CONTACT: Alisa Rosenberg
(914) 640-5214

FOR IMMEDIATE RELEASE
July 26, 2005

STARWOOD REPORTS RECORD SECOND QUARTER 2005 RESULTS

WHITE PLAINS, NY, July 26, 2005 - Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT):

Second Quarter 2005 Highlights:

• EPS from continuing operations for the second quarter of 2005 was $0.65, including an after-tax charge of $11 million relating to the demolition of a portion of the Sheraton in Cancun, Mexico where we will build vacation ownership units, compared to $0.56 in second quarter of 2004. Excluding special items, EPS from continuing operations was $0.70 for the second quarter of 2005 compared to $0.50 for the second quarter of 2004.

• REVPAR at Same-Store Owned Hotels in North America and worldwide increased 12.7% and 12.3%, respectively, when compared to the second quarter of 2004. ADR increased 9.0% and 7.5% in North America and worldwide, respectively.

• Margins at Same-Store Owned Hotels in North America improved approximately 230 basis points when compared to the second quarter of 2004.

• Globally, REVPAR for Same-Store Owned Hotels grew for W Hotels (17.2%), followed by Westin (13.0%), St. Regis/Luxury Collection (11.7%), and Sheraton (11.0%), with each of these brands experiencing both ADR and occupancy gains.

• Third-party management and franchise fees in the quarter increased 21.3% when compared to 2004.

• Vacation ownership and residential revenues, which exclude gains on sales of notes receivable, increased 66.4%. Excluding the fractional sales at the St. Regis Aspen and residential sales at the St. Regis in San

1

Francisco, contract sales at vacation ownership properties were up 15.1% when compared to 2004.

• Net income for the second quarter of 2005 was $145 million, including the after-tax charge of $11 million relating to the demolition of a portion of the Sheraton in Cancun, Mexico referred to above, compared to $154 million in the second quarter of 2004. Excluding special items, income from continuing operations was $156 million compared to $107 million in 2004. Total Company Adjusted EBITDA increased 26.1% to $391 million when compared to $310 million in 2004.

• According to Smith Travel Research system-wide market share in North America increased 90 basis points when compared to 2004.

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the second quarter of 2005 of $0.65 compared to $0.56 in the second quarter of 2004. Excluding special items of $11 million (after-tax) in the 2005 period related to the partial demolition of the Sheraton in Cancun, Mexico where we will build vacation ownership units, EPS from continuing operations was $0.70 for the second quarter of 2005 compared to $0.50 in the second quarter of 2004. Income from continuing operations was $145 million in the second quarter of 2005 compared to $120 million in 2004. Excluding special items, income from continuing operations was $156 million for the second quarter of 2005 compared to $107 million in 2004. Net income (after discontinued operations) was $145 million and EPS was $0.65 in the second quarter of 2005 compared to $154 million and EPS of $0.72 in the second quarter of 2004. The effective tax rate for the second quarter of 2005 was 24.7%.

Steven J. Heyer, CEO, said: “Our results this quarter were outstanding and we are pleased to be raising our guidance for the remainder of the year. For the eleventh quarter in a row we’ve gained market share. I am thrilled with the progress we are making on our brand-building efforts and service innovation, which I believe will continue to keep us ahead of our competition and will accelerate our market share growth. The marketing and service programs we have and are developing will help us secure an emotional connection with our guests and cement our position as brand leader in the upper upscale and luxury segments.”

“Our global development pipeline remains stronger than ever and new brand launches like Project XYZ should capture the lion’s share of new select serve opportunities. The strength of our brands should also enable Starwood to capture share of wallet both inside and outside of the four walls of the hotel. Already, the Westin Heavenly Bed ensemble available at Nordstrom’s, the Bliss catalogue business and the W Stores are adding to our top and bottom lines.”

“During the quarter we announced several additional asset sales including the legendary Hotel Danieli in Venice, moving us in line to achieve our goal of $500

2

million in asset sales. We continue to evaluate our current portfolio of owned assets with a focus on harvesting previously unrecognized assets either through additional asset sales or redevelopment opportunities.”

“Business continues to be robust and supply remains constrained. Our team is excited about the work we are doing and the direction we are heading.”

Operating Results:

Second Quarter Ended June 30, 2005

Cash flow from operations was $171 million compared to $119 million in 2004. Total Company Adjusted EBITDA was $391 million compared to $310 million in 2004.

Owned, Leased and Consolidated Joint Venture Hotels

REVPAR for Same-Store Owned Hotels in North America and worldwide increased 12.7% and 12.3%, respectively, when compared to 2004. REVPAR at Same-Store Owned Hotels in North America increased 17.2% at W, 14.2% at both St. Regis/Luxury Collection and Westin, and 9.9% at Sheraton. REVPAR growth was particularly strong at the Company’s owned hotels in New York, Chicago, Ft. Lauderdale, Denver, Los Angeles, Maui, Toronto, San Diego, Atlanta and Washington D.C. Revenue from transient travel was up 14.9% in North America when compared to 2004. Internationally, Same-Store Owned Hotel REVPAR increased 11.4%, with Latin America up 19.5% (REVPAR in owned hotels in Argentina, Brazil, Peru and resort areas in Mexico was particularly strong), Asia Pacific up 11.9%, and Europe up 9.8%. Excluding the favorable effects of foreign exchange, REVPAR increased 7.0% internationally.

Total revenues at Same-Store Owned Hotels worldwide increased 9.7%, to $929 million when compared to $847 million in 2004 while costs and expenses at the hotels increased 6.9% to $664 million in 2005 compared to $621 million in 2004. Total revenues at Same-Store Owned Hotels in North America increased 9.3% to $674 million in 2005 when compared to $617 million in 2004 while costs and expenses at these hotels increased 5.9% to $481 million when compared to $454 million in 2004.

System-wide REVPAR; Management/Franchise Fees

System-wide (owned, managed and franchised) REVPAR for Same-Store Hotels in North America increased 11.8%; W Hotels 17.6%, Sheraton 12.0%, Westin and Four Points by Sheraton 11.7% each, and St. Regis/Luxury Collection 4.2%. For the eleventh quarter in a row, total Company market share in North America increased for the Company’s owned and managed hotels as well as for system-

3

wide hotels. Total third-party management and franchise fees were $91 million, up $16 million, or 21.3%, from last year.

Distribution

Starwood’s central distribution systems gross bookings increased approximately 10% when compared to 2004. Gross online bookings through proprietary branded websites increased 30% as compared to 2004, with gross dollar bookings from the proprietary branded sites increasing 45%. Gross online dollar bookings represented approximately 12% of the overall gross dollar bookings, with 74% of that coming from our proprietary branded websites, as compared to 10% of overall gross dollar bookings, with 72% of that from proprietary branded websites in 2004.

