Starwood Reports Fourth Quarter 2012 Results

  Starwood Reports Fourth Quarter 2012 Results

Business Wire

STAMFORD, Conn. -- February 7, 2013

Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported fourth
quarter 2012 financial results.

Fourth Quarter 2012 Highlights

  *Excluding special items, EPS from continuing operations was $0.70.
    Including special items, EPS from continuing operations was $0.33.
  *Adjusted EBITDA was $325 million, which included $32 million of EBITDA
    from the St. Regis Bal Harbour residential project.
  *Excluding special items, income from continuing operations was $137
    million. Including special items, income from continuing operations was
    $65 million.
  *Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.1% in
    constant dollars (3.6% in actual dollars) compared to 2011. Systemwide
    REVPAR for Same-Store Hotels in North America increased 5.2% in constant
    dollars (5.4% in actual dollars).
  *Management fees, franchise fees and other income increased 5.1% compared
    to 2011. Management and franchise revenues increased 11.2% compared to
    2011.
  *Worldwide Same-Store Company-Operated gross operating profit margins
    increased approximately 45 basis points compared to 2011.
  *Worldwide REVPAR for Starwood Same-Store Owned Hotels increased 1.2% in
    constant dollars (0.8% in actual dollars) compared to 2011.
  *Margins at Starwood Same-Store Owned Hotels Worldwide decreased
    approximately 90 basis points compared to 2011.
  *Earnings from Starwood’s vacation ownership and residential business
    increased approximately $5 million compared to 2011.
  *During the quarter, the Company signed 40 hotel management and franchise
    contracts, representing approximately 8,400 rooms, and opened 17 hotels
    and resorts with approximately 3,900 rooms.
  *During the quarter, the Company completed sales of hotels for gross cash
    proceeds of approximately $275 million, retired $725 million of debt,
    issued $350 million of 3.125% Senior Notes due 2023, paid an annual
    dividend of $1.25 per share, and repurchased 3.5 million shares at a total
    cost of $180 million and an average price of $52.07 per share.

Full Year 2012 Highlights

  *Excluding special items, EPS from continuing operations was $2.61.
    Including special items, EPS from continuing operations was $2.39.
  *Adjusted EBITDA was $1.220 billion, which included $157 million of EBITDA
    from the St. Regis Bal Harbour residential project.
  *Excluding special items, income from continuing operations was $513
    million. Including special items, income from continuing operations was
    $470 million.
  *Worldwide Systemwide REVPAR for Same-Store Hotels increased 5.0% in
    constant dollars (3.2% in actual dollars) compared to 2011. Systemwide
    REVPAR for Same-Store Hotels in North America increased 6.0% in constant
    dollars (5.8% in actual dollars).
  *Management fees, franchise fees and other income increased 9.1% compared
    to 2011. Management and franchise revenues increased 11.5% compared to
    2011.
  *Worldwide Same-Store Company-Operated gross operating profit margins
    increased approximately 90 basis points compared to 2011.
  *Worldwide REVPAR for Starwood Same-Store Owned Hotels increased 2.6% in
    constant dollars (0.1% in actual dollars) compared to 2011.
  *Margins at Starwood Same-Store Owned Hotels Worldwide increased
    approximately 40 basis points compared to 2011.
  *Earnings from Starwood’s vacation ownership and residential business
    increased approximately $144 million compared to 2011, including a $130
    million increase in earnings from the St. Regis Bal Harbour residential
    project.
  *During the year, the Company signed 131 hotel management and franchise
    contracts, representing approximately 30,500 rooms, and opened 69 hotels
    and resorts with approximately 17,600 rooms.
  *During the year, the Company completed sales of hotels for gross cash
    proceeds of approximately $542 million, retired $1.272 billion of debt,
    issued $350 million of 3.125% Senior Notes due 2023, paid an annual
    dividend of $1.25 per share, and repurchased 6.3 million shares at a total
    cost of $320 million and an average price of $50.83 per share.

Fourth Quarter 2012 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today
reported EPS from continuing operations for the fourth quarter of 2012 of
$0.33 compared to $0.80 in the fourth quarter of 2011. Excluding special
items, EPS from continuing operations was $0.70 for the fourth quarter of 2012
compared to $0.71 in the fourth quarter of 2011. Special items in the fourth
quarter of 2012, which totaled a charge of $72 million (after-tax), included a
pre-tax charge of $113 million primarily related to tender premiums associated
with the early redemption of $725 million senior notes with maturities ranging
between 2014 and 2019 as well as pre-tax charges of $14 million associated
with the impairment of certain hotels and investments. Special items in the
fourth quarter of 2011, which totaled a credit of $18 million (after-tax),
included a pre-tax charge of approximately $70 million related to an
unfavorable legal decision, a pre-tax charge of $14 million related to certain
hotel impairments and a pre-tax charge of $16 million related to costs
associated with the early redemption of $605 million of senior notes. Special
items in the fourth quarter of 2011 also included an income tax benefit of
$116 million, primarily associated with the utilization of capital losses
which had previously been fully reserved. Excluding special items, the
effective income tax rate in the fourth quarter of 2012 was 35.7% compared to
28.3% in the fourth quarter of 2011.

Income from continuing operations was $65 million in the fourth quarter of
2012, compared to $158 million in the fourth quarter of 2011. Excluding
special items, income from continuing operations was $137 million in the
fourth quarter of 2012. Excluding special items, income from continuing
operations was $140 million in the fourth quarter of 2011.

Net income was $142 million and $0.72 per share in the fourth quarter of 2012,
compared to $167 million and $0.85 per share in the fourth quarter of 2011.

Frits van Paasschen, CEO, said, “We are happy to report strong results for the
fourth quarter and full year 2012. All four key drivers of value performed
well. We held our costs in check for the fourth year in a row, grew our
footprint with quality hotels and contracts, sustained high REVPAR and
occupancies in an uncertain environment, and werealizedgreat valuefromreal
estate sales.”

“Our balance sheet has never been stronger in the history of the company. In
December,weissued10-year senior notes at 3.125%, what we believe to be the
lowest rate ever by a U.S. lodging company for publicly traded 10-year notes.
During 2012, we returned over half a billion dollars of capital to
shareholders. We increased our dividend by 150%, and repurchased 6.3 million
shares for $320 million. Going forward, we will deploycapital by reinvesting
in our business and by returning cash to shareholders through dividends and
stock repurchases.”

“The year looks to be somewhat stronger than 2012, as the uncertainty we saw
in major world economies is showing signs of giving way to stronger demand
growth. Beyond next year into the foreseeable future,we are bullish about the
long-term outlook on the global high-end lodging industry. We are poised to
benefit from higher rates in North America and Europe where demand is growing
but supply is already short. Even more important, the dramatic economic growth
in Asia, Latin America, Middle East and Africa is fueling demand for our
brands worldwide.”

Year Ended December 31, 2012 Earnings Summary

Income from continuing operations was $470 million for the year ended December
31, 2012 compared to $502 million in the same period in 2011. Excluding
special items, income from continuing operations was $513 million for the year
ended December 31, 2012, compared to $378 million in the same period in 2011.
In addition to the fourth quarter special items discussed above, the results
for the year ended December 31, 2012 included a favorable adjustment of $11
million to reverse a portion of a litigation reserve established in 2011, a $7
million loss primarily related to the sale of one wholly-owned hotel, and $15
million net charges associated with the early redemption of approximately $495
million of senior notes. Excluding special items, the effective income tax
rate for the year ended December 31, 2012 was 32.1%, when compared to 26.1% in
the same period in 2011.

