zero) in the order in which they appear in Section 6 above, and all other Severance Payments shall thereafter be reduced (if necessary, to zero) in the order in which they appear in Section 6 above provided that extended health benefits will be reduced last to the minimum extent necessary such that, after deducting the amount of any Excise Tax imposed on such Total Payments (as so reduced) from such Total Payments (as so reduced), the amount of the Total Payments (after such reduction) will be greater if such reduction is made than it would be without such reduction. All determinations, including the order and timing of any such reduction shall be determined by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”).

          b. For purposes of this limitation, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by

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the Auditor, does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of the Code and (iii) the value of any noncash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

     8. Termination Procedures and Compensation During Dispute.

          a. Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 12 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provisions indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail.

          b. Date of Termination. “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (1) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).

          c. Dispute Concerning Termination. If the Executive reasonably believe in good faith the Company is not providing the Executive with a benefit or payment to which the Executive is entitled under the terms of this Agreement, the Executive may notify the Company, within forty-five (45) days after the Date of Termination or, if any such payment or benefit is due after such 45-day period, within 45 days following such payment date, that a dispute exists concerning the termination and/or the amount of such payment or benefit. In this event, the Company shall act within fifteen (15) days to restore fully the disputed benefits and payments (so that all benefits and payments are provided as of such date as would have been provided had there been no delay in providing such benefits and payments) and to continue to provide such benefits and payments as contemplated by this Agreement thereafter (provided, however, that in all events any payment or benefit shall not be paid or provided to the Executive before the payment date set forth in this Agreement or any applicable document), but subject to termination

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and recapture from the Executive of these disputed benefits and payments in accordance with the terms of a mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected).

     9. No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminated during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 8(d) hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than Section 6(a)(2) hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

     10. Successors; Binding Agreement.

          a. In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to terminate his employment with the Company and receive compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive’s employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.

          b. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

     11. Indemnification. The Company shall indemnify and hold Executive harmless for acts and omissions in his capacity as an officer, director or employee of the Company to the maximum extent permitted under applicable law. The Company shall maintain a Director’s and Officer’s Liability Insurance Policy, which shall provide liability coverage for Executive’s benefit, and the Executive shall remain covered under such policy for a period of at least six (6) years following the earlier of termination of employment or the occurrence of a Change in Control.

     12. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given

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when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address inserted below the Executive’s signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:
Starwood Hotels and Resorts Worldwide, Inc.
1111 Westchester Avenue
White Plains, NY 10604
Attention: Chief Administrative Officer and General Counsel

     13. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6, 7, 8, and 9 hereof) shall survive such expiration.

     14. Code Section 409A. This Agreement will be construed and administered to preserve the exemption from Section 409A of payments that qualify as short-term deferrals pursuant to Treas. Reg. §1.409A-1(b)(4) or that qualify for the two-times compensation exemption of Treas. Reg. §1.409A-1(b)(9)(iii). With respect to any amounts that are subject to Section 409A, it is intended, and this Agreement will be so construed, that such amounts and the Company’s and the Executive’s exercise of authority or discretion hereunder shall comply with the provisions of Section 409A so as not to subject the Executive to the payment of interest and additional tax that may be imposed under Section 409A. For purposes of any payment in this Agreement that is subject to Section 409A and triggered by the Executive’s “termination of employment”, (i) “termination of employment” shall have the same meaning as “separation from service” under Section 409A(a)(2)(A)(i) of the Code, and (ii) in the event the Executive is a “specified employee” on the date of the Executive’s termination of employment (with such status determined by the Company in accordance with rules established by the Company in writing in

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advance of the “specified employee identification date” that relates to the date of the Executive’s termination of employment or, if later, by December 31, 2008, or in the absence of such rules established by the Company, under the default rules for identifying specified employees under Section 409A), any payment that is subject to Section 409A, such payment shall not be paid earlier than six months after such termination of employment (if the Executive dies after the date of the Executive’s termination of employment but before any payment has been made, such remaining payments that were or could have been delayed will be paid to the Executive’s estate without regard to such six-month delay). The Executive acknowledges and agrees that the Company has made no representation to the Executive as to the tax treatment of the compensation and benefits provided pursuant to this Agreement.

     15. Expense Reimbursements. To the extent that any expense reimbursement provided for by this Agreement does not qualify for exclusion from Federal income taxation, except as specified otherwise in this Agreement, the Company will make the reimbursement only if the Executive incurs the corresponding expense during the term of this Agreement and submits the request for reimbursement no later than two months prior to the last day of the calendar year following the calendar year in which the expense was incurred so that the Company can (and it thereby will) make the reimbursement on or before the last day of the calendar year following the calendar year in which the expense was incurred. In the case of any such expense reimbursement and any in-kind benefit provided for by this Agreement that does not qualify for exclusion from Federal income taxation, the amount of expenses eligible for such reimbursement (and the amount of in-kind benefits provided) during a calendar year will not affect the amount of expenses eligible for such reimbursement (or benefits provided) in another calendar year; and the right to such reimbursement or in-kind benefit is not subject to liquidation or exchange for another benefit from the Company.

     16. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

     17. Settlement of Disputes: Arbitration.

          a. All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.

          b. Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in New York, in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to

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be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

     18. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

          a. “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

          b. “Auditor” shall have the meaning set forth in Section 7 hereof.

          c. “Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.

          d. “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

          e. “Board” shall mean the Board of Directors of the Company.

          f. “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, and Executive has not cured any such failure that is capable of being cured in all material respects within ten (10) days of receiving such written demand, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists.

          g. A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

          (1) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (3) below; or

          (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof,

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constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

     (3) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 70% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation and in proportion to their relative voting power immediately prior to such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

     (4) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 70% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

          h. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

          i. “Company” shall mean Starwood Hotels and Resorts Worldwide, Inc., and, except in determining under Section 17(g) hereof whether or not any Change in Control of

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the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

          j. “Date of Termination” shall have the meaning set forth in Section 8 hereof.

          k. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

          l. “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

          m. “Executive” shall mean the individual named in the first paragraph of this Agreement.

          n. The Executive will be deemed to have a “409A Disability” if (A) the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (B) the Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Company employees; or (C) the Executive is determined to be totally disabled by the Social Security Administration.

          o. “General Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.

          p. “Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses (ii) and (iii) of the second sentence of Section 6(a) hereof (treating all references in paragraphs (1) through (7) below to a “Change in Control” as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (1), (5), (6) or (7) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

          (1) the assignment to the Executive of any duties inconsistent with the Executive’s status as a senior executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to the Change in Control;

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          (2) a reduction by the Company in the Executive’s annual base salary as in effect on the date hereof or as the same may be increased from time to time;

          (3) the relocation of the Executive’s principal place of employment to a location more than 35 miles from the Executive’s principal place of employment immediately prior to the Change in Control or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

          (4) the failure by the Company to pay to the Executive any portion of the Executive’s current compensation, or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

          (5) the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive’s total compensation, including but not limited to the Company’s stock option, bonus and other plans or any substitute plans adopted prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other participants, as existed immediately prior to the Change in Control;

          (6) the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, savings, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control, the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy or any employment agreement in effect at the time of the Change in Control; or

          (7) any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 8(a) hereof; for purposes of this Agreement, no such purported termination shall be effective.

     The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

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     For purposes of any determination regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that Good Reason does not exist.

          q. “Notice of Termination” shall have the meaning set forth in Section 8 hereof.

          r. “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

          s. “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(8)	the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;
(9)	the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;
(10)	any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% 14 or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or
(11)	the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

          t. “Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

          u. “Severance Payments” shall have the meaning set forth in Section 6 hereof.

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          v. “Tax Counsel” shall have the meaning set forth in Section 7 hereof.

          w. “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

          x. “Total Payments” shall mean those payments so described in Section 7 hereof.