Vacation Ownership and Residential

Vacation ownership and residential revenue, which excludes gains on sales of notes receivable (there were no sales of notes receivable in the second quarter of 2005), was up $93 million, or 66.4% to $233 million when compared to 2004 primarily due to residential sales at the St. Regis Museum Tower in San Francisco and vacation ownership sales at our resorts in Maui, Orlando and Scottsdale. Contract sales, excluding fractional sales at the St. Regis Aspen and residential sales at the St. Regis in San Francisco, were up 15.1% when compared to 2004. The average price per timeshare unit sold increased approximately 12.0% to $22,480, and the number of contracts signed increased approximately 2.7% when compared to 2004.

In December 2004, the Company completed the conversion of 98 guest rooms at the St. Regis in Aspen, Colorado into 25 fractional units, which are being sold in four week intervals, and 20 new hotel rooms. In the second quarter of 2005, the Company recognized revenues of $4 million related to this project. Also, in the second quarter of 2005, the Company continued selling condominiums at the St. Regis Museum Tower which is under construction in San Francisco, and recognized revenues of approximately $40 million.

In addition to its robust pipeline of existing vacation ownership inventory, the Company continues to evaluate its existing owned real estate for potential conversion to vacation ownership, fractional, or residential projects. For example, as discussed earlier, the Company has partially demolished the Sheraton in Cancun, Mexico where it will build a timeshare development that is expected to have up to 73 units upon completion. The Company is also working with its business partners to develop similar conversion opportunities at managed hotels.

Currently, the Company is working on new phases at the Westin Ka’anapali Ocean Resort Villas in Maui, Hawaii, the Westin Kierland Villas in Scottsdale, Arizona, the Sheraton Broadway Plantation in Myrtle Beach, South Carolina, the

4

Harborside Resort at Atlantis, Nassau, Bahamas, and the Sheraton Vistana Villages in Orlando, Florida.

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

As discussed earlier, the Company did not sell any notes receivable and thereby did not recognize any gains during the second quarter of 2005 compared to gains of $8 million in the same period of 2004.

Brand Development/Unit Growth

During the second quarter, the Company signed 26 full service hotel management and franchise contracts (representing approximately 6,200 rooms) including the Westin Orlando Convention Center (Orlando, Florida, 492 rooms), Westin North Shore (Wheeling, Illinois, 440 rooms), Sheraton Urumqi (Urumqi, China, 410 rooms) and Westin Guangzhou (Guangzhou, China, 400 rooms) and opened nine new hotels and resorts, including the Sheraton Los Angeles Downtown Hotel (Los Angeles, California, 485 rooms) and Sheraton Miami Mart Hotel (Miami, Florida, 332 rooms). Nine properties (representing approximately 2,600 rooms) were removed from the system during the quarter (5 Four Points and 4 Sheratons). Including openings during the first six months of 2005, the Company expects to open approximately 50 new full-service hotels and resorts (approximately 10,000 rooms) around the world in 2005. The Company had approximately 190 full service hotels and approximately 48,000 rooms in its active global development pipeline at June 30, 2005, with roughly half of that number in international locations.

In July 2005, the Company opened a new Bliss spa at the W San Francisco hotel. Later in 2005 and in 2006, the Company plans to open 3 new Bliss spas in W hotels in Dallas, Los Angeles and Chicago and 2 new Remede Spas in St. Regis hotels in San Francisco and New York with several others in various planning stages.

Results for the Six Months Ended June 30, 2005:

EPS from continuing operations was $1.01 compared to $0.72 in 2004. Excluding special items, EPS from continuing operations was $1.05 compared to $0.66 in 2004. Income from continuing operations was $224 million compared to $153 million in 2004. Excluding special items, income from continuing operations was $233 million compared to $140 million in 2004. Net income (after discontinued operations) was $224 million and EPS was $1.01 compared to $188 million and $0.88, respectively, in 2004.

5

Cash flow from operations was $230 million compared to $182 million in 2004. Total Company Adjusted EBITDA was $679 million compared to $532 million in 2004.

Capital:

Gross capital spending during the quarter included approximately $68 million in renovations of hotel assets including construction capital at the Sheraton Hotel and Towers in New York, New York, the St. Regis in New York, New York, the Sheraton Centre Toronto Hotel in Toronto, Canada, and the Boston Park Plaza in Boston, Massachusetts. Investment spending on gross VOI inventory was $40 million, which was more than offset by cost of sales of $46 million during the quarter. The inventory spend included VOI construction at the Westin Ka’anapali Ocean Resort Villas in Maui, Hawaii, the Sheraton Vistana Villages in Orlando, Florida, and the Westin Kierland Villas in Scottsdale, Arizona and construction of fractional units at the St. Regis in Aspen, Colorado. Additionally during the quarter, further investment spending of $27 million included the ongoing development of the St. Regis Museum Tower in San Francisco which will consist of 260 hotel rooms and 102 condominium units. To date, the Company has invested $275 million in the St. Regis Museum Tower project, which is expected to open in late 2005. The Company expects to realize gross proceeds of approximately $240 million from the sale of the project’s condominiums and has recognized approximately $99 million in revenues to date.

Balance Sheet:

At June 30, 2005, the Company had total debt of $4.359 billion and cash and cash equivalents (including $518 million of restricted cash) of $899 million, or net debt of $3.460 billion, compared to net debt of $3.669 billion at the end of the first quarter of 2005. In addition, the Company continues to have an approximate $200 million investment in the senior debt of Le Meridien hotels.

At June 30, 2005, debt was approximately 77% fixed rate and 23% floating rate and its weighted average maturity was 4.6 years with a weighted average interest rate of 6.03%. The Company had cash (including total restricted cash) and availability under domestic and international revolving credit facilities of approximately $1.892 billion.

Outlook:

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

6

For the three months ended September 30, 2005, if REVPAR at Same-Store Owned Hotels in North America increases approximately 10% - 12% versus the same period in 2004:

• Adjusted EBITDA would be expected to be approximately $342 million, an increase of 17.5% when compared to $291 million in the same period of 2004.

• Net income would be expected to be approximately $114 million, an increase of 34.1% when compared to income from continuing operations before special items in the third quarter of 2004.

• EPS would be expected to be $0.51, an increase of 27.5% when compared to EPS from continuing operations before special items in the third quarter of 2004.

For the full year 2005, if REVPAR at Same-Store Owned Hotels in North America increases approximately 10% - 12% versus the full year 2004:

• Full year revenues, including other revenues from managed and franchised properties, would be expected to be approximately $5.950 billion.

• Full year Adjusted EBITDA would be expected to increase approximately 21.3% to approximately $1.395 billion, when compared to 2004 Adjusted EBITDA of $1.150 billion.

• Full year net income before special items would be expected to be approximately $484 million at approximately a 25% effective tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2006), when compared to 2004 income from continuing operations before special items of approximately $348 million at a 13.9% effective tax rate.

• Full year EPS before special items would be expected to increase approximately 34.6% to $2.18 when compared to 2004 EPS from continuing operations before special items of $1.62.

• Full year capital expenditures (excluding timeshare inventory) would be approximately $600 million, including $300 million for maintenance, renovation and technology, approximately $100 million for the completion of the St. Regis San Francisco multi-use project under construction, and $200 million for other growth initiatives. Additionally, net capital expenditures for timeshare inventory would be approximately $100 million.

