Starwood Reports 1Q, 2008 Results

. October 14, 2008

WHITE PLAINS, NY, April 24, 2008.

First Quarter 2008 Highlights

Excluding special items, EPS from continuing operations was $0.44. Includingspecial items, EPS from continuing operations was $0.42. Excluding special items, income from continuing operations was $83 million.Income from continuing operations, including special items, was $79 million. Total Company Adjusted EBITDA was $255 million. Worldwide System-wide REVPAR for Same-Store Hotels increased 8.4% comparedto the first quarter of 2007. System-wide REVPAR for Same-Store Hotels in NorthAmerica increased 2.9%.

Management and franchise revenues increased 17.7% when compared to 2007. Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased9.7% compared to the first quarter of 2007. REVPAR for Starwood branded Same-Store Owned Hotels in North America increased 8.2%. Margins at Starwood branded Same-Store Owned Hotels Worldwide and in NorthAmerica were flat when compared to the first quarter of 2007. Reported revenues from vacation ownership and residential sales decreased 16.8%when compared to 2007.

The Company signed 43 hotel management and franchise contracts in the quarterrepresenting approximately 13,000 rooms. During the first quarter, the Company repurchased approximately 6.1 million sharesat a cost of $277 million.

Starwood Hotels & Resorts Worldwide, Inc. ("Starwood" or the "Company") today reportedEPS from continuing operations for the first quarter of 2008 of $0.42 compared to $0.56 inthe first quarter of 2007. Excluding special items, EPS from continuing operations was$0.44 for the first quarter of 2008 compared to $0.48 in the first quarter of 2007. Excludingspecial items, the effective income tax rate in the first quarter of 2008 was 28.7%compared to 35.7% in the same period of 2007 primarily due to various tax planning

initiatives.

Income from continuing operations was $79 million in the first quarter of 2008 compared to$123 million in 2007. Excluding special items, which net to a $4 million charge in 2008 anda $19 million benefit in 2007, income from continuing operations was $83 million for thefirst quarter of 2008 compared to $104 million in 2007.

Net income was $32 million and EPS was $0.17 in the first quarter of 2008, compared to net income of $122 million and EPS of $0.56 in the first quarter of 2007. The 2008 resultswere adversely affected by a $47 million tax charge to discontinued operations as a resultof a 2008 administrative tax ruling for an unrelated taxpayer that impacts the tax liabilityassociated with the 1998 disposition of a business.

Frits van Paasschen, CEO, said, "Starwood has again beaten expectations due to ourstrong global presence and leading upper upscale and luxury platform. While domesticREVPAR growth slowed in the quarter, our international divisions continued to experiencerobust demand and delivered REVPAR growth of 15.5%. With 55% of our 120,000 roompipeline to be built outside of the US, we continue to expand our lead in internationalmarkets with strong new unit growth expected over the coming years. Our global portfolioof branded owned hotels also performed well, delivering world-wide REVPAR growth of9.7%. Finally, we continue to reduce our share count, buying back 6.1 million shares in thequarter."

Operating Results

First Quarter Ended March 31, 2008Management and Franchise RevenuesWorldwide System-wide REVPAR for Same-Store Hotels increased 8.4% compared to thefirst quarter of 2007, including 17.5% in Africa & the Middle East, 16.3% in Asia Pacific,15.3% in Europe, 9.1% in Latin America, and 2.9% in North America. Worldwide SystemwideREVPAR increases for Same-Store Hotels by brand were: Le M'eridien 16.8%, St.Regis/Luxury Collection 9.3%, Four Points 8.6%, Sheraton 7.6%, W Hotels 6.3%, andWestin 5.8%.

Management fees, franchise fees and other income were $210 million, up $18 million, or9.4%, from the first quarter of 2007. Management fees grew 15.4% to $105 million andfranchise fees grew 18.2% to $39 million.