[Signature Page Follows)

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          IN WITNESS WHEREOF, the parties have caused this Supplement to be duly executed as of the date first written above.

STARWOOD HOTELS AND RESORTS WORLDWIDE, INC.
By
	NAME: Jeffrey Cava
	TITLE: EVP — Human Resources  Dated: December 30, 2008
EXECUTIVE
Phil McAveety
Dated: December 30, 2008

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EX-10.7

Exhibit 10.7

April 15, 2008

Simon Turner
16 Philips Lane
Rye, NY 10580

Dear Simon,

We are delighted to confirm to you our offer of employment with Starwood Hotels & Resorts Worldwide, Inc., as President — Global Development. We recognize that a successful organization is the reflection of a talented workforce and we look forward to your contributions.

Please review the attached documents specifically stating the terms of our offer of employment to you. If those terms are acceptable, kindly signify your acceptance by signing and returning all of the attached documents to me. If you have any questions concerning the terms of this offer, please contact me.

Again, we look forward to you joining our team.

Ken Siegel
Chief Administrative Officer & General Counsel
Starwood Hotels & Resorts Worldwide, Inc.

April 15, 2008

Simon Turner
16 Philips Lane
Rye, NY 10580

Dear Simon,

We are pleased to offer your employment with Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) under the terms and conditions stated below:

Start Date:

Subject to the terms of this letter, your employment with Starwood will begin on or about May 15, 2008.

Responsibilities:

Initially, your position will be President — Global Development at the Corporate office and you shall perform such duties and services as are assigned to you by the Chief Executive Officer or the Board as requested. In your role, you shall be responsible for the Company’s global real estate development function. You shall devote your full time and attention to the affairs of the Company and to your job duties, and use your best efforts and abilities to promote Starwood’s interests. You will be reporting to Frits Van Paasschen, Chief Executive Officer, though the Company may make changes in your title and job responsibilities at any time.

In performing your duties, you will be expected to comply at all times with all Starwood policies, procedures and directives as they currently exist or as they may be adopted or changed from time to time.

Base Salary:

Your base salary will be $625,000 annually, paid in semi-monthly intervals of $26,041.67, and subject to applicable withholdings for FICA, state and federal taxes. The Starwood salary program provides performance-based salary reviews for future base salary increases (not decreases) (such increased amount being your “base salary” for all purposes thereafter).

Annual Incentive (Bonus):

You will be eligible to participate in the Starwood Annual Incentive Plan (AIP) or, at the election of the board’s compensation committee, the Annual Incentive Plan for Certain Executives (AIPCE). In either case, your target incentive is 100% of base salary. Your actual incentive award will be based upon a variety of factors including company and division performance, and your achieving specified performance criteria to be established and approved with your manager. In the event that changes are made to any of the incentive plans, the changes will apply to you as they do other similarly situated employees of the Company. For the 2008 performance year, you

shall be entitled to receive at least a pro-rated (based on your start date) target bonus (for example, assuming a start date of May 1, a bonus of $416,666.67).

Please note that the AIP and AIPCE provides that a portion of your annual bonus will be deferred and payable in Starwood stock or stock units on terms consistent with terms that apply to other senior executives. The current deferral portion of the bonus is 25% and is payable in Starwood stock having a value on the date of deferral equal to 133% of the amount deferred.

Payment of your 2008 bonus will be delivered according to the regular annual incentive plan payout schedule and your bonus will assume you were employed with Starwood for the full year. An annual bonus shall not be deemed earned by you until the Company has determined your entitlement to such bonus and only if you are employed by the Company at the time such bonus is payable in accordance with the AIP, AIPCE and Company practices. The Company does not pay pro-rata bonuses upon departure.

Long Term Incentive:

You will be eligible to participate in Starwood’s Long Term Incentive Compensation Plan (“LTIP”) beginning in 2009. This plan provides for the award of options/restricted shares at the Company’s discretion to high performing executives. The actual number of shares granted, if any, will be based upon your performance and the metrics used for other senior executives of the Company.

Sign-on Stock Equity:

In connection with your employment with the Company you will receive a restricted stock and/or option grant under the LTIP having an aggregate value of $2,400,000, determined in accordance with your written election to be made at least three business days prior to your start date. You may elect to receive 100% options, 75% options and 25% restricted stock, 50% options and 50% restricted stock or 25% options and 75% restricted stock.

Sign-on Restricted Stock:

Effective on or about your start date, you will be granted that number of shares of restricted stock having a value in accordance with your election, based on the Fair Market Value (as defined in the LTIP) on the date of the grant. The restricted shares will vest in accordance with the LTIP and will otherwise be governed by the provisions of the LTIP and the award agreement governing the restricted shares, provided that 75% of the shares will vest on the third anniversary of the date of grant and 25% will vest on the fourth anniversary of the date of grant. Further details will be provided in the award notification and agreement to be delivered to you following your employment.

Sign on Options:

Effective on or about your start date, you will be granted options having a value in accordance with your election pursuant to the terms of the LTIP. The options will have an exercise price equal to the average of the high and low sales prices of Starwood common stock as reported in the New York Stock Exchange Composite Transactions on the date of grant. The number of options shall be determined by dividing the value by the exercise price and multiplying by three. The stock options will vest in four equal annual installments beginning with the first anniversary of the grant date and will otherwise be governed by the provisions of the LTIP.

Further details will be provided in the award notification to be delivered to you following your employment.

Sign-on Bonus:

You will be paid a one-time sign-on bonus of $500,000 (gross), to be disbursed to you within the first month of your employment. In the event that you voluntarily resign from Starwood without good reason or are terminated for cause (“cause” and “good reason” as are defined below) within this one year period, you would be obligated to repay the entire amount (net of taxes) of the sign-on bonus.

Benefits:

Starwood offers “StarShare”, a comprehensive array of employee benefit programs, that are aimed at a variety of personal concerns. New employees are eligible for the StarShare health and welfare benefit programs and the 401(k) plan on the first day of the month following 90 days of continuous employment. You and your eligible dependents will be covered by these benefits as per your coverage elections.

Information on these plans and other benefit programs such as the HOT Rates (the employee discount room rates program), short-term disability, long-term disability, employee life insurance, and vacation programs will be provided to you after you begin your employment with us. You will be eligible for 20 days of vacation on an annual basis.

In the event that changes are made to any of the benefit plans, the changes will apply to you as they do other similarly situated employees of the Company.

In addition, the Company will reimburse you for up to $10,000 in legal fees incurred by you for review of your employment letter with us.

COBRA Payments:

We realize that there may be a transitional benefits cost to you because of the waiting period before you become eligible for the Starwood health plans. Therefore, during your benefits waiting period, Starwood agrees to reimburse you for COBRA payments you have elected to make to your prior employer until the date you become eligible for Starwood health benefits. The amount of the reimbursement will be the difference between the applicable normal contribution rate for Starwood group health benefits and your COBRA amount.

Resolution of Disputes:

From time to time, disagreements and misunderstandings may arise concerning your job responsibilities, performance, compensation, benefits or other matters affecting your employment with Starwood, or one of its affiliated companies. We hope that we will be able to resolve such matters through normal discussions with your immediate managers or Human Resources representatives.

In the event those efforts fail, you and Starwood agree, except as may be prohibited by law or as otherwise excluded by the terms of the attached Mutual Agreement to Arbitrate (Attachment A), to submit any and all disputes relating to or arising out of this offer letter, your employment with Starwood or the termination of that employment to final and binding arbitration pursuant to the employment rules then in effect of the American Arbitration Association, which shall be the sole and exclusive remedy for such disputes. Accordingly, you acknowledge and agree that this offer of employment and the benefits provided herein are contingent upon your execution of the

Mutual Agreement to Arbitrate provided to you herewith and incorporated herein by reference. In the event that the Mutual Agreement to Arbitrate is determined by a court with appropriate jurisdiction to be unenforceable, you and Starwood Hotels & Resorts Worldwide, Inc. waive any right to a trial by jury on the claims that otherwise would have been subject to the Mutual Agreement to Arbitrate.