• For the full year the Company expects cash interest expense of approximately $281 million and cash taxes of approximately $50 million.

7

Special Items:

     The Company recorded net charges of $11 million (after-tax) for special items in the second quarter of 2005 compared to $13 million of net credits (after-tax) in the same period of 2004.

     Special items in the second quarter of 2005 primarily relate to impairment charges associated with a hotel in Cancun, Mexico that is being partially demolished in order to build vacation ownership units.

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

Three Months Ended							Six Months Ended
June 30,							June 30,
2005			2004				2005			2004
$	156		$	107		Income from continuing operations before special items	$	233		$	140
$	0.70		$	0.50		EPS before special items	$	1.05		$	0.66
						Special Items
	—			3		Adjustment to costs associated with construction remediation (a)		—			4
	(17	)		(3	)	Loss on asset dispositions and impairments, net (b)		(16	)		(4	)
	(17	)		—		Total special items – pre-tax		(16	)		—
	6			1		Income tax benefit for special items (c)		5			1
	—			12		Favorable settlement of tax matters (d)		2			12
	(11	)		13		Total special items – after-tax		(9	)		13
$	145		$	120		Income from continuing operations	$	224		$	153
$	0.65		$	0.56		EPS including special items	$	1.01		$	0.72

(a)	Represents adjustments to the Company’s share of costs for construction remediation efforts at a property owned by a vacation ownership unconsolidated joint venture that were previously recorded in 2002.
(b)	For the three and six months ended June 30, 2005, primarily reflects impairment charges associated with the Sheraton hotel in Cancun, Mexico that is being partially demolished in order to build vacation ownership units. Loss of $3 million and $4 million for the three and six months ended June 30, 2004, respectively, reflects impairment charges primarily associated with the renovation of a portion of the W New York for the Bliss Spa.
(c)	Represents taxes on special items at the Company’s incremental tax rate.
(d)	Tax benefit in the six months ended June 30, 2005 reflects a state tax refund related to tax years prior to the 1995 split-up of ITT Corporation. Tax benefit of $12 million in the three and six months ended June 30, 2004, respectively, reflects the favorable results of certain changes to the Federal tax rules.

The Company has included the above supplemental information concerning special items to assist investors in analyzing Starwood’s financial position and results of operations. The Company has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of core on-going operations.

8

Starwood will be conducting a conference call to discuss the second quarter financial results at 10:30 a.m. (EST) today. The conference call will be available through simultaneous webcast in the Investor Relations/Press Releases section of the Company’s website at www.starwoodhotels.com. A replay of the conference call will also be available from 1:30 p.m. (EST) today through Tuesday, August 2 at 12:00 midnight (EST) on both the Company’s website and via telephone replay at (719) 457-0820 (access code 9990344).

Definitions:

All references to EPS, unless otherwise noted, reflect earnings per diluted share from continuing operations. All references to “net capital expenditures” mean gross capital expenditures for timeshare and fractional inventory net of cost of sales. EBITDA represents net income before interest expense, taxes, depreciation and amortization. The Company believes that EBITDA is a useful measure of the Company’s operating performance due to the significance of the Company’s long-lived assets and level of indebtedness. EBITDA is a commonly used measure of performance in its industry which, when considered with GAAP measures, the Company believes gives a more complete understanding of the Company’s ability to service debt, fund capital expenditures, pay income taxes and pay cash distributions. It also facilitates comparisons between the Company and its competitors. The Company’s management has historically adjusted EBITDA (i.e., “Adjusted EBITDA”) when evaluating operating performance for the total Company as well as for individual properties or groups of properties because the Company believes that the inclusion or exclusion of certain recurring and non-recurring items, such as the special items described on page 7 of this release and/or revenues and costs and expenses from hotels sold, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results. The Company’s management also used Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions and it is used in the annual budget process. Due to guidance from the Securities and Exchange Commission, the Company now does not reflect such items when calculating EBITDA; however, the Company continues to adjust for these special items and refers to this measure as Adjusted EBITDA. The Company has historically reported this measure to its investors and believes that the continued inclusion of Adjusted EBITDA provides consistency in its financial reporting and enables investors to perform more meaningful comparisons of past, present and future operating results and provides a means to evaluate the results of its core on-going operations. EBITDA and Adjusted EBITDA are not intended to represent cash flow from operations as defined by GAAP and such metrics should not be considered as an alternative to net income, cash flow from operations or any other performance measure prescribed by GAAP. The Company’s calculation of EBITDA and Adjusted EBITDA may be different from the calculations used by other companies and, therefore, comparability may be limited.

All references to Same-Store Owned Hotels reflect the Company’s owned, leased and consolidated joint venture hotels, excluding hotels sold to date, undergoing significant repositionings or for which comparable results are not

9

available (i.e., hotels not owned during the entire periods presented or closed due to seasonality.) REVPAR is defined as revenue per available room. ADR is defined as average daily rate.

All references to contract sales reflect vacation ownership sales before revenue adjustments for percentage of completion accounting methodology.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with approximately 750 properties in more than 80 countries and 120,000 employees at its owned and managed properties. With internationally renowned brands, Starwood® corporation is a fully integrated owner, operator and franchisor of hotels and resorts including: St. Regis®, The Luxury Collection®, Sheraton®, Westin®, Four Points® by Sheraton, and W®, Hotels and Resorts as well as Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, please visit www.starwoodhotels.com.

** Please contact Starwood’s new, toll-free media hotline at (866) 4-STAR-PR
(866-478-2777) for photography or additional information.**

(Note: This press release contains forward-looking statements within the meaning of federal securities regulations. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties and other factors that may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Further results, performance and achievements may be affected by general economic conditions including the timing and robustness of the recovery in the United States from the recent economic downturn and the prospects for improved performance in other parts of the world, the impact of war and terrorist activity, business and financing conditions, foreign exchange fluctuations, cyclicality of the real estate and the hotel and vacation ownership businesses, operating risks associated with the hotel and vacation ownership businesses, relationships with associates, customers and property owners, the impact of the internet reservation channels, our reliance on technology, domestic and international political and geopolitical conditions, competition, governmental and regulatory actions (including the impact of changes in U.S. and foreign tax laws and their interpretation), travelers’ fears of exposure to contagious diseases, risk associated with the level of our indebtedness, risk associated with potential acquisitions and dispositions, and other circumstances and uncertainties. These risks and uncertainties are presented in detail in our filings with the Securities and Exchange Commission. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.)

