Exhibit 10.2

March 9, 2004

Mr. Steven Hankin
Starwood Hotels & Resorts Worldwide, Inc.
1111 Westchester Avenue
White Plains, NY 10604

Dear Steve:

     This letter supplements the letter dated September 2, 1999 from Starwood
Hotels & Resorts Worldwide, Inc. (the “Company”) to you which sets forth the
terms of your employment with the Company (the “Employment Letter”).

     As previously announced, the Company has commenced a search for a new Chief
Executive Officer (“CEO”). The new CEO is expected to be hired in 2004. In order
to encourage you to remain with the Company during and after the CEO search, in
addition to the salary and bonuses payable to you in accordance with the
Employment Letter, the Company will pay to you a retention bonus of $1,000,000
(the “Bonus”) on the third anniversary of the date the new CEO commences
employment with the Company, so long as you continue to be employed by the
Company on that date.

     In the event that the Company terminates your employment for any reason
other than “cause” (as defined in the Employment Letter), in addition to the
payments and benefits provided in such circumstances under the Employment
Agreement, you will be paid the Bonus on the date of termination and all then
unvested and outstanding stock options and restricted stock granted to you under
any of the Company’s benefit plans shall become vested as of the date of
termination.

     For purposes of the prior paragraph, “cause” shall mean (i) any material
breach by you of any of the duties, responsibilities or obligations of your
employment, or any of the policies or practices of Starwood; (ii) any willful
failure or refusal by you to properly perform (as determined by Starwood in its
reasonable discretion and judgment) the duties, responsibilities or obligations
of your employment, or to properly perform or follow (as determined by Starwood
in its reasonable discretion and judgment) any lawful

 

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order or direction by Starwood; (iii) any acts or omissions by you that
constitute (as determined by Starwood in its reasonable discretion and judgment)
fraud, dishonesty, breach of your duty of loyalty, gross negligence, civil or
criminal illegality, or any other misconduct in your employment or which could
tend to bring Starwood into disrepute, could create civil or criminal liability
for Starwood or could adversely affect Starwood’s business or interests.

     Except as modified by this letter, the Employment Letter remains in full
force and effect.

     By signing and returning this letter, you confirm that this letter
accurately sets forth the understanding between you and the Company and that you
accept and agree to the terms as outlined.

Very truly yours,

Barry S. Sternlicht

ACCEPTED AND AGREED TO:

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