Employment Term:

While Starwood looks forward to a long and mutually beneficial relationship with you, you should understand that there is no fixed duration for your employment. In accepting this offer, you acknowledge and agree that your employment with the Company is at will, and may be terminated by Starwood at any time, with or without notice and for any or no reason. By signing below, you acknowledge that except for this letter, there is not and shall not be any written contract between you and the Company concerning this offer of employment or your prospective employment, and that nothing in this letter guarantees employment for any definite or specific term or duration or any particular level of benefits or compensation.

Severance:

In the event that Starwood terminates your employment for any reason other than cause, or you resign for good reason, Starwood will pay to you twelve months of your then current base salary, in a lump sum less all applicable withholdings (the “Severance Payment”), and it will periodically reimburse you for your COBRA expenses minus your last level of normal contribution for up to twelve months commencing on the termination date. The Severance Payment will be in lieu of any compensation, damage or remedy to which you might otherwise be entitled and will be subject to and conditioned upon (a) your continuing compliance with the Non-Compete, Non-Solicitation, Confidentiality and Intellectual Property Agreement referred to below and (b) your signing a written waiver and release of any and all claims against Starwood arising out of or relating to your employment with Starwood, in form and substance satisfactory to Starwood. You will not be eligible for any Severance Payment or COBRA reimbursement if you resign from your employment with the Company without good reason.

For purposes of this paragraph, “cause,” shall mean (i) any material breach by you of any of the duties, responsibilities or obligations of your employment, or any written material policies of Starwood; (ii) your willful material failure or refusal to properly perform the duties, responsibilities or obligations of your employment, or to properly perform or follow any lawful order or direction by Starwood; (iii) any material acts or omissions by you that constitute fraud, dishonesty, disloyalty, breach of trust, gross negligence, civil or criminal illegality, or any other material misconduct that subjects you to civil or criminal liability or otherwise adversely affects the business, interests or reputation of Starwood or any of its affiliates. “Good reason” shall mean (i) a reduction in your base salary, (ii) a material reduction or a material change in your duties and/or responsibilities (including reporting responsibilities) as contemplated by this letter or (iii) your being required to relocate to a principal place of employment more than thirty-five (35) miles from the Company’s principal offices as of the date hereof; provided, you shall provide the Company thirty (30) days’ prior notice and an opportunity to cure before any such resignation for good reason is effective.

Effective on your start date, Starwood will enter into a change of control severance agreement with you in the form attached hereto as Exhibit A; provided that in the event that Starwood enters into a change of control severance agreement with any newly hired executive officer of Company (other than the Chief Executive Officer) that provides a tax gross up on any excise tax that may

be payable thereunder, Starwood shall amend your agreement to provide for equivalent tax gross up provisions.

Other Conditions and Obligations:

You acknowledge that you are not subject to any currently effective employment contract, or any other contractual or other binding obligations pursuant to which your employment or employment activities with or on behalf of the Company may be subject to any restrictions. Restrictions include, without limitation, any agreements or other obligations or documents relating to non-competition, confidentiality, trade secrets, proprietary information or works for hire. By signing this letter, you represent to Starwood that there are no agreements or arrangements, whether written or oral, in effect that would prevent or conflict with your full performance of your employments duties and responsibilities to us.

This offer is contingent on satisfactory results of the Company’s pre-employment investigation, testing and verification and is subject to you having the legal right to work in the United States. Please be prepared to show appropriate identification and proof of eligibility to work on the first day that you report to work. Please contact the undersigned if you have any questions regarding these requirements.

As a further condition of this offer and your right to receive any of the benefits detailed herein, you agree to execute and be bound by a confidentiality, non-compete and non-solicitation agreement provided to you by the Company (Attachment B).

Indemnification:

In addition to any additional benefits provided under applicable state law, as an officer of the Company, you will be entitled to the benefits of: (i) those provisions of the articles of incorporation of the Company and of the by-laws of the Company which provide for indemnification of officers and Directors of the Company (and no such provision shall be amended in any way to limit or reduce the extent of indemnification available to you as an officer of the Company) and (ii) an Indemnification Agreement between the Company and Executive in the form entered into with other senior executive officers. Your rights of such indemnification obligations will survive the termination of this letter agreement and be applicable for so long as you may be subject to any claim, demand, liability, cost or expense, which the indemnification obligations are intended to protect and indemnify him against. The Company will, at no cost to you, use its reasonable best efforts to at all times include you, during the term of your employment and for so long thereafter as you may be subject to any such claim, as an insured under any directors’ and officers’ liability insurance policy maintained by the Company for its Directors and officers.

Section 409A:

     Anything herein to the contrary notwithstanding, it is intended that this letter agreement comply with the provisions of Section 409A of the Internal Revenue Code (“Code”), and this letter agreement will be construed and applied in a manner consistent with this intent including, without limitation, any required postponement of up to six (6) months of any payment (excluding payments that do not constitute a “deferral of compensation”) to you upon a “separation from service” while you are a “specified employee” (within the meanings of such terms under Treasury Regulation Section 1.409A-1) as may be required pursuant to Section 409A(a)(2)(B)(i) of the Code. In the event that any payment or benefit under this letter agreement is determined by the

Company to be in the nature of a “deferral of compensation” under Section 409A of the Code, the Company and you will take such actions, not otherwise provided herein, as may be mutually agreed to ensure that such payments comply with the applicable provisions of Section 409A of the Code and the Treasury Regulations thereunder. To the extent that any payment or benefit under this Agreement is modified by reason of this paragraph, it shall be modified in a manner that complies with Section 409A and preserves to the maximum possible extent the economic costs or value thereof (as applies) to the respective parties (determined on a pre-tax basis).

No Other Assurances:

You acknowledge that in deciding to sign this offer, you have not relied on any promises, commitments, statements or representations, whether spoken or in writing, made to you by any representative of the Company, except for what is expressly stated herein. This offer replaces and cancels all previous agreements, commitments, and understandings whether spoken or written, if any, that the Company or any representative of the Company may have made in connection with your anticipated employment.

You also acknowledge that this offer is intended as written, and that no marginal notations or other revisions to either this offer, the Mutual Agreement to Arbitrate, or the Non-compete, Non-solicitation, Confidentiality and Intellectual Property Agreement are binding on the Company unless expressly consented to in writing by the Executive Vice President, Human Resources or Starwood’s Chief Administrative Officer and General Counsel. This offer shall be construed, governed by and enforced in accordance with the laws of the State of New York, without regard to its conflicts of laws principles.

You should not resign from your current employment until you have received notification from the Company of the completion of all pre-employment investigation, testing and verification. Accordingly, this letter will be binding upon the Company and you when the Company sends confirmation that the pre-employment check has been satisfactorily completed.

By signing and returning this letter, you confirm that this letter accurately sets forth the current understanding between you and Starwood and that you accept and agree to the terms as stated above.