10

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per Share data)

Three Months Ended								Six Months Ended
June 30,								June 30,
				%										%
2005	2004			Variance				2005			2004			Variance
							Revenues
$        939	$	868			8.2		Owned, leased and consolidated joint venture hotels	$	1,752		$	1,637			7.0
233		140			66.4		Vacation ownership and residential sales and services		464			268			73.1
119		104			14.4		Management fees, franchise fees and other income		223			194			14.9
268		251			6.8		Other revenues from managed and franchised properties (a)		526			491			7.1
1,559		1,363			14.4				2,965			2,590			14.5
							Costs and Expenses
675		640			(5.5	)	Owned, leased and consolidated joint venture hotels		1,316			1,247			(5.5	)
167		105			(59.0	)	Vacation ownership and residential		334			202			(65.3	)
94		88			(6.8	)	Selling, general, administrative and other		176			170			(3.5	)
101		101			—		Depreciation		206			203			(1.5	)
4		5			20.0		Amortization		9			9			—
268		251			(6.8	)	Other expenses from managed and franchised properties (a)		526			491			(7.1	)
1,309		1,190			(10.0	)			2,567			2,322			(10.6	)
250		173			44.5		Operating income		398			268			48.5
—		8			(100.0	)	Gain on sale of VOI notes receivable		—			8			(100.0	)
18		12			50.0		Equity earnings from unconsolidated ventures, net		31			16			93.8
(60)		(65	)		7.7		Interest expense, net of interest income of $3, $1, $5 and $1		(122	)		(129	)		5.4
(17)		(3	)		n/m		Loss on asset dispositions and impairments, net		(16	)		(4	)		n/m
191		125			52.8		Income from continuing operations before taxes and minority equity		291			159			83.0
(47)		(5	)		n/m		Income tax expense		(68	)		(7	)		n/m
1		—			n/m		Minority equity in net loss		1			1			—
145		120			20.8		Income from continuing operations		224			153			46.4
							Discontinued operations:
—		34			(100.0	)	Gain on disposition (b)		—			35			(100.0	)
$         145	$	154			(5.8	)	Net income	$	224		$	188			19.1
							Earnings Per Share – Basic
$        0.67	$	0.57			17.5		Continuing operations	$	1.04		$	0.74			40.5
—		0.17			(100.0	)	Discontinued operations		—			0.17			(100.0	)
$        0.67	$	0.74			(9.5	)	Net income	$	1.04		$	0.91			14.3
							Earnings Per Share – Diluted
$        0.65	$	0.56			16.1		Continuing operations	$	1.01		$	0.72			40.3
—		0.16			(100.0	)	Discontinued operations		—			0.16			(100.0	)
$        0.65	$	0.72			(9.7	)	Net income	$	1.01		$	0.88			14.8
216		208					Weighted average number of Shares		214			206
223		215					Weighted average number of Shares assuming dilution		222			213

(a)	The Company includes in revenues the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin and includes in costs and expenses these reimbursed costs. These costs relate primarily to payroll costs at managed properties where the Company is the employer.
(b)	2004 activity represents the reversal of reserves that are no longer required as the related contingencies have been resolved and the favorable resolution of certain tax matters related to the 1999 divestiture of the Company’s gaming business.

n/m = not meaningful

11

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

	June 30,			December 31,
	2005			2004
Assets
Current assets:
Cash and cash equivalents	$	381		$	326
Restricted cash		509			347
Accounts receivable, net of allowance for doubtful accounts of $61 and $58		598			482
Inventories		316			371
Prepaid expenses and other		197			157
Total current assets		2,001			1,683
Investments		432			453
Plant, property and equipment, net		6,778			6,997
Goodwill and intangible assets, net		2,532			2,544
Other assets (a)		653			621
	$	12,396		$	12,298
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt (b)	$	634		$	619
Accounts payable		154			200
Accrued expenses		719			872
Accrued salaries, wages and benefits		248			299
Accrued taxes and other		158			138
Total current liabilities		1,913			2,128
Long-term debt (b)		3,725			3,823
Deferred income taxes		851			880
Other liabilities		624			652
		7,113			7,483
Minority interest		24			27
Exchangeable units and Class B preferred shares, at redemption value of $38.50		—			—
Commitments and contingencies
Stockholders’ equity:
Class A exchangeable preferred shares of the Trust; $0.01 par value; authorized 30,000,000 shares; outstanding 564,397 and 597,825 shares at June 30, 2005 and December 31, 2004, respectively		—			—
Corporation common stock; $0.01 par value; authorized 1,050,000,000 shares; outstanding 216,975,974 and 208,730,800 shares at June 30, 2005 and December 31, 2004, respectively		2			2
Trust Class B shares of beneficial interest; $0.01 par value; authorized 1,000,000,000 shares; outstanding 216,975,974 and 208,730,800 shares at June 30, 2005 and December 31, 2004, respectively		2			2
Additional paid-in capital		5,488			5,121
Deferred compensation		(69	)		(14	)
Accumulated other comprehensive loss		(320	)		(255	)
Retained earnings (accumulated deficit)		156			(68	)
Total stockholders’ equity		5,259			4,788
	$	12,396		$	12,298

(a)	Includes restricted cash of $9 million and $10 million at June 30, 2005 and December 31, 2004, respectively.
(b)	Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $391 million and $438 million at June 30, 2005 and December 31, 2004, respectively.

12

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

Three Months Ended									Six Months Ended
June 30,									June 30,
					%									%
2005		2004			Variance				2005		2004			Variance
								Reconciliation of Net Income to EBITDA and Adjusted EBITDA
$	145	$	154			(5.8	)	Net income	$	224	$	188			19.1
	68		70			2.9		Interest expense(a)		137		141			2.8
	47		(29	)		n/m		Income tax (benefit) expense(b)		68		(27	)		n/m
	108		109			0.9		Depreciation(c)		222		219			(1.4	)
	6		6			—		Amortization (d)		12		12			—
	374		310			20.6		EBITDA		663		533			24.4
	—		(3	)		(100.0	)	Adjustment to costs associated with construction remediation		—		(4	)		(100.0	)
	17		3			n/m		Loss on asset dispositions and impairments, net		16		4			n/m
	—		—			—		Discontinued operations(e)		—		(1	)		(100.0	)
$	391	$	310			26.1		Adjusted EBITDA	$	679	$	532			27.6

(a)	Includes $5 and $4 million of interest expense related to unconsolidated joint ventures for the three months ended June 30, 2005 and 2004, respectively, and $10 and $11 million for the six months ended June 30, 2005 and 2004, respectively.
(b)	Includes $0 and $(34) million of tax expense (benefit) recorded in discontinued operations for the three months ended June 30, 2005 and 2004, respectively, and $0 and $(34) million for the six months ended June 30, 2005 and 2004, respectively.
(c)	Includes $7 and $8 million of Starwood’s share of depreciation expense of unconsolidated joint ventures for the three months ended June 30, 2005 and 2004, respectively, and $16 and $16 million for the six months ended June 30, 2005 and 2004, respectively.
(d)	Includes $2 and $1 million of Starwood’s share of amortization expense of unconsolidated joint ventures for the three months ended June 30, 2005 and 2004, respectively, and $3 and $3 million for the six months ended June 30, 2005 and 2004, respectively.
(e)	Excludes the taxes already added back as noted in (b) above.