Net income was $562 million and $2.86 per share for the year ended December
31, 2012 compared to $489 million and $2.51 per share in the same period in
2011.

Adjusted EBITDA was $1.220 billion for the year ended December 31, 2012,
compared to $1.032 billion in the same period in 2011. Adjusted EBITDA in 2012
includes $157 million of EBITDA from the St. Regis Bal Harbour Resort
residential project (“Bal Harbour”), compared to $27 million in 2011.

Fourth Quarter 2012 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.1% in constant
dollars (3.6% in actual dollars) compared to the fourth quarter of 2011.
International Systemwide REVPAR for Same-Store Hotels increased 2.7% in
constant dollars (increased 1.5% in actual dollars).

Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by region:


                                 REVPAR
                                       Constant       Actual
Region                                            
                                       Dollars        Dollars
North America                          5.2%        5.4%
Europe                                 1.0%           (2.4%)
Asia Pacific                           3.9%           3.9%
Africa and the Middle East             1.2%           0.0%
Latin America                          5.8%           5.8%


Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by brand:


                                 REVPAR
                                      Constant       Actual
Brand                                            
                                      Dollars        Dollars
St. Regis/Luxury Collection           3.2%        1.7%
W Hotels                              4.2%           4.2%
Westin                                4.2%           3.8%
Sheraton                              3.8%           3.7%
Le Méridien                           3.0%           1.3%
Four Points by Sheraton               5.6%           5.9%
Aloft                                 9.3%           9.0%


Worldwide Same-Store Company-Operated gross operating profit margins increased
approximately 45 basis points compared to 2011. International gross operating
profit margins for Same-Store Company-Operated properties increased 55 basis
points. North American Same-Store Company-Operated gross operating profit
margins increased approximately 35 basis points, driven by REVPAR increases
and cost controls.

Management fees, franchise fees and other income were $246 million, up $12
million, or 5.1% compared to the fourth quarter of 2011. Management and
franchise revenues increased 11.2% to $238 million. Management fees increased
9.8% to $146 million and franchise fees increased 6.4% to $50 million.

For the full year 2012, Worldwide Systemwide REVPAR for Same-Store Hotels
increased 5.0% in constant dollars (3.2% in actual dollars) compared to the
full year 2011. Worldwide Same-Store Company-Operated gross operating profit
margins increased 90 basis points. Management fees, franchise fees and other
income were $888 million, up $74 million, or 9.1% compared to the full year
2011. Management and franchise revenues increased 11.5% to $861 million.
Management fees increased 11.9% to $509 million and franchise fees increased
7.0% to $200 million.

Development

During the fourth quarter of 2012, the Company signed 40 hotel management and
franchise contracts, representing approximately 8,400 rooms, of which 30 are
new builds and 10 are conversions from other brands. At December 31, 2012, the
Company had approximately 400 hotels in the active pipeline representing
approximately 100,000 rooms.

During the fourth quarter of 2012, 17 new hotels and resorts (representing
approximately 3,900 rooms) entered the system, including St. Regis Mauritius
Resort (Mauritius, 172 rooms), Metropol Palace, A Luxury Collection Hotel
(Serbia, 130 rooms), W Bangkok (Thailand, 234 rooms), Le Meridien Mexico City
(Mexico City, 160 rooms), Sheraton Shanghai Waigaoqiao (Shanghai, 451 rooms),
and Westin Snowmass Resort (Colorado, 254 rooms). During the quarter, 11
properties (representing approximately 2,600 rooms) were removed from the
system.

For the full year 2012, the Company signed 131 hotel management and franchise
contracts (representing approximately 30,500 rooms). For the full year 2012,
69 new hotels and resorts (representing approximately 17,600 rooms) entered
the system and 25 properties (representing approximately 5,500 rooms) left the
system.

Owned, Leased and Consolidated Joint Venture Hotels

Worldwide REVPAR at Starwood Same-Store Owned Hotels increased 1.2% in
constant dollars (0.8% in actual dollars) when compared to 2011. REVPAR at
Starwood Same-Store Owned Hotels in North America increased 0.6% in constant
dollars (1.4% actual dollars). Internationally, Starwood Same-Store Owned
Hotel REVPAR increased 1.7% in constant dollars (0.2% in actual dollars).

Revenues at Starwood Same-Store Owned Hotels Worldwide increased 0.2% in
constant dollars (decreased 0.1% in actual dollars) while costs and expenses
increased 1.7% in constant dollars (1.1% in actual dollars) when compared to
2011. Margins at these hotels decreased approximately 90 basis points.

Revenues at Starwood Same-Store Owned Hotels in North America increased 0.3%
in constant dollars (1.1% in actual dollars) while costs and expenses
increased 1.2% in constant dollars (1.9% in actual dollars) when compared to
2011. Margins at these hotels decreased approximately 60 basis points.

Internationally, revenues at Starwood Same-Store Owned Hotels increased 0.1%
in constant dollars (decreased 1.3% in actual dollars) while costs and
expenses increased 2.3% in constant dollars (0.4% in actual dollars) when
compared to 2011. Margins at these hotels decreased approximately 130 basis
points.

Revenues at owned, leased and consolidated joint venture hotels were $418
million, compared to $439 million in 2011. Expenses at owned, leased and
consolidated joint venture hotels were $334 million compared to $346 million
in 2011. Fourth quarter results were negatively impacted by asset sales since
the fourth quarter of 2011.

For the full year 2012, Worldwide REVPAR at Starwood Same-Store Owned Hotels
increased 2.6% in constant dollars (0.1% in actual dollars) when compared to
the full year 2011. Margins at these hotels increased approximately 40 basis
points.

Vacation Ownership

Total vacation ownership revenues increased 6.6% to $146 million in the fourth
quarter of 2012 when compared to 2011, primarily due to increased revenues
from resort operations. Originated contract sales of vacation ownership
intervals and numbers of contracts signed decreased 2.3% and 0.8%,
respectively, primarily due to lower tour flow and average price partially
offset by a slight increase in closing efficiency. The average price per
vacation ownership unit sold decreased 1.1% to approximately $14,400, driven
by inventory mix.

For the full year 2012, total vacation ownership revenues increased 3.7% to
$587 million when compared to the full year 2011, primarily due to increased
revenues from resort operations. The number of contracts signed decreased 0.9%
and the average price per vacation ownership unit sold decreased 0.9% to
approximately $14,800.

Residential

During the fourth quarter of 2012, the Company’s residential revenues were
$103 million compared to $127 million in 2011. The Company realized
residential revenues from Bal Harbour of $99 million and generated EBITDA of
$32 million, compared to revenues of $121 million and EBITDA of $33 million in
the same period of 2011. During the fourth quarter of 2012, the Company closed
sales of 27 units at Bal Harbour and realized incremental cash proceeds of $96
million associated with these units. From project inception through December
31, 2012, the Company has closed contracts on approximately 73% of the total
residential units available at Bal Harbour, and realized residential revenue
of $810 million and EBITDA of $161 million.

Selling, General, Administrative and Other

During the fourth quarter of 2012, selling, general, administrative and other
expenses increased 5.2% to $101 million compared to $96 million in 2011
primarily due to severance costs, in 2012, of approximately $9.0 million.

The Company has recently completed certain changes to its organization
structures in its Europe, Africa, and Middle East division and its Americas
division. Some of those changes were made in the fourth quarter of 2012 and
the Company recorded approximately $9.0 million in severance costs which is
included in selling, general and administrative costs for the fourth quarter
of 2012. Other changes will take place in the first quarter of 2013 and the
Company expects to record severance costs of approximately $10.0 million in
selling, general and administrative costs in the first quarter of 2013.