Very truly yours,

NAME: Kenneth S. Siegel
TITLE: Chief Administrative Officer & General Counsel

ACCEPTED AND AGREED TO:
Simon Turner	Date

Attachment A

MUTUAL AGREEMENT TO ARBITRATE

     In order to gain the benefits of a speedy, impartial, and cost-effective dispute resolution procedure, and for good and valid consideration as covenanted below and in addition to any other consideration, and intending to be legally bound, Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”) and I hereby agree that, except as otherwise provided herein, all disputes and claims for which a court otherwise would be authorized by law to grant relief, in any manner, that I may have, now or in the future, during or after my employment with Starwood, of any and every kind or nature whatsoever with or against Starwood, any of Starwood’s affiliated or subsidiary companies, partners, joint venturers, owners of properties Starwood manages, and/or any of his, her, its or their directors, officers, employees or agents , or any disputes and claims that Starwood may have against me (collectively, “Claims”), shall be submitted to the American Arbitration Association (“AAA”) to be resolved and determined through final and binding arbitration before a single arbitrator and to be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the AAA. Starwood and I agree that the arbitrator will have the authority to grant motions dispositive of all or part of any Claim. Starwood shall be responsible for payment of all arbitrator compensation, AAA filing fees and AAA administrative fees, other than the initial AAA filing fee for which I will be responsible to pay up to a maximum of $125, or as otherwise required by law.

     Any reference in this Agreement to Starwood also refers to all of Starwood’s affiliated entities, benefit plans, the benefit plans’ sponsors, fiduciaries and administrators, and all successors and assigns of any of them.

     Starwood and I each have the right to representation by counsel with respect to arbitration of any dispute pursuant to this Agreement. Except as prohibited by law, at the request of either Starwood or me, the arbitration proceedings shall be conducted in confidence, and, in such a case, all documents, testimony, and records shall be received, heard, and maintained by the arbitrator in confidence, available for inspection only by me and Starwood, our respective attorneys, and experts, who shall agree, in advance and in writing, to receive all such information confidentially and to maintain the secrecy of such information until it shall become generally known. Both parties shall be allowed adequate discovery as part of the arbitration process, including reasonable access to essential documents and witnesses as determined by agreement or the arbitrator.

     The arbitrator shall conduct a full hearing as to all issues and disputes not resolved by dispositive motion. At such hearing, the parties shall be entitled to present evidence and examine and cross-examine witnesses. The arbitrator shall issue a written decision revealing the essential findings and conclusions upon which any award is based. In addition, the arbitrator shall have authority to award equitable relief, damages, costs, and fees to the extent permitted by law, including, but not limited to, any remedy or relief that a governing court might order.

     Starwood and I hereby agree that the Claims subject to arbitration shall include but not be limited to any and all Claims that arise out of or are related to the offer of employment, transfer or promotion extended by Starwood to me, any withdrawal or rescission of that offer, any aspect of my employment with Starwood or the terms and conditions of that employment, any claim for bonus, vacation pay or other compensation, any termination of that employment and any Claim of

discrimination, retaliation, or harassment based upon age, race, religion, sex, creed, ethnicity, pregnancy, veteran status, citizenship status, national origin, disability, handicap, medical condition, sexual orientation or any other unlawful basis, or any other unlawful conduct, under any applicable federal, state, local or other statutes, orders, laws, ordinances, regulations or the like, or case law, that relate to employment or employment practices, including without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Americans with Disabilities Act of 1990, as amended, the Family Medical Leave Act of 1993, as amended, the Employee Retirement Income Security Act of 1990, as amended, the Worker Adjustment Retraining and Notification Act, as amended, the Fair Labor Standards Act, as amended, the Vietnam Era Veterans’ Readjustment Assistance Act, as amended, the Equal Pay Act, as amended, the Rehabilitation Act, as amended, the Immigration Reform and Control Act, and the state and local analogues to the foregoing.

     Starwood and I further agree that the Claims subject to arbitration shall exclude any Claims required by any applicable federal, state, local or other statute or benefit or pension plan to be submitted to an administrative forum (for example, a workers’ compensation claim, a claim for unemployment insurance benefits, or an administrative charge of discrimination or retaliation filed with the Equal Employment Opportunity Commission or the state or local analogue to that agency but not litigation arising from such charges), any claims involving any loans or advances paid to me that are subject to any mortgage, promissory note or other similar agreement that I have signed, and any Claims involving solely a monetary dispute within the jurisdiction of a small claims court. Starwood and I further agree that the Claims subject to arbitration also shall exclude any Claims to the extent they involve the alleged taking, use or disclosure of trade secrets and similar confidential or proprietary information, Claims involving a failure to pay a retention bonus or relocation expense, Claims involving a failure to repay any unearned portion of a retention bonus or relocation expense, Claims based upon any employee pension or benefit plan the terms of which contain an enforceable arbitration procedure, in which case the procedure of such plan shall apply, and Claims that cannot be compelled to mandatory arbitration under applicable federal law.

     Starwood and I agree that any arbitration award rendered as the result of any arbitration under this Agreement shall be final and binding and may be entered and enforced as a court judgment in accordance with applicable law. Starwood and I further agree that this Agreement, any arbitration under this Agreement and any arbitration award rendered in such arbitration shall be governed by the Federal Arbitration Act.

     By entering into this Agreement, Starwood and I each specifically acknowledge and understand that the right to the determination and/or trial of any Claims in court before a judge or a jury is a valuable right, and that by signing this Agreement Starwood and I hereby knowingly and voluntarily waive any and all rights we may have to assert any Claims in any court of competent jurisdiction and to a determination and/or trial before a judge or a jury.

     I further understand and acknowledge that this Agreement is not intended to be and shall not be deemed to constitute a contract of employment for any specific duration, and that my employment shall be and remain at will, which means that Starwood and I shall be free to terminate that employment at any time for any or no reason with or without notice and with or without cause.

     Each party’s promise to resolve Claims by arbitration in accordance with the provisions of this Agreement is consideration for the other party’s like promise. Additionally, I enter into this Agreement in consideration of Starwood’s employment, transfer or promotion of me.

     This Agreement shall survive my employer-employee relationship with Starwood and shall apply to any covered Claim whether arising or asserted during my employment or after the termination of my employment with the Company. This Agreement can be modified or revoked only by a writing signed by both Starwood’s Chief Administrative Officer & General Counsel and that expressly refers to this Agreement and specifically states an intent to modify or revoke it. This is the complete agreement of the parties on the subject of arbitration of disputes, except for any arbitration provision contained in a pension or benefit plan or an agreement covering change in control benefits and protections.

EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES CAREFULLY READING THIS AGREEMENT, UNDERSTANDING ITS TERMS, AND ENTERING INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF.

EACH PARTY FURTHER ACKNOWLEDGES HAVING THE OPPORTUNITY TO DISCUSS THE AGREEMENT WITH PERSONAL LEGAL COUNSEL AND HAS USED THAT OPPORTUNITY TO THE EXTENT DESIRED.

Dated:
	Simon Turner
Dated: April 15, 2008
	NAME: Kenneth S. Siegel
	TITLE: Chief Administrative Officer & General Counsel
	Starwood Hotels & Resorts Worldwide, Inc.

Attachment B

NON-COMPETE, NON-SOLICITATION, CONFIDENTIALITY AND
INTELLECTUAL PROPERTY AGREEMENT

          This Non-compete, Non-solicitation, Confidentiality and Intellectual Property Agreement (“Agreement”) is entered into as of this 15th day of April, 2008 (the “Effective Date”), by and between Starwood Hotels & Resorts Worldwide, Inc. (the “Company”) and Simon Turner (the “Employee”).

          WHEREAS, the Company devotes significant time, resources and effort to the training and advancement of its management, and its management team constitutes a significant asset and important competitive advantage; and

          WHEREAS, the Employee has and will have access to important and sensitive confidential information; and

          WHEREAS, the Company has determined that it is in the best interests of the Company and its shareholders to enter into an agreement with Employee whereby Employee will be prohibited from competing with the Company and/or soliciting employees of the Company in accordance with the terms and conditions of this Agreement; and

          WHEREAS, Employee may create inventions, trade secrets, know-how and documents or other works of authorship and may appear or perform in various promotional materials within the scope of Employee’s employment.

          WHEREAS, in consideration of the Company’s offer of employment, Employee agrees to enter into this Agreement.

