Starwood Announces Record Fourth Quarter and Full Year 2000 Results

Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) (“Starwood” or the “Company”) today reported record results for the fourth quarter and full year 2000.

Fourth Quarter and Full Year Financial Highlights:


* Fourth quarter diluted EPS from continuing operations increased 25%
      to $0.64 when compared to pro forma comparable diluted EPS of $0.51
      for the same period of 1999.  Full year diluted EPS from continuing
      operations increased 27% to $1.96 when compared to pro forma
      comparable diluted EPS of $1.54 for the same period of 1999.

* Total EBITDA for the fourth quarter increased 10% to $432 million
      and operating income increased 11% to $290 million.  For the full
      year, total EBITDA increased 16% to $1.573 billion from
      $1.359 billion in 1999.

* Fourth quarter REVPAR for Same-Store Owned Hotels in North America
      increased 8.6%.  Full year REVPAR for Same-Store Owned Hotels in
      North America increased 11.0%.  Fourth quarter REVPAR for Same-Store
      Owned Hotels in Europe increased 13.2% excluding the unfavorable
      effect of foreign currency translation.

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* Fourth quarter EBITDA at Comparable Owned Hotels in North America
      increased 16.8% and EBITDA margins increased 320 basis points to
      34.6%.  Full year EBITDA at Comparable Owned Hotels in North America
      increased 16.5% and EBITDA margins increased 170 basis points to
      33.1%.

Comments from the CEO:
“2000 was a wonderful year for our company, in large measure the result of numerous initiatives we began several years ago,” said Barry Sternlicht, Chairman and CEO. “Earnings growth accelerated from a healthy 23% in 1999 to 27% this year, leading the sector, and significantly exceeding beginning of the year Street estimates. Equally impressive is the industry leading 11.0% increase in same store REVPAR achieved in 2000 in North America.”


“Moving forward, our core strategy remains quite simple; increase shareholder value by growing EPS at least 15% and EBITDA by 8-10% per year. In 2001, we will focus on increasing our revenues by harvesting our growth investment spending of 2000, continued implementation of our new yield management system, building upon the success of our innovations like W Hotels and Westin`s Heavenly Bed, increasing the effectiveness of the #1 rated loyalty program, Starwood Preferred Guest, as well as the ongoing renovations/repositionings of our major brands and the conversions of independent properties to the W brand. The conversion of one well-located but under-performing asset to a W hotel generates far more bottom line growth for our shareholders than 50 new franchise agreements. At the same time, we will continue to improve customer service while reducing costs through the launch of Six Sigma and such initiatives as our energy management venture with Enron. We will also deploy our substantial free cash flow to high yielding growth investments in the hotel and vacation ownership areas, new management/franchise agreements, strategic acquisitions, innovative technologies that enhance productivity and we will recycle existing invested capital by continuing to sell non-strategic assets, redeploying proceeds into higher yielding ventures, stock repurchase, or debt reduction.”


Concluding, Mr. Sternlicht said, “This year, we met our objective of achieving investment grade and were delighted to learn of our inclusion in the S&P 500 during the fourth quarter. We are encouraged by the extreme tightness of the lending environment, declining industry supply trends, the recent strength in the Euro and by our financing strategy that will allow us to take advantage of the current lower interest rate environment. We are encouraged by January`s results and remain cautiously optimistic for the year, as we`ve long recognized the economy could ultimately slow demand. Given the strength of our balance sheet, with careful expense management in our owned hotels, modulating capital expenditures as necessary, and harvesting the growth investments of the year 2000, we remain confident that we can grow at a faster rate than our competitive set for years to come, even in a softening economic environment.”


Fourth Quarter Ended December 31, 2000:


For the fourth quarter of 2000, total revenues increased to $1.105 billion when compared to $1.079 billion in the same period in 1999. Excluding the impact of foreign exchange fluctuations and sold hotels, revenues increased 6% in the fourth quarter of 2000 when compared to the same period in 1999. Earnings per diluted share from continuing operations were $0.64 compared to pro forma comparable earnings per diluted share from continuing operations of $0.51 in the corresponding period in 1999. Income from continuing operations increased 26% to $131 million in the fourth quarter of 2000 compared to pro forma comparable income from continuing operations of $104 million in the same period of 1999. (See the attached unaudited consolidated statements of operations for the three months ended December 31, 2000 and 1999, and the notes thereto, for the basis of the 1999 pro forma comparable results.)


Year Ended December 31, 2000:
For the year ended December 31, 2000, total revenues increased 13% to $4.345 billion when compared to $3.829 billion in the same period in 1999. Excluding the impact of foreign exchange fluctuations and sold hotels, revenues increased 17% in the year ended December 31, 2000 when compared to 1999. Earnings per diluted share from continuing operations were $1.96 compared to pro forma comparable earnings per diluted share from continuing operations of $1.54 in the corresponding period in 1999. Income from continuing operations was $401 million for the year ended December 31, 2000 compared to pro forma comparable income from continuing operations of $303 million for the same period of 1999. (See the attached unaudited consolidated statements of operations for the year ended December 31, 2000 and 1999, and the notes thereto, for the basis of the 1999 pro forma comparable results.)


On a cash EPS basis, 2000 earnings per diluted share were $4.46.
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