SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-K



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|[X] | Joint Annual Report Pursuant to Section 13 or 15(d) of
	the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 1999


OR

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|[   ] | Transition Report Pursuant to Section 13 or 15(d) of the
	Securities Exchange Act of 1934

For the Transition Period from
               to


Commission File Number: 1-7959

STARWOOD HOTELS & RESORTS WORLDWIDE, INC


(Exact name of Registrant as specified in its
charter)


Maryland


(State or other jurisdiction


of incorporation or organization)


52-1193298

(I.R.S. employer identification no.)


777 Westchester Avenue

White Plains, NY 10604


(Address of principal executive


offices, including zip code)


(914) 640-8100

(Registrants telephone number,


including area code)


Commission File Number: 1-6828


STARWOOD HOTELS &


RESORTS


(Exact name of Registrant as specified in its
charter)


Maryland

(State or other jurisdiction


of incorporation or organization)


52-0901263

(I.R.S. employer identification no.)


777 Westchester Avenue

White Plains, NY 10604


(Address of principal executive


offices, including zip code)


(914) 640-8100

(Registrants telephone number,


including area code)


Securities Registered Pursuant to Section 12(b) of the
Act:

|                                                                                                                                                                                                                                                                                                                                                                                             |  |                        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------
|                                                                                                                                                                                                                                                                                                                                                                                             |  | Name of Each Exchange  
|Title of Each Class                                                                                                                                                                                                                                                                                                                                                                          |  | on Which Registered    
|                                                                                                                                                                                                                                                                                                                                                                                             |  |                        
|Common Stock, par value $0.01 per share (Corporation
	Share), of Starwood Hotels & Resorts Worldwide, Inc.
	(the Corporation), the Class B shares of
	beneficial interest, par value $0.01 per share
	(Class B Shares), of Starwood Hotels &
	Resorts (the Trust), and Preferred Stock Purchase
	Rights of the Corporation, all of which are attached and trade
	together as a Share |  | New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the
Act: None

Indicate by check mark whether the Registrants (1) have
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding
 12 months (or for such shorter period that the Registrants
were required to file such reports), and (2) have been
subject to such filing requirements for the past 90 days.
Yes [X] No [   ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of each
Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

As of March 27, 2000, the aggregate market value of the
Registrants voting and non-voting common equity held by
non-affiliates (for purposes of this Joint Annual Report only,
includes all shares other than those held by the
Registrants Directors, Trustees and executive officers) was
 $4,384,827,132.

As of March 27, 2000, the Corporation had outstanding
189,415,206 Corporation Shares and the Trust had outstanding
189,415,206 Class B Shares and 100 Class A shares of
beneficial interest, par value $0.01 per share
(Class A Shares).

For information concerning ownership of shares, see the Proxy
Statement for the Corporations Annual Meeting of
Stockholders that is currently expected to be held on
May 24, 2000 (the Proxy Statement), which is
incorporated by reference under various Items of this Joint
Annual Report.

Document Incorporated by Reference:

|                |  |                               
|--------------- |  | ------------------------------
|Document        |  | Where Incorporated            
|                |  |                               
|Proxy Statement |  | Part III (Items 11, 12 and 13)