          THEREFORE, the Company and Employee agree as follows:

          1. For and in consideration of Employee’s rights to severance upon a termination of his employment under certain circumstances, in accordance with the letter agreement dated April 15, 2008 to which this Agreement is referenced as Attachment B and the Severance Agreement dated of even date herewith, Employee agrees that during the period of Employee’s employment with the Company and for a period of 12 months following the date of any termination of employment from the Company (the “Non-Compete Period”), Employee shall not, without the express written consent of the Board of Directors of the Company, directly or indirectly, whether for his own account or for the account of any other person or entity, engage, participate or make any financial investment in, become employed by or render advisory services to or otherwise assist or be interested in any Competitive Business in any geographic area in which, as of the date of termination of Employee’s employment, the Company or any of its subsidiaries is engaged or planning to be engaged. As used herein, “Competitive Business” shall mean any of the firms, businesses, corporations or enterprises listed on Attachment 1. Notwithstanding the foregoing, Employee may invest in a Competitive Business if its stock is listed for trading on a national stock exchange or traded in the over-the-counter market and Executive’s holdings have an original cost less than $5,000,000 and represent less than five percent of its outstanding stock.

          2. Non-solicitation. During the Non-Compete Period, Employee shall not, without the prior written consent of the Company, except in the course of carrying out Employee’s duties hereunder, directly or indirectly solicit or attempt to solicit for employment with or on behalf of any corporation, partnership, joint venture or other business entity, any person who is, or at any time during the six-month period preceding the solicitation of such person was, a management-level employee of the Company (including, without limitation, for this purpose any director level employee of the Company and any General Manager of any hotel owned (in whole or in part) or managed by the Company).

          3. Confidentiality. Employee acknowledges that during the course of his/her employment with the Company, Employee will receive, and will have access to, “Confidential Information,” as such term is defined below, of the Company and that such information is a special, valuable and unique asset belonging to the Company. Accordingly, Employee is willing to enter into the covenants contained in this Agreement in order to provide the Company with what Employee considers to be reasonable protection for the Company’s interests. All notes, memoranda, papers, documents, correspondence or writings (which shall include information recorded or stored in writing, on magnetic tape or disc, or otherwise recorded or stored for reproduction, whether by mechanical or electronic means and whether or not such reproduction will result in a permanent record being made) (“Documents”) which from time to time may be in Employee’s possession (whether prepared by Employee or not) relating, directly or indirectly, to the business of the Company shall be and remain the property of the Company and shall be delivered by Employee to the Company immediately upon request, and in any event promptly upon termination of Employee’s employment, and Employee shall not make or keep any copies or extracts of the Documents. At any time during or after Employee’s employment with the Company ends, without the prior written consent of the Company, except (i) in the course of carrying out Employee’s duties hereunder or (ii) to the extent required by a court or governmental agency, or by applicable law or under compulsion of legal process, Employee shall not disclose to any third person any information concerning the business of the Company, including, without limitation, any trade secrets, customer lists and details of contracts with or requirements of customers, the identity of any owner of a managed hotel, information relating to any current, past or prospective management agreement or joint venture, information pertaining to business methods, sales plans, design plans and strategies, management organization, computer systems and software, operating policies or manuals, personnel records or information, information relating to current, past or contemplated employee benefits or compensation data or strategies, business, financial, development or marketing plans, or manpower strategies or plans, financial records or other financial, commercial, business or technical information relating to the Company (collectively, “Confidential Information”), unless such Confidential Information has been previously disclosed to the public by the Company or is in the public domain (other than by reason of Employee’s breach of this Section 3). Employee will, prior to making any such disclosure pursuant to subsection (ii), promptly notify the Company of his/her receipt of such process or requirement, consult with the Company on the advisability of taking steps to resist or narrow such request, cooperate with the Company in any attempt that the Company may make to obtain a court order or other reliable assurance that confidential treatment will be accorded to all or designated portions of such information, and not disclose such Confidential Information unless the Company shall have had reasonable opportunity to obtain a court order prohibiting or limiting such disclosure.

               3.1 Employee agrees that, both during and after Employee’s employment with the Company, if Employee is uncertain of whether or not information is confidential, Employee will treat that information as Confidential Information until Employee has

received written verification from an authorized officer of the Company that the information is not Confidential Information.

          4. Intellectual Property and Publicity Rights. Employee acknowledges and agrees that all right, title and interest in and to patents, patent applications, inventions, improvements, discoveries, developments, processes, business methods, technical information, know-how, trade secrets, computer programs, writings, designs, copyrights, maskworks, trademarks, service marks, trade names, trade dress and the like (collectively, “Intellectual Property”), including the right to invoke the benefit of the right of priority provided by any treaty to which the United States is a party, which Employee creates, conceives, develops or obtains, either solely or jointly with others, during Employee’s employment with the Company (a) with the use of the Company’s time, materials, facilities or other resources; or (b) resulting from or suggested by Employee’s work for the Company; or (c) in any way relating to any subject matter relating to the existing or contemplated business, products and services of the Company or the Company’s affiliates, subsidiaries and licensees shall be owned by the Company. Upon request, Employee shall execute all such assignments and other documents and take all such other action as the Company may reasonably request in order to vest in the Company, or its nominee, all of Employee’s right, title, and interest in and to such Intellectual Property. Employee further acknowledges and agrees that the Company shall have the perpetual, worldwide right to use Employee’s name, performance, biography, voice, image, signature and likeness in promotional or any other materials developed by or for the Company during Employee’s employment with the Company. Employee hereby irrevocably and unconditionally waives any and all rights that he/she has or may have in and to the Intellectual Property, including, without limitation, any “moral rights” that he/she has or may have as “author” of the Intellectual Property, and hereby expressly agrees not to make any claim or demand against the Company or any party authorized by the Company to exploit the Intellectual Property.

          5. Equitable Relief.

               5.1 Employee acknowledges that the restrictions and obligations specified in Sections 1, 2, 3 and 4 hereof are reasonable in view of the nature of the business in which the Company is engaged and Employee’s knowledge of, and responsibilities with respect to, the Company’s business, and that any breach of Sections 1, 2, 3 or 4 hereof may cause the Company irreparable harm for which there is no adequate remedy at law, and as a result of this, the Company will be entitled to the issuance by a court of competent jurisdiction of an injunction, restraining order or other equitable relief in favor of the Company, without the necessity of posting a bond, restraining Employee from committing or continuing to commit any such violation. Any right to obtain an injunction, restraining order or other equitable relief hereunder will not be deemed to be a waiver of any right to assert any other remedy the Company may have at law or in equity, including, without limitation, the right to cancel payments to which Employee is otherwise entitled under Employee’s employment agreement.

               5.2 Any proceeding or action seeking equitable relief for violation of Sections 1, 2, 3 and 4 hereof may be commenced in the federal courts in the Southern District of the State of New York, or in the absence of federal jurisdiction in state court in the State of New York. Employee hereby irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees to take any and all future action necessary to submit to the jurisdiction of such courts. Employee irrevocably waives any objection that Employee now has or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against Employee in any such

suit will be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which will be conclusive evidence of the fact and the amount of any liability therein described, or by appropriate proceedings under an applicable treaty or otherwise.

          6. Severability. In the event that any provision of this Agreement conflicts with the law under which this Agreement is to be construed, and/or if any such provision is held invalid by a court with jurisdiction over the parties to this Agreement and the subject matter of this agreement, (a) such provision will be deemed to be restated to reflect as nearly as possible the original intentions of the parties to the fullest extent permitted under applicable law, and (b) the remaining terms and provisions of this Agreement will remain in full force and effect.

          7. Governing Law. This Agreement shall be construed, governed and enforced according to the laws of the State of New York, without regard to the principles of conflicts of laws.