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

During the first quarter of 2008, the Company signed 43 hotel management and franchisecontracts representing approximately 13,000 rooms of which 39 were new builds and 4were conversions from other brands. At March 31, 2008, the Company had approximately500 hotels in the active pipeline representing over 120,000 rooms, driven by strong interestin all Starwood brands. Of these rooms, almost 70% are in the upper upscale/luxurysegment and over half are outside North America.During the first quarter of 2008, 10 new hotels and resorts (representing approximately5,000 rooms) entered the system, including the Sheraton Denver (Denver, Colorado, 1,225rooms) and Sheraton Dallas (Dallas, Texas, 1,840 rooms). Seven properties (representingapproximately 2,000 rooms) were removed from the system during the quarter.Owned, Leased and Consolidated Joint Venture HotelsWorldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 9.7%.REVPAR at Starwood branded Same-Store Owned Hotels in North America increased8.2%. Internationally, Starwood branded Same-Store Owned Hotel REVPAR increased2.9%, excluding the impact of foreign exchange, and as reported, in US dollars, brandedSame-Store Owned Hotel REVPAR increased 12.3%.Revenues at Starwood branded Same-Store Owned Hotels in North America increased6.3% while costs and expenses increased 6.2% when compared to 2007. Margins atthese hotels increased 6 basis points.Revenues at Starwood branded Same-Store Owned Hotels Worldwide increased 8.0%while costs and expenses increased 8.2% when compared to 2007. Margins at thesehotels decreased 9 basis points.Approximately 45% of Starwood's Owned Hotel earnings (before depreciation) isgenerated from outside the United States.Revenues at owned, leased and consolidated joint venture hotels were $560 million whencompared to $559 million in 2007. Reported revenues and operating income wereimpacted by the sale and closing of 11 hotels since the beginning of the first quarter of2007. These hotels had no revenues and expenses in 2008 as compared to $48 million ofrevenues and $36 million of expenses (before depreciation) in the same quarter of 2007.

Vacation Ownership

Total vacation ownership reported revenues decreased 16.2% to $191 million whencompared to 2007. Reported revenues are significantly impacted by the timing of therecognition of deferred revenues under percentage of completion accounting for projectsunder construction. During the first quarter of 2008, the Company was actively sellingvacation ownership interests at 17 resorts and is also in the predevelopment phase ofseveral other new vacation ownership resorts in California, Colorado, Hawaii, and Mexico.Originated contract sales of vacation ownership intervals decreased 6.9% primarily due tothe sellout of the Company's Westin Ka'anapali Ocean Resort North in Maui. The impactin Hawaii was partly offset by stronger results in Orlando driven by higher tour flow andclose rates. The average price per vacation ownership unit sold decreased 14.2% toapproximately $24,000, driven by a reduction in the average sales price in Hawaii as theCompany shifted to sales of lower priced inventory at the Westin Princeville Resort inKauai. The number of contracts signed increased 8.8% when compared to 2007.Vacation ownership results were well ahead of the Company's expectations for the firstquarter, primarily due to the favorable product mix of units sold, timing of expenses andother items that were realized earlier than expected. The Company expects that full year2008 results will be in line with the Company's prior guidance.Conditions remain uncertain in the asset backed securities market. We continue to expectthat we will complete a sale of vacation ownership notes receivable before the end of 2008.However, given market conditions, we are now assuming the gain from this sale to be $30million to $35 million, down $10 million from prior expectations.

Residential

During the first quarter of 2008, the Company's residential revenues were $2 millioncompared to $4 million in the prior year as our residential inventory at the St. Regis NewYork is substantially sold out.Selling, General, Administrative and OtherSelling, general, administrative and other expenses increased 15.5% to $134 millioncompared to the first quarter of 2007. The increase was primarily due to the impact offoreign currency exchange rates and two items that benefited 2007; the reversal of workerscompensation reserves and the reversal of a performance guarantee liability that waseliminated.

Asset Sales

During the first quarter of 2008, the Company entered into purchase and sale agreementsfor the sale of four wholly-owned hotels. The expected sales proceeds from these sales,which are expected to close later in 2008, are $269 million.

Capital

Gross capital spending during the quarter included approximately $57 million inrenovations of hotel assets including construction capital at the Sheraton SuitesPhiladelphia, W Times Square, aloft Philadelphia, aloft Lexington and Element Lexington.Investment spending on gross vacation ownership interest ("VOI") inventory was $106million, which was offset by cost of sales of $39 million associated with VOI sales duringthe quarter. The inventory spend included VOI construction at the Sheraton VistanaVillages in Orlando, the Westin St. John Resort and Villas in the Virgin Islands, the WestinRiverfront Resort in Avon, Colorado, and the Westin Lagunamar Ocean Resort in Cancun,as well as construction costs at the St. Regis Bal Harbour Resort in Miami Beach.

Share Repurchase

During the first quarter of 2008, the Company repurchased approximately 6.1 millionshares at a total cost of approximately $277 million. At March 31, 2008, approximately$316 million remained available under the Company's previously approved share repurchase authorization. Starwood had approximately 189 million shares outstanding

(including partnership units) at March 31, 2008.

