Starwood Announces Record First Quarter 2001 Results

Apr 24, 2001, 01:00 ET from Starwood Hotels & Resorts Worldwide, Inc.

    WHITE PLAINS, N.Y., April 24 /PRNewswire Interactive News Release/ --
 Starwood Hotels & Resorts Worldwide, Inc. (NYSE:   HOT) ("Starwood" or the
 "Company") today reported record results for the first quarter of 2001.
 
     First Quarter Financial Highlights
 
     * First quarter diluted EPS from continuing operations increased 15% to
       $0.30 when compared to diluted EPS of $0.26 for the same period of 2000.
 
     * Total EBITDA increased 6% to $335 million and operating income increased
       4% to $193 million.
 
     * REVPAR for Same-Store Owned Hotels in North America increased 4.3%.
       REVPAR for Same-Store Owned Hotels in Europe increased 10.9% excluding
       the unfavorable effect of foreign currency translation.
 
     * EBITDA at Comparable Owned Hotels in North America increased 8.7% and
       EBITDA margins increased 180 basis points to 32.5%.  EBITDA at
       Comparable Owned Hotels in Europe increased 24.0%.
 
     Comments from the CEO
 
     "We are pleased with our first quarter results and in particular, with our
 ability to increase our operating margins despite the negative impact of
 rising energy costs and isolated areas of unrest around the world, like Israel
 and Fiji," said Barry S. Sternlicht, Chairman and CEO.  "Our overall
 performance was also significantly impacted in the quarter by the severe
 storms of early March which affected our important U.S. East Coast assets."
     "The rapid deterioration of the domestic economy, highlighted by falling
 GDP forecasts, and the softening of the global economy, has made the
 visibility of our business increasingly challenging, particularly in the
 business transient area in our urban assets.  We have reacted rapidly with
 internal operating cost cuts and cuts in discretionary capital spending.  We
 are doing so in the belief that the continued decline in U.S. lodging supply
 trends, the national rollout of our new yield management system, the
 implementation of Six Sigma and our continued focus on completing the
 renovation of our asset base will lead to rapid reacceleration in REVPAR
 growth when the economy stabilizes and strengthens.  As such, we believe that
 the purchase of our stock at current multiples represents a compelling
 investment opportunity."
     Concluding, Mr. Sternlicht said, "Despite unfavorable year over year
 comparisons for the Euro and other international currencies we expect our
 global diversification, buoyed by the underlying strength of our Europe
 operations, to be a net positive this year."
 
     First Quarter Ended March 31, 2001
 
     For the first quarter of 2001, total revenues increased $18 million to
 $1.0 billion when compared to the same period in 2000.  In addition to the
 slowing North American economy, revenue growth was impacted by the disposition
 of nine hotels since February 2000, the effective closure of two hotels in
 Chicago and one in Fiji, social unrest in Israel and the unfavorable impact of
 foreign currency translation.  The Company expects that both the Chicago
 hotels, the W-Times Square, the Westin Dublin and new timeshare projects will
 contribute to stronger revenue growth in the second half of 2001.  Earnings
 per diluted share from continuing operations were $0.30 compared to earnings
 per diluted share from continuing operations of $0.26 in the corresponding
 period in 2000.  Income from continuing operations increased 17% to
 $62 million in the first quarter of 2001 compared to income from continuing
 operations of $53 million in the same period of 2000.
 
     Operating Results
 
     At the Company's owned, leased and consolidated joint venture hotels,
 excluding nine hotels disposed since February 2000 and six hotels without
 comparable prior year results ("Comparable Owned Hotels"), revenues for the
 first quarter of 2001 increased to $848 million from $835 million in 2000 and
 EBITDA increased 7.3% to $270 million from $252 million in 2000.  EBITDA at
 the Company's Comparable Owned Hotels in North America increased 8.7% to
 $214 million in the first quarter of 2001 when compared to the same period in
 2000.  EBITDA at the Company's Comparable Owned Hotels in Europe increased
 24.0% to $22 million in the first quarter of 2001 when compared to the same
 period in 2000.
     For the first quarter of 2001, revenue per available room ("REVPAR") at
 owned hotels in North America, excluding hotels under significant renovation
 or for which comparable results are not available ("Same-Store Owned Hotels"),
 increased 4.3% to $111.33 when compared to the same period in 2000 as a result
 of an increase in average daily rate ("ADR") of 5.7% to $165.92, offset by a
 decline in occupancy rates of 90 basis points to 67.1%.  REVPAR growth was
 strongest at Westin Same-Store Owned Hotels in North America where REVPAR
 increased 8.3% as a result of an increase in ADR of 5.8% and an increase in
 occupancy rates of 180 basis points. REVPAR at Same-Store Owned Hotels
 worldwide increased 3.1% in the first quarter of 2001 when compared to the
 same period in 2000 as a result of an increase in ADR of 4.2%, offset by a
 decline in occupancy rates of 70 basis points to 66.6% and unfavorable effects
 of foreign currency translation.  In Europe, Same-Store Owned Hotel REVPAR
 increased 10.9%, excluding the unfavorable effect of foreign currency
 translation, primarily as a result of strong occupancy gains at owned hotels
 in Spain and Italy.  (See attached tables for detailed REVPAR analysis.)
     EBITDA margins at Comparable Owned Hotels worldwide increased 170 basis
 points to 31.9%.  In North America, EBITDA margins at Comparable Owned Hotels
 increased 180 basis points to 32.5% in part as a result of increased higher
 margin group based food and beverage sales.  Further, the Company's strategic
 energy relationships combined with other Company initiatives substantially
 reduced the net negative impact of significantly higher energy costs,
 particularly in California and New York.  Internationally, despite weak
 economic, political and/or currency conditions, EBITDA margins increased 150
 basis points to 29.7% (in Europe, 300 basis points to 20.5%).
     The Company is currently selling vacation ownership interest ("VOI")
 inventory at nine resorts and engaged in pre-opening sales at two others.
 Three new build projects are currently underway including Sheraton's Mountain
 Vista in Avon, Colorado; Westin Mission Hills Resort Villas in Rancho Mirage,
 California (both in pre-opening sales); and Westin Ka'anapali Ocean Resort
 Villas in Maui, Hawaii.  All three new build projects are expected to post
 meaningful revenue and EBITDA beginning in the latter part of 2001 and into
 2002.
 