          8. Amendments and Waivers. No failure to act by the Company will waive any right contained in this Agreement. No provision of this Agreement may be amended or waived, except by a written agreement signed by both Employee and an authorized executive officer of the Company. Any waiver by the Company of strict performance of any provision of this Agreement shall not be a waiver of or prejudice the Company’s right to require strict performance of that same provision or any other provision of the Agreement in the future.

     Employee acknowledges that he/she has had a reasonable opportunity to review and consider the terms described above and to consult with an attorney if he/she so chooses prior to signing this Agreement. Fully understanding the above terms, Employee is entering into this letter agreement knowingly and voluntarily.

          IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first above written.

Dated:
	Simon Turner
Dated: April 15, 2008
	NAME: Kenneth S. Siegel
	TITLE: Chief Administrative Officer & General Counsel
	Starwood Hotels & Resorts Worldwide, Inc.

EX-10.8

Exhibit 10.8

AMENDMENT TO EMPLOYMENT LETTER

Effective December 30, 2008

     Starwood Hotels & Resorts Worldwide, Inc. (“Company”) set out the terms of its offer of employment to the executive named below (“Executive”) pursuant to a letter with the date specified below (“Offer Letter”). The Company and the Executive desire to amend the severance provisions of the Offer Letter (“Amendment”) in order to evidence documentary compliance with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulatory guidance thereunder, effective on the date specified above.

Executive:	Simon Turner
Date of Offer Letter:	April 15, 2008

     In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. The section entitled “Annual Incentive (Bonus)” is amended to specify that payment of your 2008 bonus will be delivered in 2009, no later than March 15, 2009 (except to the extent that a portion of the bonus is deferred pursuant to the terms of the applicable annual incentive plan).

2. The sections entitled “Sign-on Stock Equity”, “Benefits” and “COBRA Payments” are modified to clarify that the stock options, restricted stock, sign on bonus, legal fee reimbursement and COBRA payments specified in these sections were paid in 2008.

3. The first paragraph of the section entitled “Severance” is modified to read as follows:

In the event that Starwood terminates your employment for any reason other than cause, or you resign for good reason, Starwood will pay to you twelve months of your then current base salary, in a lump sum less all applicable withholdings (the “Severance Payment”), plus an amount equal to 12 times the COBRA charge on the payment date for the type of Company-provided group health plan coverage in effect for you (e.g., family coverage) on the date of your employment termination less the active employee charge for such coverage in effect on the date of your employment termination, in a lump sum less all applicable withholdings (the “COBRA Payment”). The Severance Payment will be subject to and conditioned upon your continuing compliance with the Non-Compete, Non- Solicitation, Confidentiality and Intellectual Property Agreement referred to below. In addition, the Company must deliver to you a customary release agreement (the “Release”) on the date of your employment termination, and as a condition to receipt of the Severance Benefit you must (i) sign the Release and return the signed Release to the Company within the following number of days after the date on which the Company delivers the Release to you: 14 days if you are under age 40 on the date of your termination of employment, 21 days if you are at least age 40 on the date of your termination of employment and if your

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termination of employment is not part of a group termination program within the meaning Section 7(f)(1)(F)(ii) of the Age Discrimination in Employment Act of 1967, as amended, and 45 days if you are at least age 40 on the date of your termination of employment and your termination is part of such a group termination program (the “Release Period”); and (ii) not revoke the Release within any seven-day revocation period that applies to you under the Age Discrimination in Employment Act of 1967, as amended (the “Revocation Period”). The Company will then pay the Severance Benefit to you in a lump sum 53 days following the date of your termination of employment, except as provided in the section entitled “Section 409A” below. In the event you decline or fail for any reason to timely execute and deliver the Release or you revoke the Release, then you will not be entitled to the Severance Benefit. The Company will pay the COBRA Payment to you within 30 days following the date of your employment termination, except as provided in the section entitled “Section 409A” below. You will not be eligible for any Severance Payment or COBRA Payment if you resign from your employment with the Company without good reason.

4. The section entitled “Section 409A” is amended to read as follows:

This letter agreement will be construed and administered to preserve the exemption from Section 409A of payments that qualify as short-term deferrals pursuant to Treas. Reg. §1.409A-1(b)(4) or that qualify for the two-times compensation exemption of Treas. Reg. §1.409A-1(b)(9)(iii). With respect to any amounts that are subject to Section 409A, it is intended, and this Agreement will be so construed, that such amounts and the Company’s and your exercise of authority or discretion hereunder shall comply with the provisions of Section 409A so as not to subject you to the payment of interest and additional tax that may be imposed under Section 409A. For purposes of any payment in this Agreement that is subject to Section 409A and triggered by your “termination of employment”, (i) “termination of employment” shall have the same meaning as “separation from service” under Section 409A(a)(2)(A)(i) of the Code, and (ii) in the event you are a “specified employee” on the date of your termination of employment (with such status determined by the Company in accordance with rules established by the Company in writing in advance of the “specified employee identification date” that relates to the date of your termination of employment or, if later, by December 31, 2008, or in the absence of such rules established by the Company, under the default rules for identifying specified employees under Section 409A), any payment that is subject to Section 409A, such payment shall not be paid earlier than six months after such termination of employment (if you die after the date of your termination of employment but before any payment has been made, such remaining payments that were or could have been delayed will be paid to your estate without regard to such six-month delay). You acknowledge and agree that the Company has made no representation to you as to the tax treatment of the compensation and benefits provided pursuant to this Agreement.

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     IN WITNESS WHEREOF, the Parties have executed this Amendment on the day and year first above written.

Dated: December 30, 2008

Simon Turner

	Starwood Hotels & Resorts Worldwide, Inc.
Dated: December 30, 2008	BY:
		NAME: Jeffrey M. Cava
		TITLE: EVP — Human Resources

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EX-10.9

Exhibit 10.9

SEVERANCE AGREEMENT

          THIS AGREEMENT, dated December 30, 2008 the “Effective Date”), is made by and between Starwood Hotels and Resorts Worldwide, Inc., a Maryland corporation (the “Company”), and Simon Turner (the “Executive”).

          WHEREAS, the Executive is employed by the Company as President — Global Development; and

          WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and

          WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of senior management personnel to the detriment of the Company and its stockholders; and

          WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s senior management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; and

          WHEREAS, the Company and the Executive entered into an employment agreement (the “Original Agreement”) dated April 15, 2008; and

          WHEREAS, the Company and the Executive hereby amend and restate the Original Agreement in its entirety (the “Agreement”) in order to evidence documentary compliance with section 409A of Code and the guidance thereunder (collectively “Section 409A”);

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree as follows:

     1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in Section 16 hereof.

     2. Term of Agreement. The Term of this Agreement shall commence on the Effective Date and shall continue in effect through the third anniversary of the Effective Date; provided, however, that on each anniversary of the Effective Date during the Term of this Agreement, the Term shall automatically be extended for one additional year unless, not later than 90 days prior to any such anniversary, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control or a Potential Change in Control shall have occurred during the Term, the Term shall expire no

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earlier than twenty-four (24) months beyond the month in which such Change in Control or a Potential Change in Control occurred.

     3. Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 10 hereof, no Severance Payments shall be payable under this Agreement unless during the Term there shall have been (or, under the terms of the second sentence of Section 6 hereof, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

     4. The Executive’s Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event a Potential Change in Control occurs during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of such Potential Change of Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

     5. Compensation Other Than Severance Payments.

          a. Payment of Salary During Disability. Following a Change in Control and during the Term, during any period that the Executive is unable to perform the Executive’s full-time duties with the Company as a result of:

          (1) a period of 409A Disability, the Executive shall continue to receive his base salary in accordance with the Company’s standard payroll practices at the rate in effect at the commencement of any such period, together with any compensation payable to the Executive under the Company’s short-term and long-term disability plans for salaried employees during such period and any benefit coverages customarily provided to disabled salaried employees, until the Executive’s employment is terminated on account of the Executive’s General Disability; or

          (2) a period of General Disability, the Executive shall receive any compensation payable to the Executive under the Company’s short-term and long-term disability plans for salaried employees during such period, as well as any benefit coverages customarily provided to disabled salaried employees, until the Executive’s employment is terminated on account of the Executive’s General Disability.