For the full year 2012, selling, general, administrative and other expenses
increased 5.1% to $370 million compared to $352 million in the full year 2011,
including severance costs, in 2012, of approximately $11.0 million.

Capital

Gross capital spending during the quarter included approximately $58 million
of maintenance capital and $73 million of development capital.

For the full year 2012, capital spending included $142 million of maintenance
capital and $271 million of development capital.

Asset Sales

During the fourth quarter of 2012, the Company completed the sales of certain
hotels, including the Manhattan at Times Square Hotel and the Poconos Resorts,
for gross cash proceeds of approximately $275 million. These hotels were sold
unencumbered by management and franchise contracts and the Company recorded a
net gain of $141 million in discontinued operations associated with these
sales.

Timeshare Securitization

On October 24, 2012, the Company completed a securitization involving the
issuance of $166 million of fixed rate notes. Starwood is contributing
approximately $174 million in timeshare mortgages resulting in an advance rate
of 95% with an effective note yield of 2.02%. The proceeds from the
transaction were used for general corporate purposes and will pay down the
securitized vacation ownership debt related to its 2005 securitization in
2013.

Dividend

The Company’s Board of Directors increased its annual dividend by 150% to
$1.25 per share. The dividend was paid by the Company on December 28, 2012 to
holders of record on December 14, 2012.

Share Repurchase

In the fourth quarter of 2012, the Company repurchased 3.5 million shares at a
total cost of approximately $180 million and an average price of $52.07 per
share. For the full year 2012, the Company repurchased 6.3 million shares at a
total cost of approximately $320 million and an average price of $50.83 per
share. As of December 31, 2012, approximately $180 million remained available
under the Company’s share repurchase authorization.

Balance Sheet

During the fourth quarter of 2012, the Company completed a public offering of
$350 million of 3.125% Senior Notes due 2023. The proceeds, together with cash
on hand, were used to complete a tender offer to purchase $321 million of its
7.875% Senior Notes due 2014, $156 million of its 7.375% Senior Notes due
2015, $29 million of its 6.75% Senior Notes due 2018, and $40 million of its
7.150% Senior Notes due 2019. Subsequent to the tender, the Company exercised
its call option to redeem the remaining $179 million outstanding 7.875% Senior
Notes due 2014.

At December 31, 2012, the Company had gross debt of $1.275 billion, cash and
cash equivalents of $428 million (including $123 million of restricted cash)
and net debt of $847 million, compared to net debt of $859 million as of
September 30, 2012, in each case, excluding debt and restricted cash
associated with securitized vacation ownership notes receivable. Net debt at
December 31, 2012, including $533 million of debt and $41 million of
restricted cash associated with securitized vacation ownership notes
receivables, was $1.339 billion.

At December 31, 2012, debt was approximately 97% fixed rate and 3% floating
rate and its weighted average maturity was 6.4 years with a weighted average
interest rate of 5.86%, excluding the securitized debt. The Company had cash
(including current restricted cash) and availability under the domestic and
international revolving credit facility of approximately $2.180 billion.

Outlook

We continue to operate in an uncertain world. Macroeconomic indicators are
trending positively as we enter 2013. However, macroeconomic and geopolitical
“tail risks,” though lower, persist. We remain of the view that several
scenarios could play out. Our outlook below reflects our baseline scenario for
the full year 2013:

Including Bal Harbour, which is expected to contribute approximately $50
million of EBITDA, adjusted EBITDA is expected to be approximately $1.165
billion to $1.190 billion (based on the assumptions below).

  *Excluding Bal Harbour, adjusted EBITDA is expected to be approximately
    $1.115 billion to $1.140 billion, assuming:

       *REVPAR increases at Same-Store Company-Operated Hotels Worldwide of
         5% to 7% in constant and actual dollars.
       *REVPAR increases at Same-Store Owned Hotels Worldwide of 3% to 6% in
         constant and actual dollars.
       *Margins at Same-Store Owned Hotels Worldwide increase 50 to 100 basis
         points.
       *Management fees, franchise fees and other income increase
         approximately 9% to 11%.
       *Earnings from the Company’s vacation ownership and residential
         business of approximately $160 million to $165 million.
       *Selling, general and administrative expenses increase approximately
         3% to 5%.

  *Full year owned earnings are negatively impacted by approximately $25
    million due to recent asset sales.
  *Depreciation and amortization is expected to be approximately $300
    million.
  *Interest expense is expected to be approximately $125 million.
  *Full year effective tax rate is expected to be approximately 32%, and cash
    taxes are expected to be approximately $100 million.
  *Including Bal Harbour, EPS before special items is expected to be
    approximately $2.59 to $2.68 (based on the assumptions above).
  *Full year capital expenditures (excluding vacation ownership and
    residential inventory) is expected to be approximately $200 million for
    maintenance, renovation and technology. In addition, in-flight investment
    projects and prior commitments for joint ventures and other investments
    are expected to total approximately $350 million.
  *Vacation ownership (excluding Bal Harbour) is expected to generate
    approximately $150 million in positive cash flow. Bal Harbour is expected
    to generate at least $100 million in net cash flow.

For the three months ended March 31, 2013:

  *Including Bal Harbour, which is expected to contribute approximately $20
    million of EBITDA, adjusted EBITDA is expected to be approximately $250
    million to $260 million (based on the assumptions below).
  *Excluding Bal Harbour, adjusted EBITDA is expected to be approximately
    $230 million to $240 million, assuming:

       *REVPAR increases at Same-Store Company-Operated Hotels Worldwide of
         4% to 6% in constant dollars (approximately 50 basis points lower in
         actual dollars at current exchange rates), impacted by holiday shift.
       *REVPAR increases at Same-Store Company Owned Hotels Worldwide of 3%
         to 5% in constant dollars (approximately 50 basis points lower in
         actual dollars at current exchange rates).
       *Management fees, franchise fees and other income increase
         approximately 7% to 9%.
       *Earnings from the Company’s vacation ownership and residential
         business are flat to up approximately $5 million year over year.

  *Depreciation and amortization is expected to be approximately $73 million.
  *Interest expense is expected to be approximately $32 million.
  *Including Bal Harbour, income from continuing operations is expected to be
    approximately $99 million to $105 million, reflecting an effective tax
    rate of approximately 32% (based on the assumptions above).
  *Including Bal Harbour, EPS is expected to be approximately $0.51 to $0.54
    (based on the assumptions above).

Special Items

The Company’s special items  netted to a charge of $126 million ($72 million
after-tax) in the fourth quarter of 2012 compared to a charge of $98 million
(an $18 million benefit after-tax) in the same period of 2011.

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


Three Months Ended                               Year Ended
                                            
December 31,                                     December 31,
2012       2011                                2012   2011
                                                                  
                          Income from
$ 137       $ 140       continuing             $   513         $   378   
                          operations before
                          special items
$ 0.70      $ 0.71      EPS before special     $   2.61        $   1.93  
                          items
                          Special Items
                          Restructuring and
  1            (68  )     other special              12               (68   )
                          (charges) credits,
                          net^(a)
                          Gain (loss) on
  (14  )       (14  )     asset dispositions         (21   )          —
                          and impairments,
                          net^(b)
                          Loss on early
 (113 )      (16  )     extinguishment of         (128  )         (16   )
                          debt, net^(c)
  (126 )       (98  )     Total special              (137  )          (84   )
                          items – pre-tax
                          Income tax benefit
  48           38         (expense) for              96               108
                          special items^(d)
                          Income tax benefit
 6          78        (expense) – other         (2    )         100   
                          non-recurring
                          items^(e)
 (72  )      18        Total special             (43   )         124   
                          items – after-tax
                                                                  
                          Income from
$ 65        $ 158       continuing             $   470         $   502   
                          operations
$ 0.33      $ 0.80      EPS including          $   2.39        $   2.57  
                          special items


      During the year ended December 31, 2012, the Company recorded a
(a)  favorable adjustment of $11 million to reverse a portion of a litigation
      reserve established in 2011.
      