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TABLE OF CONTENTS

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|PART I   
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|          |  | Forward-Looking Statements                                                              |  |      | 1  | 
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|Item  1.  |  | Business                                                                                |  |      | 6  | 
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|Item  2.  |  | Properties                                                                              |  |      | 14 | 
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|Item  3.  |  | Legal Proceedings                                                                       |  |      | 16 | 
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|Item  4.  |  | Submission of Matters to a Vote of Security Holders                                     |  |      | 16 | 
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|          |  | Executive Officers of the Registrants                                                   |  |      | 16 | 
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|PART II  
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|Item  5.  |  | Market for Registrants Common Equity and Related
	Stockholder Matters                  |  |      | 16 | 
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|Item  6.  |  | Selected Financial Data                                                                 |  |      | 18 | 
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|Item  7.  |  | Managements Discussion and Analysis of Financial Condition
	and Results of Operations  |  |      | 18 | 
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|Item  7A. |  | Quantitative and Qualitative Disclosures about Market Risk                              |  |      | 29 | 
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|Item  8.  |  | Financial Statements and Supplementary Data                                             |  |      | 30 | 
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|Item  9.  |  | Changes in and Disagreements with Accountants on Accounting and
	Financial Disclosure   |  |      | 30 | 
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|PART III 
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|Item  10. |  | Directors, Trustees and Executive Officers of the Registrants                           |  |      | 30 | 
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|Item  11. |  | Executive Compensation                                                                  |  |      | 35 | 
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|Item  12. |  | Security Ownership of Certain Beneficial Owners and Management                          |  |      | 35 | 
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|Item  13. |  | Certain Relationships and Related Transactions                                          |  |      | 35 | 
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|PART IV  
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|Item  14. |  | Exhibits, Financial Statements, Financial Statement Schedules and
	 Reports on Form 8-K |  |      | 35 | 

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This Joint Annual Report is filed by Starwood Hotels &
Resorts Worldwide, Inc., a Maryland corporation (the
Corporation), and its subsidiary, Starwood Hotels
& Resorts, a Maryland real estate investment trust (the
Trust). Unless the context otherwise requires, all
references to the Corporation include those entities owned or
controlled by the Corporation, including SLC Operating Limited
Partnership, a Delaware limited partnership (the Operating
Partnership), but excluding the Trust; all references
herein to the Trust include the Trust and those entities owned or
 controlled by the Trust, including SLT Realty Limited
Partnership, a Delaware limited partnership (the Realty
Partnership); and all references to Starwood or
 the Company refer to the Corporation, the Trust and
their respective subsidiaries, collectively. The shares of common
 stock, par value $0.01 per share, of the Corporation
(Corporation Shares) and the Class B shares of
beneficial interest, par value $0.01 per share, of the Trust
(Class B Shares) are attached and traded
together and may be held or transferred only in units consisting
of one Corporation Share and one Class B Share (a
Share). Prior to the reorganization of Starwood (the
Reorganization) on January 6, 1999, the common
shares of beneficial interest, par value $0.01 per share, of the
Trust (Trust Shares) were traded together with the
Corporation Shares as Paired Shares, just as the
Class B Shares and the Corporation Shares are currently
traded as Shares. Unless otherwise stated herein, all information
 with respect to Shares refers to Shares since January 6,
1999 and to Paired Shares for periods before January 6,
1999.

PART I

Forward-Looking Statements

This Joint Annual Report contains statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements appear
in a number of places in this Joint Annual Report, including,
without limitation, the section of Item 1,
Business, captioned Business Strategy and
 Item 5, Managements Discussion and Analysis of
Financial Condition and Results of Operations. Such
forward-looking statements may include statements regarding the
intent, belief or current expectations of Starwood, its Directors
 or Trustees or its officers with respect to the matters
discussed in this Joint Annual Report. All such forward-looking
statements involve risks and uncertainties that could cause
actual results to differ materially from those projected in the
forward-looking statements including, without limitation, the
risks and uncertainties set forth below. The Company undertakes
no obligation to publicly update or revise any forward-looking
statements to reflect current or future events or circumstances.