     Six Sigma
 
     On February 5, 2001 the Company announced that it has embarked upon a Six
 Sigma initiative with the long-term financial goal of more than $200 million
 of incremental EBITDA over the next five years.  Six Sigma training began in
 earnest and costs of the initiative of approximately $3 million were
 recognized during the quarter.  Higher costs are expected in the second
 quarter of 2001 before the program's first initiatives begin to more than
 offset ongoing costs of the program late in 2001.
 
     Restructuring and Other Special Credits
 
     During the first quarter of 2001, the Company wrote down its investments
 in various e-business ventures by approximately $19 million resulting in a net
 carrying value of its investments in e-business ventures of less than
 $5 million.  Offsetting the charge, the Company reversed a reserve on a note
 receivable that had previously been assessed as doubtful for collection but is
 now performing, with recent principal payments exceeding the amount reserved.
 
     Acquisitions and Dispositions
 
     In April 2001, the Company completed the acquisition of the remaining 50%
 interest in the 1,377-room Sheraton Centre Toronto for approximately CDN
 $75 million (approximately USD $48 million).  Starwood owned 50% of this
 property before completion of this acquisition.  The purchase price
 represented a trailing twelve-month EBITDA of less than five times.
     The Company continues its efforts to sell non-strategic assets.  Total
 proceeds from such sales were approximately $21 million in the first quarter
 of 2001.  Since the acquisition of ITT Corporation, the Company has completed
 non-core asset dispositions with aggregate proceeds exceeding $7.1 billion.
 The Company continues to review its portfolio for disposition candidates.
     The Company is continuing to pursue the sale of its CIGA portfolio which
 includes such world renowned assets as the Gritti Palace and Danieli in
 Venice, the St. Regis Grand and Westin Excelsior in Rome, the Grand and
 Excelsior in Florence, the Principe di Savoia in Milan, the Westin Palace in
 Madrid and four hotels in Sardinia's Costa Smeralda (and almost 6,000 acres of
 surrounding land) including the world famous Cala di Volpe and Pitrizza
 resorts.
 
     Capital
 
     During the first quarter of 2001, the Company invested approximately
 $143 million for capital and investment spend, primarily at owned hotel
 assets, and VOI construction.  Investment spend projects included the ongoing
 repositioning of the Midland Hotel to the W Chicago-City Center (390 rooms),
 conversion of the Days Inn Chicago to the W Chicago-Lakeshore (578 rooms),
 development of the W New York-Times Square (511 rooms) as well as the
 development of The St. Regis Museum Tower in San Francisco (346 rooms).
     During the first quarter, the Company purchased 1,050,000 shares at a
 total cost of approximately $35.7 million.  On April 2, 2001, the Company's
 Board of Directors authorized the repurchase of up to an additional
 $500 million of company shares.  Total share repurchase authorization, when
 combined with amounts remaining from previous authorizations increased to
 $694 million at that time.  At March 31, 2001, Starwood had approximately 202
 million shares outstanding (including partnership units and exchangeable
 preferred shares).
 
     Financing
 
     On March 31, 2001, the Company had total debt of $5.5 billion and cash of
 $224 million.  In January 2001, the Company completed a $150 million add-on
 financing to its credit facility.  At the end of the first quarter of 2001,
 the Company's debt was approximately 59% fixed rate and 41% floating rate and
 its weighted average maturity exceeded five years.  The Company elected to
 retain its floating debt position as a natural hedge against the anticipated
 economic softness in North America.  As of March 31, 2001, the Company had
 availability under its revolving credit facility of approximately $550 million
 and the Company's debt had a weighted average interest rate of 6.9%.
     During the first quarter of 2001, Starwood Hotels & Resorts (the "Trust")
 declared a quarterly dividend of $0.20 per share ($0.80 annual rate),
 representing a 16% increase over the prior year quarterly dividend.
 
     Future Performance
 
     All comments in the following paragraphs and the comments in this release
 above are deemed to be forward-looking statements.  These statements reflect
 expectations of the Company's performance given its current base of assets and
 its current understanding of external economic and political environments.
 Actual results may differ materially.
 
     * Due to the continued weakness of the U.S. economy, full year 2001 North
       America Same-Store REVPAR growth is now expected to be between 3 to 4%.
       Full year Worldwide Same-Store REVPAR growth is now expected to be
       between 2 to 3%.  Second quarter REVPAR growth in North America is not
       expected to achieve the 3% to 4% target.  Third and fourth quarter
       REVPAR growth is expected to meet or exceed the 3% to 4% target but will
       depend on economic sensitivities at that time.
 
     * Should the Financial Accounting Standards Board's proposed change in
       accounting for the amortization of goodwill be implemented, the Company
       estimates that diluted EPS could increase at least $0.24 on an annual
       basis.
 
     * Full year 2001 EBITDA is currently expected to be approximately
       $1.65 billion.
 
     * Owned hotel EBITDA margins are expected to improve at or above the
       Company's 100 basis point annual target.
 
     * The Company is currently comfortable with a total year 2001 diluted EPS
       estimate of $2.15 which represents a 10% growth in diluted EPS over the
       Company's 2000 diluted EPS.  Given the slower current economic
       environment and foreign currency fluctuations, the Company believes
       there is a greater chance of reporting earnings lower than $2.15 than
       there is of exceeding $2.15 per share.  The Company currently expects
       second quarter 2001 diluted EPS of $0.58, third quarter diluted EPS of
       $0.57 and fourth quarter diluted EPS of $0.70.
 