      During the three months and year ended December 31, 2011, the Company
      recorded restructuring and other special charges of $68 million
      primarily related to an unfavorable legal decision.
      
      During the three months ended December 31, 2012, the net loss primarily
(b)   relates to the impairment of a preferred equity investment. The year
      ended December 31, 2012 also includes a net loss primarily relating to
      the sale of one wholly-owned hotel.
      
      During the three months ended December 31, 2011, the net loss primarily
      relates to impairment charges of $7 million related to six hotels where
      their carrying value exceeded their estimated fair values and impairment
      charges of $9 million associated with fixed assets at two owned hotels
      undergoing a significant renovation, partially offset by insurance
      proceeds as a result of storm damage at another owned hotel.
      Additionally, the year ended December 31, 2011 includes the gain from an
      asset exchange transaction that was partially offset by the impairment
      of a minority investment in a joint venture hotel located in Japan.
      
      During the three months ended December 31, 2012, the net charges
      primarily relates to tender premiums associated with the early
(c)   redemption of $725 million of the Company’s long-term debt. The year
      ended December 31, 2012 also includes a net charge associated with the
      early redemption of approximately $495 million of the Company’s
      long-term debt.
      
      The three months and year ended December 31, 2011 include $16 million of
      charges associated with tender premiums and other costs related to the
      early redemption of approximately $605 million of the Company’s
      long-term debt.
      
      During the three months and year ended December 31, 2012, the benefit
(d)   primarily relates to a tax benefit on the special items at the statutory
      tax rate. The year ended December 31, 2012 also includes a tax benefit
      primarily relating to the sale of two hotels with high tax bases.
      
      During the three months and year ended December 31, 2011, the benefit
      primarily relates to a tax benefit on the special items at the statutory
      tax rate. The year ended December 31, 2011 also includes a tax benefit
      on the sale of two wholly-owned hotels with high tax bases.
      
      During the three months and year ended December 31, 2012, the net
(e)   benefit and expense primarily represents adjustments to deferred income
      taxes.
      
      During the three months and year ended December 31, 2011, the benefit
      primarily relates to the use of capital losses which had previously been
      reserved and certain changes in valuation allowances associated with
      deferred tax assets. The year ended December 31, 2011 also includes a
      tax benefit of $35 million related to the IRS settlement in the third
      quarter of 2011.


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.

Starwood will be conducting a conference call to discuss the fourth quarter
financial results at 10:30 a.m. Eastern Time today, available via webcast on
the Company’s website at
http://www.starwoodhotels.com/corporate/investor_relations.html. A webcast
replay will be available approximately two hours after the conclusion of the
live event. Alternatively, participants may call into (866) 921-0636 with
conference ID 65233963; please dial in fifteen minutes early to ensure a
timely start. A call replay will be available from 1:30 p.m. Eastern Time on
Thursday, February 7 through Thursday, February 14, 2013 and can be accessed
by dialing (855) 859-2056 with conference ID 65233963.

Definitions

All references to EPS, unless otherwise noted, reflect earnings per diluted
share from continuing operations attributable to Starwood’s common
stockholders. All references to continuing operations, discontinued operations
and net income reflect amounts attributable to Starwood’s common stockholders
(i.e., excluding amounts attributable to noncontrolling interests). 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 operating performance. 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 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
restructuring, goodwill impairment and other special charges and gains and
losses on asset dispositions and impairments, is necessary to provide the most
accurate measure of core operating results and as a means to evaluate
comparative results. The Company’s management also uses Adjusted EBITDA as a
measure in determining the value of acquisitions and dispositions and it is
used in the annual budget process. 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 condo hotels, hotels sold to
date and hotels undergoing 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 or natural disasters). References to
Company-Operated Hotel metrics (e.g. REVPAR) reflect metrics for the Company’s
owned, leased and managed hotels. References to Systemwide metrics (e.g.
REVPAR) reflect metrics for the Company’s owned, managed and franchised
hotels. REVPAR is defined as revenue per available room. ADR is defined as
average daily rate.

All references to revenues in constant dollars represent revenues, excluding
the impact of the movement of foreign exchange rates. The Company calculates
revenues in constant dollars by calculating revenues for the current year
using the prior year’s exchange rates. The Company uses this revenue measure
to better understand the underlying results and trends of the business,
excluding the impact of movements in foreign exchange rates.

All references to contract sales or originated sales reflect vacation
ownership sales before revenue adjustments for percentage of completion
accounting methodology. All references to earnings from vacation ownership and
residential represents operating income before depreciation expense. 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 to long-term management contracts and termination fees.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and
leisure companies in the world with 1,134 properties in nearly 100 countries
and 171,000 employees at its owned and managed properties. Starwood is a fully
integrated owner, operator and franchisor of hotels, resorts and residences
with the following internationally renowned brands: St. Regis^®, The Luxury
Collection^®, W^®, Westin^®, Le Méridien^®, Sheraton^®, Four Points^® by
Sheraton, Aloft^®, and Element^SM. The Company boasts one of the industry’s
leading loyalty programs, Starwood Preferred Guest (SPG), allowing members to
earn and redeem points for room stays, room upgrades and flights, with no
blackout dates. Starwood also owns Starwood Vacation Ownership, Inc., a
premier provider of world-class vacation experiences through villa-style
resorts and privileged access to Starwood brands. For more information,
including reconciliations of non-GAAP financial measures to GAAP financial
measures, please visit www.starwoodhotels.com or contact Investor Relations at
(203) 351-3500.

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 impact of war and terrorist activity, natural
disasters, business and financing conditions (including the condition of
credit markets in the U.S. and internationally), foreign exchange
fluctuations, cyclicality of the real estate (including residential) and the
hotel and vacation ownership businesses, operating risks associated with the
hotel, vacation ownership and residential businesses, relationships with
associates and labor unions, 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 the introduction of new brand
concepts and other risks and uncertainties. These risks and uncertainties are
presented in detail in our filings with the Securities and Exchange
Commission. Future vacation ownership units indicated in this press release
include planned units on land owned by the Company or by joint ventures in
which the Company has an interest that have received all major governmental
land use approvals for the development of vacation ownership resorts. There
can also be no assurance that such units will in fact be developed and, if
developed, the time period of such development (which may be more than several
years in the future). Some of the projects may require additional third-party
approvals or permits for development and build out and may also be subject to
legal challenges as well as a commitment of capital by the Company. The actual
number of units to be constructed may be significantly lower than the number
of future units indicated. There can also be no assurance that agreements will
be entered into for the hotels in the Company’s pipeline and, if entered into,
the timing of any agreement and the opening of the related hotel. Although we
believe the expectations reflected in 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.