The Reorganization

On January 6, 1999, Starwood consummated the Reorganization
pursuant to an Agreement and Plan of Restructuring dated as of
September 16, 1998, as amended, among the Corporation, ST
Acquisition Trust, a wholly owned subsidiary of the Corporation,
and the Trust. Pursuant to the Reorganization, the Trust became a
 subsidiary of the Corporation, which holds all the outstanding
Class A shares of beneficial interest, par value $0.01 per
share, of the Trust (Class A Shares). The
Reorganization was proposed in response to the Internal Revenue
Service Restructuring and Reform Act of 1998
(H.R. 2676), which made it difficult for
Starwood to acquire and operate additional hotels while still
maintaining its former status as a grandfathered paired
share real estate investment trust. While the Corporation
and the Trust believe that the Reorganization was the best
alternative in light of H.R. 2676 and that the new structure
 of Starwood does not raise the same concerns that led Congress
to enact such legislation, no assurance can be given that
additional legislation, regulations or administrative
interpretations will not be adopted that could eliminate or
reduce certain benefits of the Reorganization and have a material
 adverse effect on the results of operations, financial condition
 and prospects of Starwood.

Ability to Manage Rapid Growth

The Companys future success and its ability to manage
future growth depend in large part upon the efforts of its senior
 management and its ability to attract and retain key officers
and other highly qualified personnel. Competition for such
personnel is intense. Since January 1999, the Company has
experienced significant changes in its senior management,
including executive officers. (See Item 10, Directors,
 Trustees

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Acquisition Opportunities

The Company intends to make acquisitions that complement its
business. There can be no assurance, however, that the Company
will be able to identify acquisition candidates on commercially
reasonable terms or at all. If additional acquisitions are made,
there can also be no assurance that any anticipated benefits will
 actually be realized. Similarly, there can be no assurance that
the Company will be able to obtain additional financing for
acquisitions, or that the ability to obtain such financing will
not be restricted by the terms of the Companys current debt
 arrangements.

Tax Risks

Failure of the Trust to Qualify as a REIT Could Increase
Our Tax Liability. Qualifying as a real estate investment
 trust (a REIT) requires compliance with highly
technical and complex tax provisions that courts and
administrative agencies have interpreted only to a limited
degree. Due to the complexities of our ownership, structure and
operations, the Trust is more likely than are other REITs to face
 interpretative issues for which there are no clear answers.
Also, facts and circumstances that we do not control may affect
the Trusts ability to qualify as a REIT. The Trust believes
 that since the taxable year ended December 31, 1995, it has
 qualified as a REIT under the Internal Revenue Code of 1986, as
amended. The Trust intends to continue to operate so as to
qualify as a REIT. However, the Trust cannot assure you that it
will continue to qualify as a REIT. If the Trust failed to
qualify as a REIT for any prior tax year, the Trust would be
liable to pay a significant amount of taxes for those years.
Similarly, if the Trust fails to qualify as a REIT in the future,
 our liability for taxes would increase.

Debt Financing

As a result of incurring debt, the Company is subject to the
following risks associated with debt financing: (i) the risk
 that cash flow from operations will be insufficient to meet
required payments of principal and interest; (ii) the risk
that (to the extent that the Company maintains floating rate
indebtedness) interest rates will fluctuate; and (iii) risks
 resulting from the fact that the agreements governing the
Companys loan and credit facilities contain covenants
imposing certain limitations on the Companys ability to
acquire and dispose of assets. In addition, although the Company
anticipates that it will be able to repay or refinance its
existing indebtedness and any other indebtedness when it matures,
 there can be no assurance that it will be able to do so or that
the terms of such refinancings will be favorable.

In connection with the acquisitions of Westin Hotels &
Resorts Worldwide, Inc. and certain of its affiliates
(Westin) and ITT Corporation (ITT), the
Company incurred a substantial amount of additional debt, thereby
 increasing its exposure to the risks associated with debt
financing. The Companys increased leverage may have
important consequences including the following: (i) the
ability of the Company to obtain additional financing for
acquisitions, working capital, capital expenditures or other
purposes, if necessary, may be impaired or such financing may not
 be available on terms favorable to the Company; (ii) a
substantial decrease in operating cash flow or an increase in
expenses of the Company could make it difficult for the Company
to meet its debt service requirements and force it to modify its
operations; (iii) the Companys higher level of debt
and resulting interest expense may place it at a competitive
disadvantage with respect to certain competitors with lower
amounts of indebtedness and/or higher credit ratings; and
(iv) the Companys greater leverage may make it more
vulnerable to a downturn in its business or in the economy
generally.