     * The Company produces substantial free cash flow.  The Company has
       completed a multi-year capital plan and divided these expenditures into
       growth and maintenance expenditures.  The Company considers the growth
       expenditures as discretionary.  After interest expense, maintenance
       capital expenditures, dividends and cash taxes, discretionary cash flow
       is expected to be approximately  $700 million in 2001.  The Company's
       2001 earnings estimates assume EBITDA generating investment spending for
       timeshare inventory (approximately $120 million), the completion of the
       W Times Square, the two W Hotels in Chicago, the St. Regis San Francisco
       (approximately $150 million) and sliver equity investments and single
       asset acquisitions (approximately $100 million).  The balance of
       expected discretionary cash flow is available for other EBITDA
       generating projects, share repurchase or debt paydown.  Currently,
       approximately $200 million of previously approved capital projects have
       been deferred.  In general, the Company targets 15% after-tax internal
       rate of return on invested capital.  Vacation ownership projects, on
       average, are expected to achieve better than 20% after-tax internal rate
       of return on invested capital.
 
     Starwood Hotels & Resorts Worldwide, Inc. will be conducting a conference
 call to discuss the first quarter financial results at 10:30 a.m. (EDT) today.
 The conference call will be available through simultaneous webcast in the
 Investor Relations/Press Releases section of the Company's website at
 http://www.starwoodhotels.com.  A replay of the conference call will also be
 available from 1:30 p.m. (EDT) today through 8:00 p.m. (EDT) May 1, 2001 on
 both the Company's website and via telephone replay at 719-457-0820 (access
 code: 764835).
 
     Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and
 leisure companies in the world with more than 725 properties in 80 countries
 and 120,000 employees at its owned and managed properties.  With
 internationally renowned brands, Starwood is a fully integrated owner,
 operator and franchiser of hotels and resorts including:  St. Regis, The
 Luxury Collection, Sheraton, Westin, Four Points by Sheraton and W brands, as
 well as Starwood Vacation Ownership, Inc., one of the premier developers and
 operators of high quality vacation interval ownership.
 
     (Note:  This release contains certain statements that may be deemed
 "forward-looking statements" within the meaning of Section 27A of the
 Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
 Forward-looking statements are not guarantees of future performance and
 involve risks and uncertainties that could cause actual results to differ
 materially from historical results or those anticipated at the time the
 forward-looking statements are made, including, without limitation, risks and
 uncertainties associated with the following:  the continued ability of the
 Trust to qualify for taxation as a REIT; Starwood's ability to attract and
 retain personnel; identification, completion, terms and timing of future
 acquisitions and dispositions; the availability and terms of capital for
 acquisitions and for renovations; execution of hotel renovation and expansion
 programs; the ability to maintain existing management, franchise or
 representation agreements and to obtain new agreements on favorable terms;
 competition within the lodging and leisure industry; the cyclicality of the
 real estate business and the hotel and leisure business; foreign exchange
 fluctuations and exchange control restrictions; general real estate and
 national and international economic conditions; political and financial
 conditions and uncertainties in countries in which Starwood owns or operates
 properties; changes in current laws, rules or regulations of governmental or
 other regulatory bodies; and the other risks and uncertainties set forth in
 the annual, quarterly and current reports and proxy statements of the Trust
 and Starwood filed with the Securities and Exchange Commission.  Starwood
 undertakes 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
                                                               March 31,
                                                         2001           2000
     Revenues
     Owned, leased and consolidated
      joint venture hotels                               $865           $843
     Other hotel and leisure(a)                           149            153
                                                        1,014            996
     Costs and Expenses
     Owned, leased and consolidated
      joint venture hotels                                596            590
     Selling, general, administrative and other(b)         99            104
     Restructuring and other special credits              (1)             --
     Depreciation                                         105             97
     Amortization                                          22             20
                                                          821            811
     Operating income                                     193            185
     Interest expense, net of interest
      income of $3 and $3                               (100)          (105)
     Gain on sales of real estate and investments, net     --              1
                                                           93             81
     Income tax expense                                  (31)           (29)
     Minority equity in net income                         --              1
     Income from continuing operations                     62             53
     Extraordinary item, net of tax                        --            (3)
     Net income                                           $62            $50
 
     Earnings Per Share - Basic
     Continuing operations                              $0.31          $0.26
     Extraordinary item                                    --         (0.01)
     Net income                                         $0.31          $0.25
 
     Earnings Per Share - Diluted
     Continuing operations                              $0.30          $0.26
     Extraordinary item                                    --         (0.01)
     Net income                                         $0.30          $0.25
 
     Weighted average number of Shares                    199            195
     Weighted average number of Shares assuming dilution  207            202
 
     Reconciliation of Operating Income to EBITDA(c)
     Operating income                                    $193           $185
     Depreciation(d)                                      112            103
     Amortization                                          22             20
     Interest expense of unconsolidated joint ventures      6              6
     Interest income                                        3              3
     Restructuring and other special credits              (1)             --
     EBITDA                                              $335           $317
 
 
     (a)Other hotel and leisure revenues include management and franchise fees
         earned from third party hotel owners, the Company's interest in
         unconsolidated joint ventures and the sale and financing of VOIs.
     (b) Selling, general, administrative and other expenses includes the cost
         of sales of VOIs and other costs of timeshare operations.
     (c) EBITDA is defined as income before interest expense, income tax
         expense and depreciation and amortization.Non-recurring items and
         gains and losses from sales of real estate and investments are also
         excluded from EBITDA as these items do not impact operating results on
         a recurring basis. Management considers EBITDA to be one measure of
         the cash flows from operations of the Company before debt service that
         provides a relevant basis for comparison, and EBITDA is presented to
         assist investors in analyzing the performance of the Company.  This
         information should not be considered as an alternative to any measure
         of performance as promulgated under accounting principles generally
         accepted in the United States, nor should it be considered as an
         indicator of the overall financial performance of the Company. The
         Company's calculation of EBITDA may be different from the calculation
         used by other companies and, therefore, comparability may be limited.
     (d) Includes depreciation expense of unconsolidated joint ventures.
 