Dividend

The Company paid a dividend of $0.90 per share on January 11, 2008 to holders of recordon December 31, 2007. This represents a 7% increase over the prior year dividends.

Balance Sheet

At March 31, 2008, the Company had total debt of $4.115 billion and cash and cashequivalents (including $248 million of restricted cash) of $462 million, or net debt of $3.653billion, compared to net debt of $3.229 billion at the end of 2007.At March 31, 2008, debt was approximately 43% fixed rate and 57% floating rate and itsweighted average maturity was 3.8 years with a weighted average interest rate of 5.3%.The Company had cash (including total restricted cash) and availability under the domesticand international revolving credit facility of approximately $1.352 billion.In April 2008, $375 million of the revolving credit facility that was to expire on April 27, 2008was converted to a term loan that matures in April 2010, with a Company option to extenduntil February 2011 as long as certain conditions are satisfied. The amount availableunder the revolving credit facility was reduced by $375 million.

Outlook

While overall lodging trends are currently strong, uncertainty surrounding the U.S.economic environment and its impact on travel patterns continues to make it difficult topredict future results.For the full year 2008: Assuming a REVPAR growth range at Same-Store Company Operated Hotelsworldwide of 8% to 10% and a REVPAR growth range at Branded Same-StoreCompany Owned Hotels in North America of 4% to 6%: Adjusted EBITDA would be between $1.250 billion and $1.300 billion. EPS before special items would be between $2.40 and $2.58. North America Same-Store Branded Owned Hotel EBITDA growth of 0% to7% versus 2007 with margin changes between negative 50 basis points andpositive 50 basis points. Management and franchise revenue growth between 12% and 14%. Operating income from our vacation ownership and residential business willdecline $40 million to $60 million versus 2007 (including potential gains onsale of vacation ownership notes receivable of $30 million to $35 million inthe fourth quarter of 2008). Income from continuing operations before special items would be between $452 million and $486 million reflecting an effective tax rate of 33%.

Full year capital expenditures (excluding vacation ownership and residentialinventory) would be approximately $500 million, including $300 million formaintenance, renovation and technology and $200 million for other growthinitiatives. Additionally, net capital expenditures for vacation ownership andresidential inventory, including Bal Harbour, would be approximately $275 million. Full year depreciation and amortization would be approximately $355 million. Full year interest expense would be approximately $220 million and cash taxes ofapproximately $200 million.

Full year weighted average diluted shares outstanding of 188 million. The Company expects to open approximately 80 to 100 hotels (representingapproximately 20,000 rooms) in 2008 and is targeting signing over 200 hotelmanagement and franchise contracts in 2008.

For the three months ended June 30, 2008:

Adjusted EBITDA is expected to be $285 million to $295 million assuming: REVPAR growth at Same-Store Company Operated Hotels worldwide of 10%to 12%. REVPAR growth at Branded Same-Store Owned Hotels in North America of5% to 7%. North America Branded Same Store Owned Hotel EBITDA growth of 0% to5% with margin changes of approximately 0 to negative 50 basis points. Growth from management and franchise revenues of 12% to 14%. Operating income from our vacation ownership and residential business willbe down $50 million to $55 million. Income from continuing operations, before special items, is expected to beapproximately $95 million to $102 million, reflecting an effective tax rate of 33%. EPS before special items is expected to be approximately $0.50 to $0.54.-7-

Special Items

The Company recorded net charges of $4 million (after-tax) for special items in the firstquarter of 2008 compared to $19 million of net credits (after-tax) in the same period of2007.Special items in the first quarter of 2008 primarily relate to severance and related costs inconnection with the reorganization of certain divisions and the consolidation of certainoffices and sales centers.The following represents a reconciliation of income from continuing operations beforespecial items to income from continuing operations after special items (in millions, exceptper share data):