Thereafter the Executive’s benefits shall be determined under the Company’s retirement, insurance and other compensation programs then in effect in accordance with the terms of such programs.

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          b. Accrued Salary. If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive such Executive’s full salary through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

          c. Post-Termination Benefits. If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason.

          d. Time of Payment. Upon termination of the Executive’s employment following a Change in Control and during the Term, the Executive shall receive the payments or benefits to which he may be entitled under Section 5(b) and 5(c) and which constitute deferred compensation subject to Section 409A either (A) at the time when due hereunder, or (B) if a payment date sufficient to satisfy Section 409A is not otherwise stated for such payment or benefit, on the date of Executive’s termination of employment, except as provided in Section 14 below.

     6. Severance Payments.

          a. If the Executive’s employment is terminated following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6 (“Severance Payments”) and Section 7, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control (an “Acquiring Person”), (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of an Acquiring Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in

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anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct.

          (1) Lump Sum Payment. In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive under the terms of his offer letter from the Company, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the average of the annual bonuses earned by the Executive in the three fiscal years ending immediately prior to the fiscal year in which occurs the Date of Termination or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. For purposes of the preceding sentence, in determining any bonus amount for any fiscal year, bonuses paid with respect to any year in which employment of the Executive commenced shall be annualized based on the number of days employed by the Company during such year. In the event the date of the Executive’s termination of employment occurs on or within two years following an event that constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of section 409A(a)(2)(a)(vi) of the Code, such amount will be paid in a lump sum within 30 days following the date of the Executive’s termination of employment, except as set forth in Section 14 below; otherwise, such amount will be paid 53 days following the date of the Executive’s termination of employment, except as provided by Section 14 below.

          (2) Continuation of Welfare Benefits. Subject to Paragraph 15 in the case of any benefits that are not exempt from Section 409A, for the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, disability, and accident insurance benefits and other benefits and perquisites (including employee stay rates) substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence. Benefits otherwise receivable by the Executive pursuant to this Section 6(a)(2) shall be reduced to the extent benefits of the same type are received by the Executive from another employer during the twenty-four (24) month period following the Executive’s termination of employment; provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.

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          (3) Health Benefits. For the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive with group health coverage substantially similar to that which the Executive was receiving immediately prior to the Notice of Termination. The premium charge to the Executive for each month of such coverage will equal the Company’s monthly COBRA charge for such coverage in which the Executive, his spouse and covered dependents (as applicable) is enrolled from time to time (less the amount of any administrative charge typically assessed by the Company as part of its COBRA charge) and the Executive will be required to pay such monthly premium charge in accordance with the Company’s standard COBRA premium payment requirements. The Company will pay Executive a lump sum in cash equal to an initial multiple that is increased by a percentage. For this purpose, the initial multiple is 24 times the difference that results from calculating (i) the Company’s monthly COBRA charge on the Date of Termination for family coverage with respect to the highest value health coverage provided to salaried employees, minus (ii) the amount the Company charges active salaried employees for such coverage on Executive’s Date of Termination. In addition, for this purpose, the percentage is the sum of (I) 1% for each month in the 24-month period that will fall in the calendar year following Executive’s Date of Termination, plus (II) 2% for each month in the 24-month period that will fall in the second calendar year following Executive’s Date of Termination. The Company will make such payment within 30 days following the date of the Executive’s termination of employment, except as provided by Section 14 below.

          (4) Incentive Compensation. Notwithstanding any provision of any annual or long-term incentive plan to the contrary, the Company shall pay to the Executive in cash the following amounts:

          (A) A lump sum equal to any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, paid during the fiscal year of termination when bonuses for such completed fiscal year are paid to senior executives (but not later than 2-1/2 months after such completed fiscal year, except as provided by Section 14 below; and

          (B) the value of each contingent incentive compensation award allocated or awarded to the Executive for a then uncompleted period under any such plan that the Executive would have earned on the last day of the performance award period, assuming the achievement, at the target level, of the individual and corporate performance goals established with respect to such award, paid in the year following the end of such performance period when awards for such performance period are paid to senior executives (but not later than 2-1/2 months after the end of such performance period, except as provided by Section 14 below. Awards for uncompleted periods shall be prorated based upon the number of days the Executive is employed by the Company during such year.

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          (5) Accelerated Vesting of Stock Options. All stock options and restricted stock held by the Executive under any stock option or incentive plan maintained by the Company (including the Company’s 2004 Long-Term Incentive Plans) shall immediately vest and become exercisable as of the Date of Termination, to be exercised in accordance with the terms of the applicable plan

          (6) Outplacement Services. The Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of two (2) years following the date of the Executive’s termination of employment or, if earlier, until the first acceptance by the Executive of an offer of employment. The cost of such outplacement services shall not exceed twenty percent (20%) of the Executive’s base salary in effect on the Date of Termination.

          (7) 401(k) Contributions. The Company shall pay the Executive an amount equal to the unvested portion (if any) of the Executive’s account balance under the Company’s 401(k) Plan that is forfeited by reason of the Executive’s termination of employment. Such payment shall be made within 30 days following the date of the Executive’s termination of employment, except as provided by Section 14 below.

     7. 280G Cap.

          a. Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Executive in connection with a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company (within the meaning of section 280G(b)(2)(A)(i) of the Code (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in such change in ownership or effective control or in the ownership of Company assets or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter called “Total Payments”) would not be deductible (in whole or part), by the Company, an affiliate or Person making such payment or providing such benefit as a result of section 280G of the Code, then, the Total Payments shall be reduced (with the cash Severance Payments being reduced first (if necessary, to zero) in the order in which they appear in Section 6 above, and all other Severance Payments shall thereafter be reduced (if necessary, to zero) in the order in which they appear in Section 6 above provided that extended health benefits will be reduced last to the minimum extent necessary such that, after deducting the amount of any Excise Tax imposed on such Total Payments (as so reduced) from such Total Payments (as so reduced), the amount of the Total Payments (after such reduction) will be greater if such reduction is made than it would be without such reduction. All determinations, including the order and timing of any such reduction shall be determined by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”).

          b. For purposes of this limitation, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by

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the Auditor, does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of the Code and (iii) the value of any noncash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

     8. Termination Procedures and Compensation During Dispute.

          a. Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 12 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provisions indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail.

          b. Date of Termination. “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (1) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).

          c. Dispute Concerning Termination. If the Executive reasonably believe in good faith the Company is not providing the Executive with a benefit or payment to which the Executive is entitled under the terms of this Agreement, the Executive may notify the Company, within forty-five (45) days after the Date of Termination or, if any such payment or benefit is due after such 45-day period, within 45 days following such payment date, that a dispute exists concerning the termination and/or the amount of such payment or benefit. In this event, the Company shall act within fifteen (15) days to restore fully the disputed benefits and payments (so that all benefits and payments are provided as of such date as would have been provided had there been no delay in providing such benefits and payments) and to continue to provide such benefits and payments as contemplated by this Agreement thereafter (provided, however, that in all events any payment or benefit shall not be paid or provided to the Executive before the payment date set forth in this Agreement or any applicable document), but subject to termination

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and recapture from the Executive of these disputed benefits and payments in accordance with the terms of a mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected).