 
                   STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                      UNAUDITED BALANCE SHEET INFORMATION
                                 (In millions)
 
                                                            March 31,
                                                               2001
 
     Total assets                                             $12,639
     Cash and cash equivalents                                   $224
     Total debt                                                $5,496
     Shares outstanding(a)                                        202
 
     (a) Shares outstanding include partnership units and exchangeable
         preferred shares.
 
 
                                       WORLDWIDE            NORTH AMERICA
                                  2001    2000   Var.    2001    2000   Var.
 
                                      152 Hotels             110 Hotels
     OWNED HOTELS
                REVPAR ($)       110.16  106.81   3.1%  111.33  106.70   4.3%
                ADR ($)          165.49  158.81   4.2%  165.92  157.03   5.7%
                OCCUPANCY (%)     66.6%   67.3%   -0.7   67.1%   68.0%   -0.9
 
                                            65                     41
     SHERATON
                REVPAR ($)        93.11   92.66   0.5%   95.78   93.22   2.7%
                ADR ($)          144.43  143.25   0.8%  147.99  143.85   2.9%
                OCCUPANCY (%)     64.5%   64.7%   -0.2   64.7%   64.8%   -0.1
 
                                            35                     23
     WESTIN
                REVPAR ($)       121.86  114.54   6.4%  118.41  109.31   8.3%
                ADR ($)          166.07  158.65   4.7%  157.93  149.24   5.8%
                OCCUPANCY (%)     73.4%   72.2%    1.2   75.0%   73.2%    1.8
 
                                            11                      5
     LUXURY COLLECTION
                REVPAR ($)       247.67  237.52   4.3%  314.30  306.34   2.6%
                ADR ($)          348.64  334.86   4.1%  415.75  393.87   5.6%
                OCCUPANCY (%)     71.0%   70.9%    0.1   75.6%   77.8%   -2.2
 
                                             9                      9
     W
                REVPAR ($)       160.60  151.04   6.3%  160.60  151.04   6.3%
                ADR ($)          232.24  209.25  11.0%  232.24  209.25  11.0%
                OCCUPANCY (%)     69.2%   72.2%   -3.0   69.2%   72.2%   -3.0
 
                                            32                     32
     OTHER
                REVPAR ($)        72.97   72.56   0.6%   72.97   72.56   0.6%
                ADR ($)          124.58  114.13   9.2%  124.58  114.13   9.2%
                OCCUPANCY (%)     58.6%   63.6%   -5.0   58.6%   63.6%   -5.0
 
 
                                                         INTERNATIONAL(2)
                                                  2001        2000       Var.
 
                                                          42 Hotels
     OWNED HOTELS
                    REVPAR ($)                  106.28      107.18      -0.8%
                    ADR ($)                     164.03      164.97      -0.6%
                    OCCUPANCY (%)                64.8%       65.0%      -0.2
 
                                                               24
     SHERATON
                    REVPAR ($)                   87.63       91.52      -4.3%
                    ADR ($)                     137.00      142.01      -3.5%
                    OCCUPANCY (%)                64.0%       64.4%       -0.4
 
                                                               12
     WESTIN
                    REVPAR ($)                  135.53      135.82      -0.2%
                    ADR ($)                     202.09      199.88       1.1%
                    OCCUPANCY (%)                67.1%       68.0%       -0.9
 
                                                                6
     LUXURY COLLECTION
                    REVPAR ($)                  161.53      147.28       9.7%
                    ADR ($)                     247.96      237.72       4.3%
                    OCCUPANCY (%)                65.1%       62.0%        3.1
 
 
     (1)  Hotel Results exclude 5 hotels under significant renovation or
          without comparable results, 6 hotels without prior year results
          and 9 hotels sold during 2000 and 2001.
     (2)  See next page for breakdown by division.
 
 
                                           EUROPE             LATIN AMERICA
                                     2001   2000   Var.   2001     2000   Var.
 
                                        27 Hotels              13 Hotels
     OWNED HOTELS
                 REVPAR ($)        117.10  111.04  5.5%   96.58  102.86  -6.1%
                 ADR ($)           185.71  178.63  4.0%  147.57  154.67  -4.6%
                 OCCUPANCY (%)      63.1%   62.2%   0.9   65.4%   66.5%  -1.1
 
                                              12                    10
     SHERATON
                 REVPAR ($)         91.74   87.82  4.5%   85.65   91.66  -6.6%
                 ADR ($)           143.74  140.27  2.5%  138.05  144.59  -4.5%
                 OCCUPANCY (%)      63.8%   62.6%   1.2   62.0%   63.4%   -1.4
 
                                               9                     3
     WESTIN
                 REVPAR ($)        128.78  126.00  2.2%  151.22  156.23  -3.2%
                 ADR ($)           213.12  204.81  4.1%  183.31  192.11  -4.6%
                 OCCUPANCY (%)      60.4%   61.5%  -1.1   82.5%   81.3%    1.2
 
                                               6
     LUXURY COLLECTION
                 REVPAR ($)        161.53  147.28  9.7%
                 ADR ($)           247.96  237.72  4.3%
                 OCCUPANCY (%)      65.1%   62.0%   3.1
 
 
                                                         ASIA PACIFIC
                                                 2001        2000        Var.
 
                                                          2 Hotels
     OWNED HOTELS
                    REVPAR ($)                   82.10      104.49      -21.4%
                    ADR ($)                     110.96      136.83      -18.9%
                    OCCUPANCY (%)                74.0%       76.4%       -2.4
 
                                                               2
     SHERATON
                    REVPAR ($)                   82.10      104.49      -21.4%
                    ADR ($)                     110.96      136.83      -18.9%
                    OCCUPANCY (%)                74.0%       76.4%        -2.4
 
     (1)  Hotel Results exclude 5 hotels under significant renovation or
          without comparable results, 6 hotels without prior year results
          and 9 hotels sold during 2000 and 2001.
 
