Starwood Net Income for 3rd Qtr 2005 Drops Sharply to $39 million Compared

Plans to Sell up to $4 billion of Assets within the Next Year

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. October 14, 2008

WHITE PLAINS, NY, October 26, 2005. Starwood Hotels & Resorts Worldwide, Inc. ("Starwood" or the "Company") today reported EPS from continuing operations for the third quarter of 2005 of $0.18 compared to $0.49 in the third quarter of 2004. Excluding special items of $91 million, which primarily relate to tax expense on the adoption of a plan to repatriate foreign earnings in accordance with the American Jobs Creation Act of 2004 and additional tax expense related to the 1998 disposition of ITT World Directories, EPS from continuing operations was $0.58 for the third quarter of 2005 compared to $0.40 in the third quarter of 2004. Income from continuing operations was $40 million in the third quarter of 2005 compared to $105 million in 2004. Excluding special items, income from continuing operations was $131 million for the third quarter of 2005 compared to $85 million in 2004. Net income (after discontinued operations) was $39 million and EPS was $0.17 in the third quarter of 2005 compared to $107 million and EPS of $0.50 in the third quarter of 2004. The effective tax rate for the third quarter of 2005, including the two special tax items discussed above, was 72.3%.

Steven J. Heyer, CEO, said "Our Third Quarter performance was outstanding. Our operators remain committed to industry leading top line growth, while at the same time driving industry leading margin expansion through productivity initiatives. We remain focused on developing differentiated brand specific service excellence and emotional content. With strong brands comes significant opportunity to expand our footprint - particularly given that our brands are currently underrepresented versus our competitive set.

At the same time, we are working hard to unlock the inherent value of our owned real estate portfolio through aggressive portfolio management. We believe there will always be an important role for real estate if that real estate has significant upside development potential via timeshare, residential or repositioning.

Assets that do not fit our strategic criteria will be marketed for sale and we are in various stages of discussions with numerous interested parties. We expect that between today and twelve months from now we will likely enter into agreements for the sale of $2 - $4 billion of assets. In most cases we expect to retain long term management or franchise contracts, maintaining our footprint while unlocking value for reinvestment in the business and for share repurchase - a core strategic principle.

Our core lodging businesses remain strong. The time is right to harvest previously unrecognized assets, build on our innovative culture, build world class brands, drive related growth and secure our position as the premier owned, management and franchise hotel and resort company."

Third Quarter 2005 Highlights:

EPS from continuing operations for the third quarter of 2005 was $0.18, compared to $0.49 in the third quarter of 2004. Excluding special items which primarily relate to tax expense on the adoption of a plan to repatriate foreign earnings in accordance with the American Jobs Creation Act of 2004 and additional tax expense related to the 1998 disposition of ITT World Directories, EPS from continuing operations was $0.58 for the third quarter of 2005 compared to $0.40 for the third quarter of 2004.

REVPAR at Same-Store Owned Hotels in North America and worldwide increased 13.2% and 11.9%, respectively, when compared to the third quarter of 2004. ADR increased 10.1% and 8.5% in North America and worldwide, respectively.

Margins at Starwood branded Same-Store Owned Hotels in North America improved approximately 280 basis points when compared to the third quarter of 2004.

Globally, REVPAR for Same-Store Owned Hotels grew for W Hotels (24.5%), followed by St. Regis/Luxury Collection (11.2%), Westin (10.3%), and Sheraton (10.3%), with each of these brands experiencing both ADR and occupancy gains.

Third-party management and franchise fees in the quarter increased 11.4% when compared to 2004.

Vacation ownership and residential revenues, which exclude gains on sales of notes receivable, increased 33.1%. Excluding the fractional sales at the St. Regis Aspen and residential sales at the St. Regis in San Francisco, contract sales at vacation ownership properties were up 14.4% when compared to 2004.

Net income for the third quarter of 2005 was $39 million, compared to net income of $107 million in the third quarter of 2004. Excluding special items, income from continuing operations was $131 million in the third quarter of 2005 compared to $85 million in the same period of 2004.

Total Company Adjusted EBITDA, including the impact of Hurricanes Dennis, Katrina and Rita, increased 19.2% to $347 million when compared to $291 million in 2004. The Company's two owned hotels and one joint venture hotel in New Orleans and its owned hotel in Key West were negatively impacted by Hurricanes Dennis, Katrina and Rita. In addition to the loss of business from these storms, $4 million of insurance deductible expenses and cleanup and associate relocation costs are reflected in these results.

According to Smith Travel Research system-wide market share in North America increased 50 basis points when compared to 2004.