Three Months Ended						Six Months
June 30,						Ended June 30,
2005		2004				2005			2004
					Cash Flow Data
$	145	$	154		Net income	$	224		$	188
					Exclude:
	—		(34	)	Discontinued operations, net		—			(35	)
	145		120		Income from continuing operations		224			153
	(103)		(44	)	Increase in restricted cash		(161	)		(130	)
	129		43		Adjustments to income from continuing operations, changes in working capital, and other		167			158
	171		119		Cash from continuing operations		230			181
	—		—		Cash from discontinued operations		—			1
$	171	$	119		Cash from operating activities	$	230		$	182
$	(82)	$	(64	)	Cash used for investing activities	$	(151	)	$	(244	)
$	(13)	$	(128	)	Cash used for financing activities	$	(11	)	$	(201	)

13

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

	Year Ended
	December 31, 2005
Net income before special items	$	484
Special items (see page 8)		(9	)
Net income	$	475
EPS before special items	$	2.18
Special items (see page 8)		(0.04	)
EPS	$	2.14

Three Months
Ended			Year Ended
September 30, 2005			December 31, 2005
$	114	Net Income	$	475
	72	Interest expense		281
	38	Income tax expense		151
	118	Depreciation and amortization		472
	342	EBITDA		1,379
	—	Loss on asset dispositions and impairments, net		16
$	342	Adjusted EBITDA	$	1,395

Three Months
Ended			Year Ended
September 30, 2004			December 31, 2004
$	107	Net income	$	395
	68	Interest expense		275
	35	Income tax expense		34
	111	Depreciation		445
	6	Amortization		26
	327	EBITDA		1,175
	4	Loss on asset dispositions and impairments, net		33
	(3)	Discontinued operations		(17	)
	(37)	Restructuring and other special credits, net		(37	)
	—	Adjustment to costs associated with construction remediation		(4	)
$	291	Adjusted EBITDA	$	1,150

14

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

Three Months Ended								Six Months Ended
June 30,								June 30,
				%			Same-Store Owned Hotels (1)					%
2005		2004		Variance			Worldwide	2005		2004		Variance
							Revenue
$	929	$	847		9.7		Same-Store Owned Hotels	$	1,702	$	1,576		8.0
	1		10		(90.0	)	Hotels Sold or Closed in 2005 and 2004 (4 hotels)		6		19		(68.4	)
	8		9		(11.1	)	Hotels Without Comparable Results (4 hotels)		43		41		4.9
	1		2		(50.0	)	Other ancillary hotel operations		1		1		—
$	939	$	868		8.2		Total Owned, Leased and Consolidated Joint Venture Hotels Revenue	$	1,752	$	1,637		7.0
							Costs and Expenses
$	664	$	621		(6.9	)	Same-Store Owned Hotels	$	1,275	$	1,199		(6.3	)
	1		8		87.5		Hotels Sold or Closed in 2005 and 2004 (4 hotels)		6		16		62.5
	8		9		11.1		Hotels Without Comparable Results (4 hotels)		33		30		(10.0	)
	2		2		—		Other ancillary hotel operations		2		2		—
$	675	$	640		(5.5	)	Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses	$	1,316	$	1,247		(5.5	)

Three Months Ended								Six Months Ended
June 30,								June 30,
				%			Same-Store Owned Hotels					%
2005		2004		Variance			North America	2005		2004		Variance
							Revenue
$	674	$	617		9.2		Same-Store Owned Hotels	$	1,237	$	1,158		6.8
	—		4		(100.0	)	Hotels Sold or Closed in 2005 and 2004 (3 hotels)		2		10		(80.0	)
	4		5		(20.0	)	Hotels Without Comparable Results (3 hotels)		33		32		3.1
$	678	$	626		8.3		Total Owned, Leased and Consolidated Joint Venture Hotels Revenue	$	1,272	$	1,200		6.0
							Costs and Expenses
$	481	$	454		(5.9	)	Same-Store Owned Hotels	$	923	$	881		(4.8	)
	—		4		100.0		Hotels Sold or Closed in 2005 and 2004 (3 hotels)		2		8		75.0
	6		6		—		Hotels Without Comparable Results (3 hotels)		27		24		(12.5	)
$	487	$	464		(5.0	)	Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses	$	952	$	913		(4.3	)

Three Months Ended								Six Months Ended
June 30,								June 30,
				%			Same-Store Owned Hotels					%
2005		2004		Variance			International	2005		2004		Variance
							Revenue
$	255	$	230		10.9		Same-Store Owned Hotels	$	465	$	418		11.2
	1		6		(83.3	)	Hotels Sold or Closed in 2005 and 2004 (1 hotel)		4		9		(55.5	)
	4		4		—		Hotels Without Comparable Results (1 hotel)		10		9		11.1
	1		2		(50.0	)	Other ancillary hotel operations		1		1		—
$	261	$	242		7.9		Total Owned, Leased and Consolidated Joint Venture Hotels Revenue	$	480	$	437		9.8
							Costs and Expenses
$	183	$	167		(9.6	)	Same-Store Owned Hotels	$	352	$	318		(10.7	)
	1		4		75.0		Hotels Sold or Closed in 2005 and 2004 (1 hotel)		4		8		50.0
	2		3		33.3		Hotels Without Comparable Results (1 hotel)		6		6		—
	2		2		—		Other ancillary hotel operations		2		2		—
$	188	$	176		(6.8	)	Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses	$	364	$	334		(9.0	)

(1) Same-Store Owned Hotel Results exclude 4 hotels sold or closed in 2005 and 2004 and 4 hotels without comparable results.

15

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

	WORLDWIDE									NORTH AMERICA									INTERNATIONAL(2)
	2005			2004			Var.			2005			2004			Var.			2005			2004			Var.
				134 Hotels									91 Hotels									43 Hotels
SAME STORE OWNED HOTELS
REVPAR ($)		131.98			117.49			12.3	%		130.18			115.54			12.7	%		137.30			123.26			11.4	%
ADR ($)		178.24			165.85			7.5	%		171.30			157.15			9.0	%		200.96			195.77			2.7	%
OCCUPANCY (%)		74.0	%		70.8	%		3.2			76.0	%		73.5	%		2.5			68.3	%		63.0	%		5.3
					58									36									22
SHERATON
REVPAR ($)		107.89			97.21			11.0	%		114.84			104.45			9.9	%		92.95			81.69			13.8	%
ADR ($)		150.69			140.23			7.5	%		154.33			141.00			9.5	%		141.78			138.16			2.6	%
OCCUPANCY (%)		71.6	%		69.3	%		2.3			74.4	%		74.1	%		0.3			65.6	%		59.1	%		6.5
					36									22									14
WESTIN
REVPAR ($)		142.51			126.13			13.0	%		124.26			108.79			14.2	%		200.32			180.80			10.8	%
ADR ($)		183.73			172.21			6.7	%		158.13			146.06			8.3	%		269.39			260.77			3.3	%
OCCUPANCY (%)		77.6	%		73.2	%		4.4			78.6	%		74.5	%		4.1			74.4	%		69.3	%		5.1
					10									4									6
ST. REGIS/LUXURY COLLECTION
REVPAR ($)		289.21			258.86			11.7	%		266.55			233.32			14.2	%		327.07			303.43			7.8	%
ADR ($)		404.50			390.77			3.5	%		356.99			338.31			5.5	%		494.00			493.43			0.1	%
OCCUPANCY (%)		71.5	%		66.2	%		5.3			74.7	%		69.0	%		5.7			66.2	%		61.5	%		4.7
					12									12
W
REVPAR ($)		196.28			167.46			17.2	%		196.28			167.46			17.2	%
ADR ($)		243.82			218.23			11.7	%		243.82			218.23			11.7	%
OCCUPANCY (%)		80.5	%		76.7	%		3.8			80.5	%		76.7	%		3.8
					18									17									1
OTHER
REVPAR ($)		90.90			80.83			12.5	%		89.39			78.74			13.5	%		100.04			93.54			6.9	%
ADR ($)		127.43			118.65			7.4	%		125.71			118.30			6.3	%		137.63			120.53			14.2	%
OCCUPANCY (%)		71.3	%		68.1	%		3.2			71.1	%		66.6	%		4.5			72.7	%		77.6	%		(4.9	)