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SOURCE Starwood Hotels & Resorts Worldwide, Inc.
    WHITE PLAINS, N.Y., April 24 /PRNewswire Interactive News Release/ --
 Starwood Hotels & Resorts Worldwide, Inc. (NYSE:   HOT) ("Starwood" or the
 "Company") today reported record results for the first quarter of 2001.
 
     First Quarter Financial Highlights
 
     * First quarter diluted EPS from continuing operations increased 15% to
       $0.30 when compared to diluted EPS of $0.26 for the same period of 2000.
 
     * Total EBITDA increased 6% to $335 million and operating income increased
       4% to $193 million.
 
     * REVPAR for Same-Store Owned Hotels in North America increased 4.3%.
       REVPAR for Same-Store Owned Hotels in Europe increased 10.9% excluding
       the unfavorable effect of foreign currency translation.
 
     * EBITDA at Comparable Owned Hotels in North America increased 8.7% and
       EBITDA margins increased 180 basis points to 32.5%.  EBITDA at
       Comparable Owned Hotels in Europe increased 24.0%.
 
     Comments from the CEO
 
     "We are pleased with our first quarter results and in particular, with our
 ability to increase our operating margins despite the negative impact of
 rising energy costs and isolated areas of unrest around the world, like Israel
 and Fiji," said Barry S. Sternlicht, Chairman and CEO.  "Our overall
 performance was also significantly impacted in the quarter by the severe
 storms of early March which affected our important U.S. East Coast assets."
     "The rapid deterioration of the domestic economy, highlighted by falling
 GDP forecasts, and the softening of the global economy, has made the
 visibility of our business increasingly challenging, particularly in the
 business transient area in our urban assets.  We have reacted rapidly with
 internal operating cost cuts and cuts in discretionary capital spending.  We
 are doing so in the belief that the continued decline in U.S. lodging supply
 trends, the national rollout of our new yield management system, the
 implementation of Six Sigma and our continued focus on completing the
 renovation of our asset base will lead to rapid reacceleration in REVPAR
 growth when the economy stabilizes and strengthens.  As such, we believe that
 the purchase of our stock at current multiples represents a compelling
 investment opportunity."
     Concluding, Mr. Sternlicht said, "Despite unfavorable year over year
 comparisons for the Euro and other international currencies we expect our
 global diversification, buoyed by the underlying strength of our Europe
 operations, to be a net positive this year."
 
     First Quarter Ended March 31, 2001
 
     For the first quarter of 2001, total revenues increased $18 million to
 $1.0 billion when compared to the same period in 2000.  In addition to the
 slowing North American economy, revenue growth was impacted by the disposition
 of nine hotels since February 2000, the effective closure of two hotels in
 Chicago and one in Fiji, social unrest in Israel and the unfavorable impact of
 foreign currency translation.  The Company expects that both the Chicago
 hotels, the W-Times Square, the Westin Dublin and new timeshare projects will
 contribute to stronger revenue growth in the second half of 2001.  Earnings
 per diluted share from continuing operations were $0.30 compared to earnings
 per diluted share from continuing operations of $0.26 in the corresponding
 period in 2000.  Income from continuing operations increased 17% to
 $62 million in the first quarter of 2001 compared to income from continuing
 operations of $53 million in the same period of 2000.
 
     Operating Results
 
     At the Company's owned, leased and consolidated joint venture hotels,
 excluding nine hotels disposed since February 2000 and six hotels without
 comparable prior year results ("Comparable Owned Hotels"), revenues for the
 first quarter of 2001 increased to $848 million from $835 million in 2000 and
 EBITDA increased 7.3% to $270 million from $252 million in 2000.  EBITDA at
 the Company's Comparable Owned Hotels in North America increased 8.7% to
 $214 million in the first quarter of 2001 when compared to the same period in
 2000.  EBITDA at the Company's Comparable Owned Hotels in Europe increased
 24.0% to $22 million in the first quarter of 2001 when compared to the same
 period in 2000.
     For the first quarter of 2001, revenue per available room ("REVPAR") at
 owned hotels in North America, excluding hotels under significant renovation
 or for which comparable results are not available ("Same-Store Owned Hotels"),
 increased 4.3% to $111.33 when compared to the same period in 2000 as a result
 of an increase in average daily rate ("ADR") of 5.7% to $165.92, offset by a
 decline in occupancy rates of 90 basis points to 67.1%.  REVPAR growth was
 strongest at Westin Same-Store Owned Hotels in North America where REVPAR
 increased 8.3% as a result of an increase in ADR of 5.8% and an increase in
 occupancy rates of 180 basis points. REVPAR at Same-Store Owned Hotels
 worldwide increased 3.1% in the first quarter of 2001 when compared to the
 same period in 2000 as a result of an increase in ADR of 4.2%, offset by a
 decline in occupancy rates of 70 basis points to 66.6% and unfavorable effects
 of foreign currency translation.  In Europe, Same-Store Owned Hotel REVPAR
 increased 10.9%, excluding the unfavorable effect of foreign currency
 translation, primarily as a result of strong occupancy gains at owned hotels
 in Spain and Italy.  (See attached tables for detailed REVPAR analysis.)
     EBITDA margins at Comparable Owned Hotels worldwide increased 170 basis
 points to 31.9%.  In North America, EBITDA margins at Comparable Owned Hotels
 increased 180 basis points to 32.5% in part as a result of increased higher
 margin group based food and beverage sales.  Further, the Company's strategic
 energy relationships combined with other Company initiatives substantially
 reduced the net negative impact of significantly higher energy costs,
 particularly in California and New York.  Internationally, despite weak
 economic, political and/or currency conditions, EBITDA margins increased 150
 basis points to 29.7% (in Europe, 300 basis points to 20.5%).
     The Company is currently selling vacation ownership interest ("VOI")
 inventory at nine resorts and engaged in pre-opening sales at two others.
 Three new build projects are currently underway including Sheraton's Mountain
 Vista in Avon, Colorado; Westin Mission Hills Resort Villas in Rancho Mirage,
 California (both in pre-opening sales); and Westin Ka'anapali Ocean Resort
 Villas in Maui, Hawaii.  All three new build projects are expected to post
 meaningful revenue and EBITDA beginning in the latter part of 2001 and into
 2002.
 