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Unaudited Consolidated Statements of Income

(In millions, except per share data)

Three Months Ended                                              Year Ended
                                                         
December 31,                                                    December 31,
                            %                                                               %
2012        2011                                            2012        2011       
                            Variance                                                        Variance
                                           Revenues
                                           Owned, leased
                                           and
$ 418         $ 439         (4.8   )       consolidated         $ 1,698       $ 1,768       (4.0   )
                                           joint venture
                                           hotels
                                           Vacation
                                           ownership and
  249           264         (5.7   )       residential            1,287         703         83.1
                                           sales and
                                           services
                                           Management
                                           fees,
  246           234         5.1            franchise fees         888           814         9.1
                                           and other
                                           income
                                           Other revenues
 620         594        4.4           from managed          2,448       2,339      4.7    
                                           and franchised
                                           properties^(a)
  1,533         1,531       0.1                                   6,321         5,624       12.4
                                           Costs and
                                           Expenses
                                           Owned, leased
                                           and
  334           346         3.5            consolidated           1,391         1,449       4.0
                                           joint venture
                                           hotels
                                           Vacation
  171           191         10.5           ownership and          961           521         (84.5  )
                                           residential
                                           Selling,
  101           96          (5.2   )       general,               370           352         (5.1   )
                                           administrative
                                           and other
                                           Restructuring
                                           and other
  (1    )       68          n/m            special                (12   )       68          n/m
                                           charges
                                           (credits), net
  58            58          —              Depreciation           226           235         3.8
  7             7           —              Amortization           25            30          16.7
                                           Other expenses
 620         594        (4.4   )       from managed          2,448       2,339      (4.7   )
                                           and franchised
                                           properties^(a)
  1,290         1,360       5.1                                   5,409         4,994       (8.3   )
  243           171         42.1           Operating              912           630         44.8
                                           income
                                           Equity
                                           (losses)
                                           earnings and
  6             5           20.0           gains and              25            11          n/m
                                           (losses) from
                                           unconsolidated
                                           ventures, net
                                           Interest
                                           expense, net
  (36   )       (49   )     26.5           of interest            (170  )       (200  )     15.0
                                           income of $1,
                                           $1, $2 and $3
                                           Loss on early
  (113  )       (16   )     n/m            extinguishment         (128  )       (16   )     n/m
                                           of debt
                                           Gain  (loss)
                                           on asset
 (14   )      (14   )     —             dispositions          (21   )      —          n/m    
                                           and
                                           impairments,
                                           net
                                           Income from
                                           continuing
                                           operations
  86            97          (11.3  )       before taxes           618           425         45.4
                                           and
                                           noncontrolling
                                           interests
                                           Income tax
 (21   )      61         n/m           benefit               (148  )      75         n/m    
                                           (expense)
                                           Income (loss)
  65            158         (58.9  )       from                   470           500         (6.0   )
                                           continuing
                                           operations
                                           Discontinued
                                           Operations:
                                           Gain (loss) on
 77          9          n/m           dispositions,         92          (13   )     n/m    
                                           net of tax
  142           167         (15.0  )       Net income             562           487         15.4
                                           (loss)
                                           Net loss
                                           (income)
 —           —          —             attributable          —           2          (100.0 )
                                           to
                                           noncontrolling
                                           interests
                                           Net income
$ 142        $ 167        (15.0  )       (loss)               $ 562        $ 489        14.9   
                                           attributable
                                           to Starwood
                                           Earnings
                                           (Losses) Per
                                           Share – Basic
$ 0.34        $ 0.82        (58.5  )       Continuing           $ 2.44        $ 2.65        (7.9   )
                                           operations
 0.40        0.05       n/m           Discontinued          0.48        (0.07 )     n/m    
                                           operations
$ 0.74       $ 0.87       (14.9  )       Net income           $ 2.92       $ 2.58       13.2   
                                           (loss)
                                           Earnings
                                           (Losses) Per
                                           Share –
                                           Diluted
$ 0.33        $ 0.80        (58.8  )       Continuing           $ 2.39        $ 2.57        (7.0   )
                                           operations
 0.39        0.05       n/m           Discontinued          0.47        (0.06 )     n/m    
                                           operations
$ 0.72       $ 0.85       (15.3  )       Net income           $ 2.86       $ 2.51       13.9   
                                           (loss)
                                           Amounts
                                           attributable
                                           to Starwood’s
                                           Common
                                           Stockholders
$ 65          $ 158         (58.9  )       Continuing           $ 470         $ 502         (6.4   )
                                           operations
 77          9          n/m           Discontinued          92          (13   )     n/m    
                                           operations
$ 142        $ 167        (15.0  )       Net income           $ 562        $ 489        14.9   
                                           (loss)
                                                                                            
                                           Weighted
 191         190                       average number        193         189   
                                           of shares
                                           Weighted
                                           average number
 194         196                       of shares             197         195   
                                           assuming
                                           dilution


      The Company includes in revenues the reimbursement of costs incurred on
      behalf of managed hotel property owners and franchisees with no added
(a)  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.
      
n/m= not meaningful



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Consolidated Balance Sheets

(In millions, except share data)
                                           December 31,    December 31,
                                               2012               2011
                                               (unaudited)
Assets
Current assets:
Cash and cash equivalents                      $  305             $  454
Restricted cash                                   158                232
Accounts receivable, net of allowance             586                569
for doubtful accounts of $59 and $46
Inventories                                       361                812
Securitized vacation ownership notes
receivable, net of allowance for
doubtful                                          65                 64

accounts of $9 and $10
Deferred income tax                               320                278
Prepaid expenses and other                       124              125    
Total current assets                              1,919              2,534
Investments                                       260                259
Plant, property and equipment, net                3,162              3,232
Assets held for sale, net                         36                 42
Goodwill and intangible assets, net               2,025              2,053
Deferred tax assets                               636                639
Other assets^(a)                                  385                355
Securitized vacation ownership notes             438              446    
receivable
Total assets                                   $  8,861          $  9,560  
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current              $  2               $  3
maturities of long-term debt^(b)
Accounts payable                                  121                144
Current maturities of long-term                   150                130
securitized vacation ownership debt
Accrued expenses                                  1,074              1,177
Accrued salaries, wages and benefits              395                375
Accrued taxes and other                          287              163    
Total current liabilities                         2,029              1,992
Long-term debt^(b)                                1,273              2,194
Long-term securitized vacation                    383                402
ownership debt
Deferred income taxes                             78                 46
Other liabilities                                1,956            1,971  
Total liabilities                                5,719            6,605  
Commitments and contingencies
Stockholders’ equity:
Common stock; $0.01 par value;
authorized 1,000,000,000 shares;
outstanding
193,121,094 and 195,913,400 shares at
December 31, 2012 and December
31, 2011, respectively                            2                  2
Additional paid-in capital                        816                963
Accumulated other comprehensive loss              (338   )           (348   )
Retained earnings                                2,657            2,337  
Total Starwood stockholders’ equity               3,137              2,954
Noncontrolling interest                          5                1      
Total stockholders’ equity                       3,142            2,955  
Total liabilities and stockholders’            $  8,861          $  9,560  
equity


(a)  Includes restricted cash of $6 million and $2 million at December 31,
      2012 and December 31, 2011, respectively.
      
      Excludes Starwood’s share of unconsolidated joint venture debt
(b)   aggregating approximately $389 million and $432 million at

      December 31, 2012 and December 31, 2011, respectively.