(1)	Hotel Results exclude 4 hotels sold or closed and 3 hotels without comparable results during 2004 and 2005.
(2)	See next page for breakdown by division

Page 16

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

	EUROPE									LATIN AMERICA									ASIA PACIFIC
	2005			2004			Var.			2005			2004			Var.			2005			2004			Var.
				28 Hotels									11 Hotels									4 Hotels
SAME STORE OWNED HOTELS
REVPAR ($)		194.63			177.28			9.8	%		64.50			53.98			19.5	%		110.82			99.01			11.9	%
ADR ($)		271.09			265.21			2.2	%		103.35			99.83			3.5	%		156.94			138.70			13.2	%
OCCUPANCY (%)		71.8	%		66.8	%		5.0			62.4	%		54.1	%		8.3			70.6	%		71.4	%		(0.8	)
					11									8									3
SHERATON
REVPAR ($)		126.69			114.10			11.0	%		55.17			46.05			19.8	%		117.43			102.36			14.7	%
ADR ($)		172.74			171.23			0.9	%		96.10			92.52			3.9	%		169.35			151.49			11.8	%
OCCUPANCY (%)		73.3	%		66.6	%		6.7			57.4	%		49.8	%		7.6			69.3	%		67.6	%		1.7
					11									3
WESTIN
REVPAR ($)		238.48			217.37			9.7	%		99.95			84.13			18.8	%
ADR ($)		332.76			315.41			5.5	%		122.73			119.44			2.8	%
OCCUPANCY (%)		71.7	%		68.9	%		2.8			81.4	%		70.4	%		11.0
					6
ST. REGIS/LUXURY COLLECTION
REVPAR ($)		327.07			303.43			7.8	%
ADR ($)		494.00			493.43			0.1	%
OCCUPANCY (%)		66.2	%		61.5	%		4.7
																							1
OTHER
REVPAR ($)																				100.04			93.54			6.9	%
ADR ($)																				137.63			120.53			14.2	%
OCCUPANCY (%)																				72.7	%		77.6	%		(4.9	)

(1) Hotel Results exclude 4 hotels sold or closed and 3 hotels without comparable results during 2004 and 2005.

Page 17

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

	WORLDWIDE(2)							NORTH AMERICA(2)							INTERNATIONAL(3)
	2005		2004		Var.			2005		2004		Var.			2005		2004		Var.
			134 Hotels							91 Hotels							43 Hotels
SAME STORE OWNED HOTELS
Total REVENUE		928,951		847,188		9.7	%		674,173		616,627		9.3	%		254,778		230,561		10.5	%
Total EXPENSE		664,554		621,516		(6.9	%)		481,103		454,387		(5.9	%)		183,451		167,129		(9.8	%)
				58							36							22
SHERATON
REVENUE		364,631		338,739		7.6	%		253,467		240,513		5.4	%		111,164		98,226		13.2	%
EXPENSE		264,395		246,701		(7.2	%)		180,127		174,040		(3.5	%)		84,268		72,661		(16.0	%)
				36							22							14
WESTIN
REVENUE		295,263		265,614		11.2	%		194,662		173,829		12.0	%		100,601		91,785		9.6	%
EXPENSE		204,833		191,443		(7.0	%)		135,618		126,413		(7.3	%)		69,215		65,030		(6.4	%)
				10							4							6
ST. REGIS/LUXURY COLLECTION
REVENUE		104,638		98,186		6.6	%		69,675		65,080		7.1	%		34,963		33,106		5.6	%
EXPENSE		73,729		70,360		(4.8	%)		51,384		48,160		(6.7	%)		22,345		22,200		(0.7	%)
				12							12
W(2)
REVENUE		107,838		93,742		15.0	%		107,838		93,742		15.0	%
EXPENSE		77,411		71,460		(8.3	%)		77,411		71,460		(8.3	%)
				18							17							1
OTHER
REVENUE		56,581		50,907		11.1	%		48,531		43,463		11.7	%		8,050		7,444		8.1	%
EXPENSE		44,186		41,552		(6.3	%)		36,563		34,314		(6.6	%)		7,623		7,238		(5.3	%)

(1)	Hotel Results exclude 4 hotels sold or closed and 3 hotels without comparable results during 2004 and 2005.
(2)	Includes lease expense of $4,288 in 2005 and 2004 related to the lease of the W Times Square in New York
(3)	See next page for breakdown by division

Page 18

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

	EUROPE							LATIN AMERICA							ASIA PACIFIC
	2005		2004		Var.			2005		2004		Var.			2005		2004		Var.
	28 Hotels							11 Hotels							4 Hotels
SAME STORE OWNED HOTELS
Total REVENUE		179,686		167,292		7.4	%		47,137		38,194		23.4	%		27,955		25,075		11.5	%
Total EXPENSE		130,019		121,812		(6.7	%)		31,823		25,653		(24.1	%)		21,609		19,664		(9.9	%)
				11							8							3
SHERATON
REVENUE		61,074		55,581		9.9	%		30,185		25,014		20.7	%		19,905		17,631		12.9	%
EXPENSE		48,790		43,529		(12.1	%)		21,492		16,706		(28.6	%)		13,986		12,426		(12.6	%)
				11							3
WESTIN
REVENUE		83,649		78,605		6.4	%		16,952		13,180		28.6	%
EXPENSE		58,884		56,083		(5.0	%)		10,331		8,947		(15.5	%)
				6
ST. REGIS/LUXURY COLLECTION
REVENUE		34,963		33,106		5.6	%
EXPENSE		22,345		22,200		(0.7	%)
																		1
OTHER
REVENUE																8,050		7,444		8.1	%
EXPENSE																7,623		7,238		(5.3	%)

(1) Hotel Results exclude 4 hotels sold or closed and 3 hotels without comparable results during 2004 and 2005.