     Six Sigma
 
     On February 5, 2001 the Company announced that it has embarked upon a Six
 Sigma initiative with the long-term financial goal of more than $200 million
 of incremental EBITDA over the next five years.  Six Sigma training began in
 earnest and costs of the initiative of approximately $3 million were
 recognized during the quarter.  Higher costs are expected in the second
 quarter of 2001 before the program's first initiatives begin to more than
 offset ongoing costs of the program late in 2001.
 
     Restructuring and Other Special Credits
 
     During the first quarter of 2001, the Company wrote down its investments
 in various e-business ventures by approximately $19 million resulting in a net
 carrying value of its investments in e-business ventures of less than
 $5 million.  Offsetting the charge, the Company reversed a reserve on a note
 receivable that had previously been assessed as doubtful for collection but is
 now performing, with recent principal payments exceeding the amount reserved.
 
     Acquisitions and Dispositions
 
     In April 2001, the Company completed the acquisition of the remaining 50%
 interest in the 1,377-room Sheraton Centre Toronto for approximately CDN
 $75 million (approximately USD $48 million).  Starwood owned 50% of this
 property before completion of this acquisition.  The purchase price
 represented a trailing twelve-month EBITDA of less than five times.
     The Company continues its efforts to sell non-strategic assets.  Total
 proceeds from such sales were approximately $21 million in the first quarter
 of 2001.  Since the acquisition of ITT Corporation, the Company has completed
 non-core asset dispositions with aggregate proceeds exceeding $7.1 billion.
 The Company continues to review its portfolio for disposition candidates.
     The Company is continuing to pursue the sale of its CIGA portfolio which
 includes such world renowned assets as the Gritti Palace and Danieli in
 Venice, the St. Regis Grand and Westin Excelsior in Rome, the Grand and
 Excelsior in Florence, the Principe di Savoia in Milan, the Westin Palace in
 Madrid and four hotels in Sardinia's Costa Smeralda (and almost 6,000 acres of
 surrounding land) including the world famous Cala di Volpe and Pitrizza
 resorts.
 
     Capital
 
     During the first quarter of 2001, the Company invested approximately
 $143 million for capital and investment spend, primarily at owned hotel
 assets, and VOI construction.  Investment spend projects included the ongoing
 repositioning of the Midland Hotel to the W Chicago-City Center (390 rooms),
 conversion of the Days Inn Chicago to the W Chicago-Lakeshore (578 rooms),
 development of the W New York-Times Square (511 rooms) as well as the
 development of The St. Regis Museum Tower in San Francisco (346 rooms).
     During the first quarter, the Company purchased 1,050,000 shares at a
 total cost of approximately $35.7 million.  On April 2, 2001, the Company's
 Board of Directors authorized the repurchase of up to an additional
 $500 million of company shares.  Total share repurchase authorization, when
 combined with amounts remaining from previous authorizations increased to
 $694 million at that time.  At March 31, 2001, Starwood had approximately 202
 million shares outstanding (including partnership units and exchangeable
 preferred shares).
 
     Financing
 
     On March 31, 2001, the Company had total debt of $5.5 billion and cash of
 $224 million.  In January 2001, the Company completed a $150 million add-on
 financing to its credit facility.  At the end of the first quarter of 2001,
 the Company's debt was approximately 59% fixed rate and 41% floating rate and
 its weighted average maturity exceeded five years.  The Company elected to
 retain its floating debt position as a natural hedge against the anticipated
 economic softness in North America.  As of March 31, 2001, the Company had
 availability under its revolving credit facility of approximately $550 million
 and the Company's debt had a weighted average interest rate of 6.9%.
     During the first quarter of 2001, Starwood Hotels & Resorts (the "Trust")
 declared a quarterly dividend of $0.20 per share ($0.80 annual rate),
 representing a 16% increase over the prior year quarterly dividend.
 
     Future Performance
 
     All comments in the following paragraphs and the comments in this release
 above are deemed to be forward-looking statements.  These statements reflect
 expectations of the Company's performance given its current base of assets and
 its current understanding of external economic and political environments.
 Actual results may differ materially.
 
     * Due to the continued weakness of the U.S. economy, full year 2001 North
       America Same-Store REVPAR growth is now expected to be between 3 to 4%.
       Full year Worldwide Same-Store REVPAR growth is now expected to be
       between 2 to 3%.  Second quarter REVPAR growth in North America is not
       expected to achieve the 3% to 4% target.  Third and fourth quarter
       REVPAR growth is expected to meet or exceed the 3% to 4% target but will
       depend on economic sensitivities at that time.
 
     * Should the Financial Accounting Standards Board's proposed change in
       accounting for the amortization of goodwill be implemented, the Company
       estimates that diluted EPS could increase at least $0.24 on an annual
       basis.
 
     * Full year 2001 EBITDA is currently expected to be approximately
       $1.65 billion.
 
     * Owned hotel EBITDA margins are expected to improve at or above the
       Company's 100 basis point annual target.
 
     * The Company is currently comfortable with a total year 2001 diluted EPS
       estimate of $2.15 which represents a 10% growth in diluted EPS over the
       Company's 2000 diluted EPS.  Given the slower current economic
       environment and foreign currency fluctuations, the Company believes
       there is a greater chance of reporting earnings lower than $2.15 than
       there is of exceeding $2.15 per share.  The Company currently expects
       second quarter 2001 diluted EPS of $0.58, third quarter diluted EPS of
       $0.57 and fourth quarter diluted EPS of $0.70.
 