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Historical Data

(In millions)
Three Months Ended                                                  Year Ended
                                                             
December 31,                                                        December 31,
                              %                                                                 %
2012   2011                                         2012        2011       
                              Variance                                                          Variance
                                                                                                
                                             Reconciliation
                                             of Net Income
                                             (Loss) to EBITDA
                                             and Adjusted
                                             EBITDA
$  142         $  167         (15.0  )       Net income             $ 562         $ 489         14.9
                                             (loss)
   40             53          (24.5  )       Interest                 182           223         (18.4  )
                                             expense^(a)
                                             Loss on early
   113            16          n/m            extinguishment           128           16          n/m
                                             of debt, net
                                             Income tax
   92             (70  )      n/m            (benefit)                234           (81   )     n/m
                                             expense^(b)
   66             65          1.5            Depreciation^(c)         256           265         (3.4   )
  8            8          —             Amortization^(d)        28          34         (17.6  )
   461            239         92.9           EBITDA                   1,390         946         46.9
                                             (Gain) loss on
   14             14          —              asset                    21            —           n/m
                                             dispositions and
                                             impairments, net
                                             Discontinued
   (149  )        —           n/m            operations               (179  )       18          n/m
                                             (gain) loss on
                                             dispositions^(e)
                                             Restructuring
  (1    )       68         n/m           and other               (12   )      68         n/m    
                                             special charges
                                             (credits), net
$  325        $  321        1.2           Adjusted EBITDA        $ 1,220      $ 1,032      18.2   


      Includes $3 million of Starwood’s share of interest expense of
(a)  unconsolidated joint ventures for the three months ended December 31,
      2012 and 2011, and $10 million and $20 million for the year ended
      December 31, 2012 and 2011, respectively.
      Includes $72 million and $(9) million of tax expense (benefit) recorded
(b)   in discontinued operations for the three months ended December 31, 2012
      and 2011, respectively, and $87 million and $(5) million for the year
      ended December 31, 2012 and 2011, respectively.
      Includes $8 million and $7 million of Starwood’s share of depreciation
(c)   expense of unconsolidated joint ventures for each of the three months
      ended December 31, 2012 and 2011, respectively, and $30 million for the
      year ended December 31, 2012 and 2011.
      Includes $1 million of Starwood’s share of amortization expense of
(d)   unconsolidated joint ventures for the three months ended December 31,
      2012 and 2011, and $3 million and $4 million for the year ended December
      31, 2012 and 2011, respectively.
(e)   Excludes the amount of income tax expense (benefit) included within (b)
      above.



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels Worldwide

(In millions)
                                                     Three Months Ended
                                              
                                                     December 31, 2012
                                                     $Change     % Variance
Revenue
Revenue increase/(decrease) (GAAP)                   $ (0.5 )       (0.1   %)
Impact of changes in foreign exchange                 1.1         0.3    %
rates
Revenue increase/(decrease) in constant              $ 0.6         0.2    %
dollars
                                                                    
Expense
Expense increase/(decrease) (GAAP)                   $ 3.0          1.1    %
Impact of changes in foreign exchange                 1.5         0.6    %
rates
Expense increase/(decrease) in constant              $ 4.5         1.7    %
dollars
                                                                           
                                                                    
Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels North
America

(In millions)
                                                     Three Months Ended

                                                     December 31, 2012
                                                     $Change        % Variance
Revenue
Revenue increase/(decrease) (GAAP)                   $ 1.9          1.1    %
Impact of changes in foreign exchange                 (1.4 )       (0.8   %)
rates
Revenue increase/(decrease) in constant              $ 0.5         0.3    %
dollars
                                                                    
Expense
Expense increase/(decrease) (GAAP)                   $ 2.5          1.9    %
Impact of changes in foreign exchange                 (1.0 )       (0.7   %)
rates
Expense increase/(decrease) in constant              $ 1.5         1.2    %
dollars
                                                                           

Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels
International

(In millions)
                                                     Three Months Ended

                                                     December 31, 2012
                                                     $Change        % Variance
Revenue
Revenue increase/(decrease) (GAAP)                   $ (2.4 )       (1.3   %)
Impact of changes in foreign exchange                 2.5         1.4    %
rates
Revenue increase/(decrease) in constant              $ 0.1         0.1    %
dollars
                                                                    
Expense
Expense increase/(decrease) (GAAP)                   $ 0.5          0.4    %
Impact of changes in foreign exchange                 2.5         1.9    %
rates
Expense increase/(decrease) in constant              $ 3.0         2.3    %
dollars



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliation – Earnings from Vacation Ownership and Residential Business

(In millions)

                     Three Months Ended                     Year Ended
                                                     
                     December 31,                           December 31,
                                               $                                      $
                     2012   2011                2012   2011  
                                               Variance                               Variance
                                                                                      
Earnings
from
vacation             $  78        $  73        $  5         $  326       $  182       $   144
ownership
and
residential
Depreciation           (5  )       (5  )       —          (20 )       (22 )        2
expense
Operating
income from
vacation             $  73       $  68       $  5        $  306      $  160      $   146
ownership
and
residential


Non-GAAP to GAAP Reconciliation – Earnings from Bal Harbour

(In millions)

                     Three Months Ended                     Year Ended

                     December 31,                           December 31,
                                               $                                      $
                     2012     2011                  2012     2011
                                               Variance                               Variance
                                                                                      
Earnings
from Bal             $  32        $  33        $  (1  )     $  157       $  27        $   130
Harbour
Depreciation           —          —          —          —          —           —
expense
Operating
income from          $  32       $  33       $  (1  )     $  157      $  27       $   130
Bal Harbour



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Future Performance

(In millions, except per share data)

Low Case

Three Months Ended                                         Year Ended
                                                    
March 31, 2013                                             December 31, 2013
$       99               Net income                        $      503
        32               Interest expense                         125
        46               Income tax expense                       237
       73               Depreciation and                        300
                         amortization
        250              EBITDA                                   1,165
                         (Gain) loss on asset
        -                dispositions and                         -
                         impairments, net
       -                Discontinued operations                 -
                         (gain) loss on dispositions
$       250              Adjusted EBITDA                   $      1,165
                                                                             
Three Months Ended                                         Year Ended

March 31, 2013                                             December 31, 2013
                         Income from continuing
$       99               operations before special         $      503
                         items
$       0.51             EPS before special items          $      2.59
                         Special Items
                         Gain (loss) on asset
       -                dispositions and                        -
                         impairments, net
        -                Total special items –                    -
                         pre-tax
                         Income tax benefit
       -                associated with special                 -
                         items
       -                Total special items –                   -
                         after-tax
$       99               Income from continuing            $      503
                         operations
$       0.51             EPS including special items       $      2.59

High Case

Three Months Ended                                         Year Ended

March 31, 2013                                             December 31, 2013
$       105              Net income                        $      520
        32               Interest expense                         125
        50               Income tax expense                       245
       73               Depreciation and                        300
                         amortization
        260              EBITDA                                   1,190
                         (Gain) loss on asset
        -                dispositions and                         -
                         impairments, net
       -                Discontinued operations                 -
                         (gain) loss on dispositions
$       260              Adjusted EBITDA                   $      1,190
                                                                             
Three Months Ended                                         Year Ended

March 31, 2013                                             December 31, 2013
                         Income from continuing
$       105              operations before special         $      520
                         items
$       0.54             EPS before special items          $      2.68
                         Special Items
                         Gain (loss) on asset
       -                dispositions and                        -
                         impairments, net
        -                Total special items –                    -
                         pre-tax
                         Income tax benefit
       -                associated with special                 -
                         items
       -                Total special items –                   -
                         after-tax
$       105              Income from continuing            $      520
                         operations
$       0.54             EPS including special items       $      2.68



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations –

Future Earnings from Vacation Ownership and Residential Business

Excluding Bal Harbour

(In millions)


Low Case

                                                 Three Months Ended
                                           
                                                 March 31,
                                                                      $
                                                 2013    2012     
                                                                      Variance
                                                                      