Page 19

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

	WORLDWIDE									NORTH AMERICA									INTERNATIONAL(2)
	2005			2004			Var.			2005			2004			Var.			2005			2004			Var.
	133 Hotels									90 Hotels									43 Hotels
SAME STORE OWNED HOTELS
REVPAR ($)		122.20			109.90			11.2	%		120.46			108.85			10.7	%		127.35			112.99			12.7	%
ADR ($)		173.87			162.36			7.1	%		168.65			155.81			8.2	%		190.37			184.47			3.2	%
OCCUPANCY (%)		70.3	%		67.7	%		2.6			71.4	%		69.9	%		1.5			66.9	%		61.2	%		5.7
					57									35									22
SHERATON
REVPAR ($)		99.46			90.88			9.4	%		103.09			95.46			8.0	%		91.76			81.14			13.1	%
ADR ($)		146.12			137.06			6.6	%		148.89			136.98			8.7	%		139.93			137.27			1.9	%
OCCUPANCY (%)		68.1	%		66.3	%		1.8			69.2	%		69.7	%		(0.5	)		65.6	%		59.1	%		6.5
					36									22									14
WESTIN
REVPAR ($)		135.00			120.42			12.1	%		120.79			108.82			11.0	%		181.35			157.87			14.9	%
ADR ($)		180.70			168.58			7.2	%		158.78			147.78			7.4	%		258.09			245.44			5.2	%
OCCUPANCY (%)		74.7	%		71.4	%		3.3			76.1	%		73.6	%		2.5			70.3	%		64.3	%		6.0
					10									4									6
ST. REGIS/LUXURY COLLECTION
REVPAR ($)		266.71			238.78			11.7	%		271.92			238.17			14.2	%		258.00			239.85			7.6	%
ADR ($)		396.77			384.29			3.2	%		368.61			351.05			5.0	%		458.46			459.71			(0.3	%)
OCCUPANCY (%)		67.2	%		62.1	%		5.1			73.8	%		67.8	%		6.0			56.3	%		52.2	%		4.1
					12									12
W
REVPAR ($)		176.30			152.22			15.8	%		176.30			152.22			15.8	%
ADR ($)		233.63			212.32			10.0	%		233.63			212.32			10.0	%
OCCUPANCY (%)		75.5	%		71.7	%		3.8			75.5	%		71.7	%		3.8
					18									17									1
OTHER
REVPAR ($)		80.48			72.28			11.3	%		75.69			67.71			11.8	%		109.54			100.04			9.5	%
ADR ($)		124.15			115.97			7.1	%		121.12			114.72			5.6	%		138.68			121.41			14.2	%
OCCUPANCY (%)		64.8	%		62.3	%		2.5			62.5	%		59.0	%		3.5			79.0	%		82.4	%		(3.4	)

(1)	Hotel Results exclude 4 hotels sold or closed and 4 hotels without comparable results during 2004 and 2005.
(2)	See next page for breakdown by division

Page 20

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

	EUROPE									LATIN AMERICA									ASIA PACIFIC
	2005			2004			Var.			2005			2004			Var.			2005			2004			Var.
	28 Hotels									11 Hotels									4 Hotels
SAME STORE OWNED HOTELS
REVPAR ($)		168.66			151.89			11.0	%		73.27			61.77			18.6	%		117.42			103.29			13.7	%
ADR ($)		257.53			249.67			3.1	%		110.95			108.05			2.7	%		158.10			140.72			12.4	%
OCCUPANCY (%)		65.5	%		60.8	%		4.7			66.0	%		57.2	%		8.8			74.3	%		73.4	%		0.9
					11									8									3
SHERATON
REVPAR ($)		118.43			106.79			10.9	%		59.33			51.41			15.4	%		122.25			105.28			16.1	%
ADR ($)		172.90			169.63			1.9	%		96.81			96.81			0.0	%		171.26			155.10			10.4	%
OCCUPANCY (%)		68.5	%		63.0	%		5.5			61.3	%		53.1	%		8.2			71.4	%		67.9	%		3.5
					11									3
WESTIN
REVPAR ($)		203.19			180.03			12.9	%		126.21			101.12			24.8	%
ADR ($)		313.65			294.73			6.4	%		150.07			139.27			7.8	%
OCCUPANCY (%)		64.8	%		61.1	%		3.7			84.1	%		72.6	%		11.5
					6
ST. REGIS/LUXURY COLLECTION
REVPAR ($)		258.00			239.85			7.6	%
ADR ($)		458.46			459.71			(0.3	%)
OCCUPANCY (%)		56.3	%		52.2	%		4.1
																							1
OTHER
REVPAR ($)																				109.54			100.04			9.5	%
ADR ($)																				138.68			121.41			14.2	%
OCCUPANCY (%)																				79.0	%		82.4	%		(3.4	%)

(1) Hotel Results exclude 4 hotels sold or closed and 4 hotels without comparable results during 2004 and 2005.

Page 21

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

	WORLDWIDE(2)							NORTH AMERICA(2)							INTERNATIONAL(3)
	2005		2004		Var.			2005		2004		Var.			2005		2004		Var.
	133 Hotels							90 Hotels							43 Hotels
SAME STORE OWNED HOTELS
Total REVENUE		1,701,818		1,576,067		8.0	%		1,237,337		1,158,188		6.8	%		464,481		417,879		11.2	%
Total EXPENSE		1,275,245		1,198,852		(6.4	%)		923,059		880,686		(4.8	%)		352,185		318,165		(10.7	%)
				57							35							22
SHERATON
REVENUE		652,363		618,591		5.5	%		440,847		429,756		2.6	%		211,516		188,835		12.0	%
EXPENSE		495,858		466,814		(6.2	%)		334,919		325,952		(2.8	%)		160,939		140,862		(14.3	%)
				36							22							14
WESTIN
REVENUE		556,474		504,853		10.2	%		378,599		346,139		9.4	%		177,875		158,714		12.1	%
EXPENSE		399,888		372,779		(7.3	%)		267,879		251,935		(6.3	%)		132,009		120,844		(9.2	%)
				10							4							6
ST. REGIS/LUXURY COLLECTION
REVENUE		197,672		186,114		6.2	%		139,799		131,726		6.1	%		57,873		54,388		6.4	%
EXPENSE		145,311		139,403		(4.2	%)		101,963		97,704		(4.4	%)		43,348		41,699		(4.0	%)
				12							12
W(2)
REVENUE		195,229		173,762		12.4	%		195,229		173,762		12.4	%
EXPENSE		149,132		139,616		(6.8	%)		149,132		139,616		(6.8	%)
				18							17							1
OTHER
REVENUE		100,080		92,747		7.9	%		82,863		76,805		7.9	%		17,217		15,942		8.0	%
EXPENSE		85,056		80,240		(6.0	%)		69,167		65,480		(5.6	%)		15,889		14,760		(7.6	%)

(1)	Hotel Results exclude 4 hotels sold or closed and 4 hotels without comparable results during 2004 and 2005.
(2)	Includes lease expense of $8,575 in 2005 and 2004 related to the lease of the W Times Square in New York
(3)	See next page for breakdown by division