     * The Company produces substantial free cash flow.  The Company has
       completed a multi-year capital plan and divided these expenditures into
       growth and maintenance expenditures.  The Company considers the growth
       expenditures as discretionary.  After interest expense, maintenance
       capital expenditures, dividends and cash taxes, discretionary cash flow
       is expected to be approximately  $700 million in 2001.  The Company's
       2001 earnings estimates assume EBITDA generating investment spending for
       timeshare inventory (approximately $120 million), the completion of the
       W Times Square, the two W Hotels in Chicago, the St. Regis San Francisco
       (approximately $150 million) and sliver equity investments and single
       asset acquisitions (approximately $100 million).  The balance of
       expected discretionary cash flow is available for other EBITDA
       generating projects, share repurchase or debt paydown.  Currently,
       approximately $200 million of previously approved capital projects have
       been deferred.  In general, the Company targets 15% after-tax internal
       rate of return on invested capital.  Vacation ownership projects, on
       average, are expected to achieve better than 20% after-tax internal rate
       of return on invested capital.
 
     Starwood Hotels & Resorts Worldwide, Inc. will be conducting a conference
 call to discuss the first quarter financial results at 10:30 a.m. (EDT) today.
 The conference call will be available through simultaneous webcast in the
 Investor Relations/Press Releases section of the Company's website at
 http://www.starwoodhotels.com.  A replay of the conference call will also be
 available from 1:30 p.m. (EDT) today through 8:00 p.m. (EDT) May 1, 2001 on
 both the Company's website and via telephone replay at 719-457-0820 (access
 code: 764835).
 
     Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and
 leisure companies in the world with more than 725 properties in 80 countries
 and 120,000 employees at its owned and managed properties.  With
 internationally renowned brands, Starwood is a fully integrated owner,
 operator and franchiser of hotels and resorts including:  St. Regis, The
 Luxury Collection, Sheraton, Westin, Four Points by Sheraton and W brands, as
 well as Starwood Vacation Ownership, Inc., one of the premier developers and
 operators of high quality vacation interval ownership.
 
     (Note:  This release contains certain statements that may be deemed
 "forward-looking statements" within the meaning of Section 27A of the
 Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
 Forward-looking statements are not guarantees of future performance and
 involve risks and uncertainties that could cause actual results to differ
 materially from historical results or those anticipated at the time the
 forward-looking statements are made, including, without limitation, risks and
 uncertainties associated with the following:  the continued ability of the
 Trust to qualify for taxation as a REIT; Starwood's ability to attract and
 retain personnel; identification, completion, terms and timing of future
 acquisitions and dispositions; the availability and terms of capital for
 acquisitions and for renovations; execution of hotel renovation and expansion
 programs; the ability to maintain existing management, franchise or
 representation agreements and to obtain new agreements on favorable terms;
 competition within the lodging and leisure industry; the cyclicality of the
 real estate business and the hotel and leisure business; foreign exchange
 fluctuations and exchange control restrictions; general real estate and
 national and international economic conditions; political and financial
 conditions and uncertainties in countries in which Starwood owns or operates
 properties; changes in current laws, rules or regulations of governmental or
 other regulatory bodies; and the other risks and uncertainties set forth in
 the annual, quarterly and current reports and proxy statements of the Trust
 and Starwood filed with the Securities and Exchange Commission.  Starwood
 undertakes 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
                                                               March 31,
                                                         2001           2000
     Revenues
     Owned, leased and consolidated
      joint venture hotels                               $865           $843
     Other hotel and leisure(a)                           149            153
                                                        1,014            996
     Costs and Expenses
     Owned, leased and consolidated
      joint venture hotels                                596            590
     Selling, general, administrative and other(b)         99            104
     Restructuring and other special credits              (1)             --
     Depreciation                                         105             97
     Amortization                                          22             20
                                                          821            811
     Operating income                                     193            185
     Interest expense, net of interest
      income of $3 and $3                               (100)          (105)
     Gain on sales of real estate and investments, net     --              1
                                                           93             81
     Income tax expense                                  (31)           (29)
     Minority equity in net income                         --              1
     Income from continuing operations                     62             53
     Extraordinary item, net of tax                        --            (3)
     Net income                                           $62            $50
 
     Earnings Per Share - Basic
     Continuing operations                              $0.31          $0.26
     Extraordinary item                                    --         (0.01)
     Net income                                         $0.31          $0.25
 
     Earnings Per Share - Diluted
     Continuing operations                              $0.30          $0.26
     Extraordinary item                                    --         (0.01)
     Net income                                         $0.30          $0.25
 
     Weighted average number of Shares                    199            195
     Weighted average number of Shares assuming dilution  207            202
 
     Reconciliation of Operating Income to EBITDA(c)
     Operating income                                    $193           $185
     Depreciation(d)                                      112            103
     Amortization                                          22             20
     Interest expense of unconsolidated joint ventures      6              6
     Interest income                                        3              3
     Restructuring and other special credits              (1)             --
     EBITDA                                              $335           $317
 
 
     (a)Other hotel and leisure revenues include management and franchise fees
         earned from third party hotel owners, the Company's interest in
         unconsolidated joint ventures and the sale and financing of VOIs.
     (b) Selling, general, administrative and other expenses includes the cost
         of sales of VOIs and other costs of timeshare operations.
     (c) EBITDA is defined as income before interest expense, income tax
         expense and depreciation and amortization.Non-recurring items and
         gains and losses from sales of real estate and investments are also
         excluded from EBITDA as these items do not impact operating results on
         a recurring basis. Management considers EBITDA to be one measure of
         the cash flows from operations of the Company before debt service that
         provides a relevant basis for comparison, and EBITDA is presented to
         assist investors in analyzing the performance of the Company.  This
         information should not be considered as an alternative to any measure
         of performance as promulgated under accounting principles generally
         accepted in the United States, nor should it be considered as an
         indicator of the overall financial performance of the Company. The
         Company's calculation of EBITDA may be different from the calculation
         used by other companies and, therefore, comparability may be limited.
     (d) Includes depreciation expense of unconsolidated joint ventures.
 