Earnings from vacation ownership and             $ 43     $ 43        $  —
residential
Depreciation expense                              (5 )   (5    )       —  
Operating income from vacation                   $ 38    $ 38       $  —  
ownership and residential
                                                             
                                                             Year Ended

                                                             December 31, 2013
                                                             
Earnings from vacation ownership and residential             $ 160
Depreciation expense                                         (21            )
Operating income from vacation ownership and residential     $ 139          

High Case

                                                 Three Months Ended

                                                 March 31,
                                                                      $
                                                 2013     2012
                                                                      Variance
                                                                      
Earnings from vacation ownership and             $ 48     $ 43        $  5
residential
Depreciation expense                              (5 )   (5    )       —  
Operating income from vacation                   $ 43    $ 38       $  5  
ownership and residential
                                                             
                                                             Year Ended

                                                             December 31, 2013
                                                             
Earnings from vacation ownership and residential             $ 165
Depreciation expense                                         (21            )
Operating income from vacation ownership and residential     $ 144          



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations –

Future Earnings from Bal Harbour

(In millions)

                                              Three Months Ended
                                       
                                              March 31, 2013
                                              
Earnings from Bal Harbour                     $        20
Depreciation expense                                  —
Operating income from Bal Harbour             $        20


                                              Year Ended

                                              December 31, 2013
                                              
Earnings from Bal Harbour                     $        50
Depreciation expense                                  —
Operating income from Bal Harbour             $        50



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses

(In millions)

Three Months Ended                                           Year Ended
                                                      
December 31,                                                 December 31,
                          %              Same-Store                                    %
2012   2011                  Owned Hotels        2012   2011  
                          Variance                                                     Variance
                                         Worldwide
                                                                                       
                                         Revenue
                                         Same-Store
$   341      $   342      (0.3   )       Owned               $  1,252     $  1,255     (0.2   )
                                         Hotels^(a)
                                         Hotels Sold
    —            43       (100.0 )       or Closed in           114          223       (48.9  )
                                         2012 and 2011
                                         Hotels
    70           47       48.9           Without                305          262       16.4
                                         Comparable
                                         Results
                                         Other
   7           7        —             ancillary             27          28        (3.6   )
                                         hotel
                                         operations
                                         Total Owned,
                                         Leased and
$   418      $   439      (4.8   )       Consolidated        $  1,698     $  1,768     (4.0   )
                                         Joint Venture
                                         Hotels
                                         Revenue
                                                                                       
                                         Costs and
                                         Expenses
                                         Same-Store
$   265      $   262      (1.1   )       Owned               $  993       $  1,001     0.8
                                         Hotels^(a)
                                         Hotels Sold
    1            32       96.9           or Closed in           93           186       50.0
                                         2012 and 2011
                                         Hotels
    61           46       (32.6  )       Without                280          236       (18.6  )
                                         Comparable
                                         Results
                                         Other
   7           6        (16.7  )       ancillary             25          26        3.8    
                                         hotel
                                         operations
                                         Total Owned,
                                         Leased and
$   334      $   346      3.5           Consolidated        $  1,391     $  1,449     4.0    
                                         Joint Venture
                                         Hotels Costs
                                         and Expenses
                                                                                       
Three Months Ended                                           Year Ended

December 31,                                                 December 31,
                          %              Same-Store                                    %
2012     2011                    Owned Hotels        2012     2011
                          Variance                                                     Variance
                                         North America
                                                                                       
                                         Revenue
                                         Same-Store
$   167      $   165      1.2            Owned               $  612       $  610       0.3
                                         Hotels^(a)
                                         Hotels Sold
    —            43       (100.0 )       or Closed in           114          209       (45.5  )
                                         2012 and 2011
                                         Hotels
    61           43       41.9           Without                229          181       26.5
                                         Comparable
                                         Results
                                         Other
   —           —        —             ancillary             1           1         —      
                                         hotel
                                         operations
                                         Total Owned,
                                         Leased and
$   228      $   251      (9.2   )       Consolidated        $  956       $  1,001     (4.5   )
                                         Joint Venture
                                         Hotels
                                         Revenue
                                                                                       
                                         Costs and
                                         Expenses
                                         Same-Store
$   131      $   129      (1.6   )       Owned               $  509       $  507       (0.4   )
                                         Hotels^(a)
                                         Hotels Sold
    1            32       96.9           or Closed in           93           172       45.9
                                         2012 and 2011
                                         Hotels
    53           40       (32.5  )       Without                208          161       (29.2  )
                                         Comparable
                                         Results
                                         Other
   1           —        n/m           ancillary             1           1         —      
                                         hotel
                                         operations
                                         Total Owned,
                                         Leased and
$   186      $   201      7.5           Consolidated        $  811       $  841       3.6    
                                         Joint Venture
                                         Hotels Costs
                                         and Expenses
                                                                                       
Three Months Ended                                           Year Ended

December 31,                                                 December 31,
                          %              Same-Store                                    %
2012     2011                    Owned Hotels        2012     2011
                          Variance                                                     Variance
                                         International
                                                                                       
                                         Revenue
                                         Same-Store
$   174      $   177      (1.7   )       Owned               $  640       $  645       (0.8   )
                                         Hotels^(a)
                                         Hotels Sold
    —            —        —              or Closed in           —            14        (100.0 )
                                         2012 and 2011
                                         Hotels
    9            4        n/m            Without                76           81        (6.2   )
                                         Comparable
                                         Results
                                         Other
   7           7        —             ancillary             26          27        (3.7   )
                                         hotel
                                         operations
                                         Total Owned,
                                         Leased and
$   190      $   188      1.1           Consolidated        $  742       $  767       (3.3   )
                                         Joint Venture
                                         Hotels
                                         Revenue
                                                                                       
                                         Costs and
                                         Expenses
                                         Same-Store
$   134      $   133      (0.8   )       Owned               $  484       $  494       2.0
                                         Hotels^(a)
                                         Hotels Sold
    —            —        —              or Closed in           —            14        100.0
                                         2012 and 2011
                                         Hotels
    8            6        (33.3  )       Without                72           75        4.0
                                         Comparable
                                         Results
                                         Other
   6           6        —             ancillary             24          25        4.0    
                                         hotel
                                         operations
                                         Total Owned,
                                         Leased and
$   148      $   145      (2.1   )       Consolidated        $  580       $  608       4.6    
                                         Joint Venture
                                         Hotels Costs
                                         and Expenses


      Same-Store Owned Hotel results exclude four hotels sold and 12 hotels
(a)  without comparable results for the three months ended and 11 hotels sold
      and 14 hotels without comparable results for the year ended.
      
n/m= not meaningful



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Systemwide^(1) Statistics - Same Store
For the Three Months Ended December 31,
UNAUDITED
                                                                                                             
                                  Systemwide - Worldwide                       Systemwide - North America               Systemwide - International
                                  2012       2011       Variance       2012         2011         Variance       2012         2011         Variance
                                                                                                                                                  
TOTAL HOTELS
              REVPAR              115.92         111.84         3.6%           112.89       107.06       5.4%           119.90       118.11       1.5%
              ($)
              ADR ($)             174.11         171.34         1.6%           166.48       161.14       3.3%           184.51       185.26       (0.4%)
              Occupancy           66.6%          65.3%          1.3            67.8%        66.4%        1.4            65.0%        63.8%        1.2
              (%)
                                                                                                                                                  
                                                                                                                                                  
SHERATON
              REVPAR              97.86          94.41          3.7%           94.55        88.35        7.0%           102.17       102.27       (0.1%)
              ($)
              ADR ($)             150.53         148.14         1.6%           142.85       137.00       4.3%           160.94       163.01       (1.3%)
              Occupancy           65.0%          63.7%          1.3            66.2%        64.5%        1.7            63.5%        62.7%        0.8
              (%)
                                                                                                                                                  