Page 22

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

	EUROPE							LATIN AMERICA							ASIA PACIFIC
	2005		2004		Var.			2005		2004		Var.			2005		2004		Var.
	28 Hotels							11 Hotels							4 Hotels
SAME STORE OWNED HOTELS
Total REVENUE		308,138		283,123		8.8	%		99,285		83,653		18.7	%		57,058		51,103		11.7	%
Total EXPENSE		245,985		225,192		(9.2	%)		62,844		53,627		(17.2	%)		43,356		39,346		(10.2	%)
				11							8							3
SHERATON
REVENUE		110,292		100,191		10.1	%		61,383		53,483		14.8	%		39,841		35,161		13.3	%
EXPENSE		91,851		81,323		(12.9	%)		41,621		34,953		(19.1	%)		27,467		24,586		(11.7	%)
				11							3
WESTIN
REVENUE		139,973		128,544		8.9	%		37,902		30,170		25.6	%
EXPENSE		110,786		102,170		(8.4	%)		21,223		18,674		(13.6	%)
				6
ST. REGIS/LUXURY COLLECTION
REVENUE		57,873		54,388		6.4	%
EXPENSE		43,348		41,699		(4.0	%)
																		1
OTHER
REVENUE																17,217		15,942		8.0	%
EXPENSE																15,889		14,760		(7.6	%)

(1) Hotel Results exclude 4 hotels sold or closed and 4 hotels without comparable results during 2004 and 2005.

Page 23

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Debt Portfolio Summary
As of June 30, 2005
UNAUDITED

	Interest	Balance						Interest			Avg Maturity
Debt	Terms	(in millions)			% of Portfolio			Rate			(in years)
Floating Rate Debt:
Senior credit facility
Revolving credit facility	Various + 125	$	14			0	%		3.81	%		1.3
Term loan	LIBOR + 125		500			12	%		4.59	%		1.1
			514			12	%		4.57	%		1.2
Mortgages and other	Various		186			4	%		5.38	%		2.2
Interest rate swaps	LIBOR + 423		300			7	%		7.75	%
Total Floating			1,000			23	%		5.67	%		1.4
Fixed Rate Debt:
Sheraton Holding public debt (1)			1,052			24	%		6.00	%		7.5
Senior notes (2)			1,510			35	%		6.70	%		4.4
Convertible debt			360			8	%		3.50	%		0.9
Mortgages and other			737			17	%		7.25	%		5.8
Interest rate swaps			(300	)		(7	%)		7.88	%
Total Fixed			3,359			77	%		6.13	%		5.2
Total Debt		$	4,359			100	%		6.03	%		4.6

(1)	Balance consists of outstanding public debt of $1.047 billion and a $5 million fair value adjustment related to the unamortized gain on fixed to floating interest rate swaps terminated in September 2002 and March 2004.
(2)	Balance consists of outstanding public debt of $1.496 billion and a $26 million fair value adjustment related to the unamortized gain on fixed to floating interest rate swaps terminated in September 2002 and March 2004 and a ($12) million fair value adjustment related to current fixed to floating interest rate swaps.

Maturities
<1 year	$	634
1-3 years		1,631
3-5 years		485
>5 years		1,609
	$	4,359

Page 24

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

Properties without comparable results in 2005:

Property	Location
Sheraton Kauai	Koloa, HI
St. Regis Aspen	Aspen, CO
Paradise Streams Caesars	Mt. Pocono, PA
Shertaton Cancun	Cancun, Mexico

Properties sold or closed in 2005 and 2004:

Property	Location
Englewood — Sheraton Denver Tech Center	Englewood, CO
Deerfield — Hilton	Ft. Lauderdale, FL
Rancho Bernardo — Four Points	Rancho Bernardo, CA
Lisbon — Sheraton Lisboa Htl & Twrs	Lisbon, Portugal

Selected Balance Sheet Items:

Cash and cash equivalents (including restricted cash of $518 million)	$	899
Debt level	$	4,359

Page 25

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

	Q2			YTD
Capital Expenditures:
Owned, Leased and Consolidated Joint Venture Hotels		68			126
Corporate/IT		12			16
Subtotal		80			142
Vacation Ownership Capital Expenditures:
Capital expenditures (includes land acquisitions)		6			8
Net capital expenditures for Inventory (1)		(6	)		(20	)
Subtotal		—			(12	)
Development Capital		27			98
Total Capital Expenditures		107			228

(1) Represents gross inventory capital expenditures of $40 and $73 in the three and six months ended June 30, 2005, respectively, less cost of sales of $46 and $93 in the three and six months ended June 30, 2005, respectively.

Page 26

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

	NAD				EAME				LAD				ASIA				Total
	Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms
Owned
Sheraton		36		16,218		11		3,077		7		3,549		3		1,028		57		23,872
Westin		22		10,359		11		2,374		3		901		—		—		36		13,634
Four Points		6		1,153		—		—		—		—		1		630		7		1,783
W		12		4,294		—		—		—		—		—		—		12		4,294
Luxury Collection		1		654		5		638		2		320		—		—		8		1,612
St. Regis		4		840		1		161		—		—		—		—		5		1,001
Other		12		2,806		—		—		—		—		—		—		12		2,806
Total Owned		93		36,324		28		6,250		12		4,770		4		1,658		137		49,002
Managed & UJV
Sheraton		42		20,828		72		21,170		10		1,995		45		16,267		169		60,260
Westin		37		20,888		7		1,869		—		—		12		4,935		56		27,692
Four Points		1		475		7		1,035		2		263		2		387		12		2,160
W		5		902		—		—		1		237		2		353		8		1,492
Luxury Collection		6		1,401		6		942		7		158		—		—		19		2,501
St. Regis		2		403		1		95		—		—		2		591		5		1,089
Other		1		2,567		—		—		—		—		2		296		3		2,863
Total Managed & UJV		94		47,464		93		25,111		20		2,653		65		22,829		272		98,057
Franchised
Sheraton		114		35,953		29		7,043		3		1,074		17		5,682		163		49,752
Westin		18		7,288		3		1,141		3		598		5		1,226		29		10,253
Four Points		92		16,363		10		1,376		9		1,350		1		126		112		19,215
Luxury Collection		3		600		12		1,354		—		—		—		—		15		1,954
Total Franchised		227		60,204		54		10,914		15		3,022		23		7,034		319		81,174
Systemwide
Sheraton		192		72,999		112		31,290		20		6,618		65		22,977		389		133,884
Westin		77		38,535		21		5,384		6		1,499		17		6,161		121		51,579
Four Points		99		17,991		17		2,411		11		1,613		4		1,143		131		23,158
W		17		5,196		—		—		1		237		2		353		20		5,786
Luxury Collection		10		2,655		23		2,934		9		478		—		—		42		6,067
St. Regis		6		1,243		2		256		—		—		2		591		10		2,090
Other		13		5,373		—		—		—		—		2		296		15		5,669
Total Systemwide		414		143,992		175		42,275		47		10,445		92		31,521		728		228,233

Page 27