 
                   STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                      UNAUDITED BALANCE SHEET INFORMATION
                                 (In millions)
 
                                                            March 31,
                                                               2001
 
     Total assets                                             $12,639
     Cash and cash equivalents                                   $224
     Total debt                                                $5,496
     Shares outstanding(a)                                        202
 
     (a) Shares outstanding include partnership units and exchangeable
         preferred shares.
 
 
                                       WORLDWIDE            NORTH AMERICA
                                  2001    2000   Var.    2001    2000   Var.
 
                                      152 Hotels             110 Hotels
     OWNED HOTELS
                REVPAR ($)       110.16  106.81   3.1%  111.33  106.70   4.3%
                ADR ($)          165.49  158.81   4.2%  165.92  157.03   5.7%
                OCCUPANCY (%)     66.6%   67.3%   -0.7   67.1%   68.0%   -0.9
 
                                            65                     41
     SHERATON
                REVPAR ($)        93.11   92.66   0.5%   95.78   93.22   2.7%
                ADR ($)          144.43  143.25   0.8%  147.99  143.85   2.9%
                OCCUPANCY (%)     64.5%   64.7%   -0.2   64.7%   64.8%   -0.1
 
                                            35                     23
     WESTIN
                REVPAR ($)       121.86  114.54   6.4%  118.41  109.31   8.3%
                ADR ($)          166.07  158.65   4.7%  157.93  149.24   5.8%
                OCCUPANCY (%)     73.4%   72.2%    1.2   75.0%   73.2%    1.8
 
                                            11                      5
     LUXURY COLLECTION
                REVPAR ($)       247.67  237.52   4.3%  314.30  306.34   2.6%
                ADR ($)          348.64  334.86   4.1%  415.75  393.87   5.6%
                OCCUPANCY (%)     71.0%   70.9%    0.1   75.6%   77.8%   -2.2
 
                                             9                      9
     W
                REVPAR ($)       160.60  151.04   6.3%  160.60  151.04   6.3%
                ADR ($)          232.24  209.25  11.0%  232.24  209.25  11.0%
                OCCUPANCY (%)     69.2%   72.2%   -3.0   69.2%   72.2%   -3.0
 
                                            32                     32
     OTHER
                REVPAR ($)        72.97   72.56   0.6%   72.97   72.56   0.6%
                ADR ($)          124.58  114.13   9.2%  124.58  114.13   9.2%
                OCCUPANCY (%)     58.6%   63.6%   -5.0   58.6%   63.6%   -5.0
 
 
                                                         INTERNATIONAL(2)
                                                  2001        2000       Var.
 
                                                          42 Hotels
     OWNED HOTELS
                    REVPAR ($)                  106.28      107.18      -0.8%
                    ADR ($)                     164.03      164.97      -0.6%
                    OCCUPANCY (%)                64.8%       65.0%      -0.2
 
                                                               24
     SHERATON
                    REVPAR ($)                   87.63       91.52      -4.3%
                    ADR ($)                     137.00      142.01      -3.5%
                    OCCUPANCY (%)                64.0%       64.4%       -0.4
 
                                                               12
     WESTIN
                    REVPAR ($)                  135.53      135.82      -0.2%
                    ADR ($)                     202.09      199.88       1.1%
                    OCCUPANCY (%)                67.1%       68.0%       -0.9
 
                                                                6
     LUXURY COLLECTION
                    REVPAR ($)                  161.53      147.28       9.7%
                    ADR ($)                     247.96      237.72       4.3%
                    OCCUPANCY (%)                65.1%       62.0%        3.1
 
 
     (1)  Hotel Results exclude 5 hotels under significant renovation or
          without comparable results, 6 hotels without prior year results
          and 9 hotels sold during 2000 and 2001.
     (2)  See next page for breakdown by division.
 
 
                                           EUROPE             LATIN AMERICA
                                     2001   2000   Var.   2001     2000   Var.
 
                                        27 Hotels              13 Hotels
     OWNED HOTELS
                 REVPAR ($)        117.10  111.04  5.5%   96.58  102.86  -6.1%
                 ADR ($)           185.71  178.63  4.0%  147.57  154.67  -4.6%
                 OCCUPANCY (%)      63.1%   62.2%   0.9   65.4%   66.5%  -1.1
 
                                              12                    10
     SHERATON
                 REVPAR ($)         91.74   87.82  4.5%   85.65   91.66  -6.6%
                 ADR ($)           143.74  140.27  2.5%  138.05  144.59  -4.5%
                 OCCUPANCY (%)      63.8%   62.6%   1.2   62.0%   63.4%   -1.4
 
                                               9                     3
     WESTIN
                 REVPAR ($)        128.78  126.00  2.2%  151.22  156.23  -3.2%
                 ADR ($)           213.12  204.81  4.1%  183.31  192.11  -4.6%
                 OCCUPANCY (%)      60.4%   61.5%  -1.1   82.5%   81.3%    1.2
 
                                               6
     LUXURY COLLECTION
                 REVPAR ($)        161.53  147.28  9.7%
                 ADR ($)           247.96  237.72  4.3%
                 OCCUPANCY (%)      65.1%   62.0%   3.1
 
 
                                                         ASIA PACIFIC
                                                 2001        2000        Var.
 
                                                          2 Hotels
     OWNED HOTELS
                    REVPAR ($)                   82.10      104.49      -21.4%
                    ADR ($)                     110.96      136.83      -18.9%
                    OCCUPANCY (%)                74.0%       76.4%       -2.4
 
                                                               2
     SHERATON
                    REVPAR ($)                   82.10      104.49      -21.4%
                    ADR ($)                     110.96      136.83      -18.9%
                    OCCUPANCY (%)                74.0%       76.4%        -2.4
 
     (1)  Hotel Results exclude 5 hotels under significant renovation or
          without comparable results, 6 hotels without prior year results
          and 9 hotels sold during 2000 and 2001.
 
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 SOURCE  Starwood Hotels & Resorts Worldwide, Inc.