                                                                                                                                                  
WESTIN
              REVPAR              127.76         123.03         3.8%           120.95       115.69       4.5%           143.49       139.98       2.5%
              ($)
              ADR ($)             185.55         181.42         2.3%           176.21       170.40       3.4%           206.88       206.96       (0.0%)
              Occupancy           68.9%          67.8%          1.1            68.6%        67.9%        0.7            69.4%        67.6%        1.8
              (%)
                                                                                                                                                  
                                                                                                                                                  
ST. REGIS/LUXURY
COLLECTION
              REVPAR              189.87         186.77         1.7%           233.89       230.01       1.7%           166.79       163.96       1.7%
              ($)
              ADR ($)             299.94         300.41         (0.2%)         341.85       334.22       2.3%           275.14       279.49       (1.6%)
              Occupancy           63.3%          62.2%          1.1            68.4%        68.8%        (0.4)          60.6%        58.7%        1.9
              (%)
                                                                                                                                                  
                                                                                                                                                  
LE MERIDIEN
              REVPAR              131.98         130.30         1.3%           209.31       210.56       (0.6%)         122.63       120.60       1.7%
              ($)
              ADR ($)             195.32         194.37         0.5%           269.20       264.92       1.6%           184.85       184.03       0.4%
              Occupancy           67.6%          67.0%          0.6            77.8%        79.5%        (1.7)          66.3%        65.5%        0.8
              (%)
                                                                                                                                                  
                                                                                                                                                  
W
              REVPAR              224.24         215.19         4.2%           213.11       206.01       3.4%           253.14       238.95       5.9%
              ($)
              ADR ($)             299.64         289.73         3.4%           283.90       274.34       3.5%           340.97       331.18       3.0%
              Occupancy           74.8%          74.3%          0.5            75.1%        75.1%        -              74.2%        72.2%        2.0
              (%)
                                                                                                                                                  
                                                                                                                                                  
FOUR POINTS
              REVPAR              77.66          73.30          5.9%           73.68        69.01        6.8%           83.86        79.99        4.8%
              ($)
              ADR ($)             117.43         115.25         1.9%           110.69       107.71       2.8%           128.08       127.25       0.7%
              Occupancy           66.1%          63.6%          2.5            66.6%        64.1%        2.5            65.5%        62.9%        2.6
              (%)
                                                                                                                                                  
                                                                                                                                                  
ALOFT
              REVPAR              71.44          65.54          9.0%           76.50        69.00        10.9%
              ($)
              ADR ($)             108.77         104.71         3.9%           112.79       106.89       5.5%
              Occupancy           65.7%          62.6%          3.1            67.8%        64.6%        3.2
              (%)
                                                                                                                                                  


(1)  Includes same store owned, leased, managed, and franchised hotels
      


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Three Months Ended December 31,
UNAUDITED
                                                                               
                                              Systemwide ^(1)                          Company Operated ^(2)
                                              2012         2011         Variance       2012         2011         Variance
                                                                                                                 
TOTAL WORLDWIDE
                      REVPAR                  115.92       111.84       3.6%           132.93       128.97       3.1%
                      ($)
                      ADR ($)                 174.11       171.34       1.6%           196.84       194.21       1.4%
                      Occupancy               66.6%        65.3%        1.3            67.5%        66.4%        1.1
                      (%)
                                                                                                                 
                                                                                                                 
NORTH AMERICA
                      REVPAR                  112.89       107.06       5.4%           145.17       138.80       4.6%
                      ($)
                      ADR ($)                 166.48       161.14       3.3%           206.88       199.78       3.6%
                      Occupancy               67.8%        66.4%        1.4            70.2%        69.5%        0.7
                      (%)
                                                                                                                 
                                                                                                                 
EUROPE
                      REVPAR                  126.28       129.43       (2.4%)         137.86       141.02       (2.2%)
                      ($)
                      ADR ($)                 201.34       205.08       (1.8%)         212.52       217.58       (2.3%)
                      Occupancy               62.7%        63.1%        (0.4)          64.9%        64.8%        0.1
                      (%)
                                                                                                                 
                                                                                                                 
AFRICA & MIDDLE EAST
                      REVPAR                  136.69       136.73       (0.0%)         137.21       137.70       (0.4%)
                      ($)
                      ADR ($)                 209.87       209.82       0.0%           211.36       211.68       (0.2%)
                      Occupancy               65.1%        65.2%        (0.1)          64.9%        65.0%        (0.1)
                      (%)
                                                                                                                 
                                                                                                                 
ASIA PACIFIC
                      REVPAR                  114.77       110.48       3.9%           114.31       108.79       5.1%
                      ($)
                      ADR ($)                 171.42       170.84       0.3%           170.57       169.63       0.6%
                      Occupancy               67.0%        64.7%        2.3            67.0%        64.1%        2.9
                      (%)
                                                                                                                 
                                                                                                                 
LATIN AMERICA
                      REVPAR                  103.77       98.12        5.8%           112.36       106.39       5.6%
                      ($)
                      ADR ($)                 168.90       165.89       1.8%           180.11       172.86       4.2%
                      Occupancy               61.4%        59.1%        2.3            62.4%        61.5%        0.9
                      (%)
                                                                                                                 


(1)  Includes same store owned, leased, managed, and franchised hotels
(2)   Includes same store owned, leased, and managed hotels
      


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned/Leased Hotel Results - Same Store ^(1)
For the Three Months Ended December 31,
UNAUDITED
                                                                                                    
                                                                                                                              
                        WORLDWIDE                              NORTH AMERICA                          INTERNATIONAL
                        2012        2011        Variance       2012        2011        Variance       2012        2011        Variance
                                                                                                                              
TOTAL HOTELS                       41                                   16                                   25          
                                    Hotels                                 Hotels                                 Hotels
        REVPAR          165.58      164.25      0.8%           177.04      174.56      1.4%           156.03      155.66      0.2%
        ($)
        ADR ($)         233.94      231.35      1.1%           239.57      235.33      1.8%           228.86      227.76      0.5%
        Occupancy       70.8%       71.0%       (0.2)          73.9%       74.2%       (0.3)          68.2%       68.3%       (0.1)
        (%)
                                                                                                                              
        Total           341,409     341,888     (0.1%)         166,565     164,691     1.1%           174,844     177,197     (1.3%)
        Revenue
        Total           265,414     262,406     (1.1%)         131,776     129,283     (1.9%)         133,638     133,123     (0.4%)
        Expenses


(1)  Hotel Results exclude four hotels sold and 12 hotels without comparable
      results during 2011 & 2012
      
Note: Revenues and Expenses above are represented in thousands of dollars.



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended December 31,
UNAUDITED ($ millions)


                 Worldwide
                    2012   2011   $ Variance   %
                                                                     Variance
                                                                     
Management
Fees:
Base Fees           87               82               5              6.1%
Incentive           59               51               8              15.7%
Fees
Total
Management          146              133              13             9.8%
Fees

Franchise           50               47               3              6.4%
Fees
                                                                     
Total
Management &        196              180              16             8.9%
Franchise
Fees
                                                                     
Other
Management &        42               34               8              23.5%
Franchise
Revenues ^(1)
                                                                     
Total
Management &        238              214              24             11.2%
Franchise
Revenues
                                                                     
Other               8                20               (12*Story
                                                      too large*

[TRUNCATED]