Three Months Ended

March 31,2008 2007Income from continuing operations before special items . $ 83 $ 104EPS before special items . $ 0.44 $ 0.48Special ItemsRestructuring and other special (charges) credits, net (a)(9) 2(Loss)/gain on asset dispositions and impairments, net (b). (1) 11Total special items - pre-tax(10) 13Income tax benefit for special items (c). 6 2Reserves and credits associated with tax matters (d) - 4Total special items - after-tax . (4) 19Income from continuing operations$ 79 $ 123EPS including special items. $ 0.42 $ 0.56(a) During the three months ended March 31, 2008, the Company recorded a restructuring charge associated withthe reorganization of certain divisions and the consolidation of certain sites including severance, leasetermination fees and the write-off of leasehold improvements. During 2007, the Company recorded the reversalof costs and refund of insurance payments related to a retired executive.(b) For the three months ended March 31, 2008, primarily reflects impairment charges for a hotel expected to besold in the second quarter of 2008. For the three months ended March 31, 2007, primarily reflects the gain onthe sale of one hotel.(c) In 2008, benefit relates to the reduction of valuation allowance for capital losses that are expected to be utilizedprior to expiration and tax benefits at the statutory rate for the restructuring charges discussed in (a). In 2007,represents a tax benefit on the sale of one hotel due to the utilization of capital losses.(d) Income tax benefit relates to adjustments to deferred taxes associated with deferred gains on previous hotelsales.

The Company has included the above supplemental information concerning special itemsto assist investors in analyzing Starwood's financial position and results of operations. TheCompany has chosen to provide this information to investors to enable them to performmeaningful comparisons of past, present and future operating results and as a means toemphasize the results of core on-going operations.Starwood will be conducting a conference call to discuss the first quarter financial results at10:30 a.m. (EST) today at (913) 312-0384. The conference call will be available throughsimultaneous webcast in the Investor Relations/Press Releases section of the Company'swebsite at http://www.starwoodhotels.com. A replay of the conference call will also beavailable from 12:30 p.m. (EST) today through Thursday, May 1 at 12:00 midnight (EST) on both the Company's website and via telephone replay at (719) 457-0820 (access code 3588734).

Definitions

All references to EPS, unless otherwise noted, reflect earnings per diluted share fromcontinuing operations. All references to "net capital expenditures" mean gross capitalexpenditures for timeshare and fractional inventory net of cost of sales. All references to"close rates" refer to the percentage of tours converted to actual sales of vacationownership intervals. EBITDA represents net income before interest expense, taxes,depreciation and amortization. The Company believes that EBITDA is a useful measure ofthe Company's operating performance due to the significance of the Company's long-livedassets and level of indebtedness. EBITDA is a commonly used measure of performance inits industry which, when considered with GAAP measures, the Company believes gives amore complete understanding of the Company's operating performance. It also facilitatescomparisons between the Company and its competitors. The Company's managementhas historically adjusted EBITDA (i.e., "Adjusted EBITDA") when evaluating operatingperformance for the total Company as well as for individual properties or groups ofproperties because the Company believes that the inclusion or exclusion of certainrecurring and non-recurring items, such as revenues and costs and expenses from hotelssold, restructuring and other special charges and gains and losses on asset dispositionsand impairments, is necessary to provide the most accurate measure of core operatingresults and as a means to evaluate comparative results. The Company's managementalso uses Adjusted EBITDA as a measure in determining the value of acquisitions anddispositions and it is used in the annual budget process. Due to guidance from theSecurities and Exchange Commission, the Company now does not reflect such items whencalculating EBITDA; however, the Company continues to adjust for these special items andrefers to this measure as Adjusted EBITDA. The Company has historically reported thismeasure to its investors and believes that the continued inclusion of Adjusted EBITDAprovides consistency in its financial reporting and enables investors to perform moremeaningful comparisons of past, present and future operating results and provides ameans to evaluate the results of its core on-going operations. EBITDA and AdjustedEBITDA are not intended to represent cash flow from operations as defined by GAAP andsuch metrics should not be considered as an alternative to net income, cash flow fromoperations or any other performance measure prescribed by GAAP. The Company'scalculation of EBITDA and Adjusted EBITDA may be different from the calculations usedby other companies and, therefore, comparability may be limited.

All references to Same-Store Owned Hotels reflect the Company's owned, leased andconsolidated joint venture hotels, excluding condo hotels, hotels sold to date and hotelsundergoing significant repositionings or for which comparable results are not available (i.e.,hotels not owned during the entire periods presented or closed due to seasonality orhurricane damage). References to Company Operated Hotel metrics (e.g. REVPAR)reflect metrics for the Company's owned and managed hotels. References to System-Wide metrics (e.g. REVPAR) reflect metrics for the Company's owned, managed andfranchised hotels. REVPAR is defined as revenue per available room. ADR is defined asaverage daily rate.

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

All references to management and franchise revenues represent base and incentive fees,franchise fees, amortization of deferred gains resulting from the sales of hotels subject tolong-term management contracts and termination fees offset by payments by Starwoodunder performance and other guarantees.

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