     9. No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminated during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 8(d) hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than Section 6(a)(2) hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

     10. Successors; Binding Agreement.

          a. In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to terminate his employment with the Company and receive compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive’s employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.

          b. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

     11. Indemnification. The Company shall indemnify and hold Executive harmless for acts and omissions in his capacity as an officer, director or employee of the Company to the maximum extent permitted under applicable law. The Company shall maintain a Director’s and Officer’s Liability Insurance Policy, which shall provide liability coverage for Executive’s benefit, and the Executive shall remain covered under such policy for a period of at least six (6) years following the earlier of termination of employment or the occurrence of a Change in Control.

     12. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given

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when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address inserted below the Executive’s signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:
Starwood Hotels and Resorts Worldwide, Inc.
1111 Westchester Avenue
White Plains, NY 10604
Attention: Chief Administrative Officer and General Counsel

     13. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6, 7, 8, and 9 hereof) shall survive such expiration.

     14. Code Section 409A. This Agreement will be construed and administered to preserve the exemption from Section 409A of payments that qualify as short-term deferrals pursuant to Treas. Reg. §1.409A-1(b)(4) or that qualify for the two-times compensation exemption of Treas. Reg. §1.409A-1(b)(9)(iii). With respect to any amounts that are subject to Section 409A, it is intended, and this Agreement will be so construed, that such amounts and the Company’s and the Executive’s exercise of authority or discretion hereunder shall comply with the provisions of Section 409A so as not to subject the Executive to the payment of interest and additional tax that may be imposed under Section 409A. For purposes of any payment in this Agreement that is subject to Section 409A and triggered by the Executive’s “termination of employment”, (i) “termination of employment” shall have the same meaning as “separation from service” under Section 409A(a)(2)(A)(i) of the Code, and (ii) in the event the Executive is a “specified employee” on the date of the Executive’s termination of employment (with such status determined by the Company in accordance with rules established by the Company in writing in

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advance of the “specified employee identification date” that relates to the date of the Executive’s termination of employment or, if later, by December 31, 2008, or in the absence of such rules established by the Company, under the default rules for identifying specified employees under Section 409A), any payment that is subject to Section 409A, such payment shall not be paid earlier than six months after such termination of employment (if the Executive dies after the date of the Executive’s termination of employment but before any payment has been made, such remaining payments that were or could have been delayed will be paid to the Executive’s estate without regard to such six-month delay). The Executive acknowledges and agrees that the Company has made no representation to the Executive as to the tax treatment of the compensation and benefits provided pursuant to this Agreement.

     15. Expense Reimbursements. To the extent that any expense reimbursement provided for by this Agreement does not qualify for exclusion from Federal income taxation, except as specified otherwise in this Agreement, the Company will make the reimbursement only if the Executive incurs the corresponding expense during the term of this Agreement and submits the request for reimbursement no later than two months prior to the last day of the calendar year following the calendar year in which the expense was incurred so that the Company can (and it thereby will) make the reimbursement on or before the last day of the calendar year following the calendar year in which the expense was incurred. In the case of any such expense reimbursement and any in-kind benefit provided for by this Agreement that does not qualify for exclusion from Federal income taxation, the amount of expenses eligible for such reimbursement (and the amount of in-kind benefits provided) during a calendar year will not affect the amount of expenses eligible for such reimbursement (or benefits provided) in another calendar year; and the right to such reimbursement or in-kind benefit is not subject to liquidation or exchange for another benefit from the Company.

     16. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

     17. Settlement of Disputes: Arbitration.

          a. All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.

          b. Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in New York, in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to

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be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

     18. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

          a. “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

          b. “Auditor” shall have the meaning set forth in Section 7 hereof.

          c. “Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.

          d. “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

          e. “Board” shall mean the Board of Directors of the Company.

          f. “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, and Executive has not cured any such failure that is capable of being cured in all material respects within ten (10) days of receiving such written demand, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists.

          g. A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

          (1) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (3) below; or

          (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof,

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constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

          (3) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 70% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation and in proportion to their relative voting power immediately prior to such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

          (4) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 70% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

          h. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

          i. “Company” shall mean Starwood Hotels and Resorts Worldwide, Inc., and, except in determining under Section 17(g) hereof whether or not any Change in Control of

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the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

          j. “Date of Termination” shall have the meaning set forth in Section 8 hereof.

          k. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

          l. “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

          m. “Executive” shall mean the individual named in the first paragraph of this Agreement.

          n. The Executive will be deemed to have a “409A Disability” if (A) the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (B) the Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Company employees; or (C) the Executive is determined to be totally disabled by the Social Security Administration.

          o. “General Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.

          p. “Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses (ii) and (iii) of the second sentence of Section 6(a) hereof (treating all references in paragraphs (1) through (7) below to a “Change in Control” as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (1), (5), (6) or (7) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

          (1) the assignment to the Executive of any duties inconsistent with the Executive’s status as a senior executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to the Change in Control;

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          (2) a reduction by the Company in the Executive’s annual base salary as in effect on the date hereof or as the same may be increased from time to time;

          (3) the relocation of the Executive’s principal place of employment to a location more than 35 miles from the Executive’s principal place of employment immediately prior to the Change in Control or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

          (4) the failure by the Company to pay to the Executive any portion of the Executive’s current compensation, or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

          (5) the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive’s total compensation, including but not limited to the Company’s stock option, bonus and other plans or any substitute plans adopted prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other participants, as existed immediately prior to the Change in Control;

          (6) the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, savings, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control, the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy or any employment agreement in effect at the time of the Change in Control; or

          (7) any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 8(a) hereof; for purposes of this Agreement, no such purported termination shall be effective.

     The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

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     For purposes of any determination regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that Good Reason does not exist.

          q. “Notice of Termination” shall have the meaning set forth in Section 8 hereof.

          r. “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

          s. “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(1).	the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;
(2).	the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;
(3).	any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or
(4).	the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

          t. “Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

          u. “Severance Payments” shall have the meaning set forth in Section 6 hereof.

          v. “Tax Counsel” shall have the meaning set forth in Section 7 hereof.

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          w. “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

          x. “Total Payments” shall mean those payments so described in Section 7 hereof.

[Signature Page Follows)

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          IN WITNESS WHEREOF, the parties have caused this Supplement to be duly executed as of the date first written above.

STARWOOD HOTELS AND RESORTS WORLDWIDE, INC.
By
	NAME: Jeffrey Cava
	TITLE: EVP — Human Resources  Dated: December 30, 2008
EXECUTIVE
	Simon Turner
	Dated: December 30, 2008

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Frits van Paasschen, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of Starwood Hotels & Resorts Worldwide, Inc.;
2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 1, 2009

/s/ Frits van Paasschen  

Frits van Paasschen 

Chief Executive Officer 

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Vasant Prabhu, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of Starwood Hotels & Resorts Worldwide, Inc.;
2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 1, 2009

/s/ Vasant Prabhu  

Vasant Prabhu 

Chief Financial Officer 

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 1350 of Chapter 63
of Title 18 of the United States Code

     I, Frits van Paasschen, the Chief Executive Officer of Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), certify , pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that (i) the accompanying Form 10-Q of Starwood for the quarter ended March 31, 2009 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Starwood.

/s/ Frits van Paasschen  

Frits van Paasschen 

Chief Executive Officer
Starwood Hotels & Resorts Worldwide, Inc.

May 1, 2009 

EX-32.2

Exhibit 32.2

Certification Pursuant to Section 1350 of Chapter 63
of Title 18 of the United States Code

     I, Vasant Prabhu, the Chief Financial Officer of Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), certify , pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that (i) the accompanying Form 10-Q of Starwood for the quarter ended March 31, 2009 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Starwood.

/s/ Vasant Prabhu  

Vasant Prabhu 

Chief Financial Officer
Starwood Hotels & Resorts Worldwide, Inc.

May 1, 2009