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Starwood Capital May Exert Influence Over Us

Barry S. Sternlicht is the Chairman and Chief Executive
Officer and a board member of the Corporation and the Trust.
Mr. Sternlicht also serves as the President and Chief
Executive Officer of, and may be deemed to control, Starwood
Capital Group, L.L.C. (Starwood Capital), which owns
limited partnership interests in the Realty Partnership and the
Operating Partnership. In addition, Jonathan D. Eilian and
Madison F. Grose, each of whom is a Director of the
Corporation and a Trustee of the Trust, are also employed by or
affiliated with Starwood Capital. Although our policy requires a
majority of our Directors and Trustees to be
independent of Starwood Capital, Starwood Capital may
 be able to exercise influence over our affairs. Because Starwood
 Capitals tax situation is different from our tax
situation, Starwood Capital may not have the same objectives as
do our stockholders or our management with regard to the pricing,
 structure and timing of any sale of properties or mortgage
loans.

Risks Relating to Hotel Operations

Our Properties Are Subject to All the Operating Risks
Common to the Hotel Industry.Operating risks common to
the hotel industry include:



| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in general economic conditions;                                                                                                          
|
| |  | decreases in the level of demand for rooms and related services;                                                                                 
|
| |  | cyclical over-building in the hotel industry;                                                                                                    
|
| |  | restrictive changes in zoning and similar land use laws and
	regulations or in health, safety and environmental laws, rules
	and regulations; and
|
| |  | changes in travel patterns.                                                                                                                      

We Must Compete for Properties and Customers.The
hotel industry is highly competitive. Our properties compete for
customers with other hotel properties in their geographic
markets, and we also compete with other hotel companies for
properties. Some of our competitors may have substantially
greater marketing and financial resources than we do, and they
may improve their facilities, reduce their prices or expand or
improve their marketing programs in ways that adversely affect
our operating results.

The Hotel Industry Is Seasonal in Nature.The hotel
 industry is seasonal in nature; however, the periods during
which our properties experience higher hotel revenue vary from
property to property and depend principally upon location. Our
revenue historically has been lower in the first quarter than in
the second, third or fourth quarters.

The Hotel Business Is Capital Intensive.In order
for our properties to remain attractive and competitive, we have
to spend money periodically to keep them well maintained,
modernized and refurbished. This creates an ongoing need for cash
 and, to the extent expenditures cannot be funded from cash
generated by our operations, we may be required to borrow or
otherwise obtain these funds. Accordingly, our financial results
may be sensitive to the cost and availability of funds.

Real Estate Investments Are Subject to Numerous Risks.Because we own and lease hotels, we are subject to the
varying degrees of risk that generally relate to investments in
real property. The investment returns available from equity
investments in real estate depend in large part on the amount of
income earned and capital appreciation generated by the related
properties, as well as the expenses incurred. In addition, a
variety of other factors affect income from properties and real
estate values, including governmental regulations, real estate,
zoning, tax and eminent domain laws, interest rate levels and the
 availability of financing. For example, new or existing real
estate, zoning or tax laws can make it more expensive and/or
time-consuming to develop real property or expand, modify or
renovate hotels. When interest rates increase, the cost of
acquiring, developing, expanding or renovating real property
increases and real property values may decrease as the number of
potential buyers decreases. Similarly, as financing becomes less
available, it becomes more difficult both to acquire and to sell
real property. Finally, governments can, under eminent domain
laws, take real property. Sometimes this taking is for less
compensation than the owner believes the

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Hotel Development Is Subject to Timing, Budgeting and Other
 Risks.We intend to develop hotel properties as suitable
 opportunities arise. New project development has a number of
risks, including risks associated with:



| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | construction delays or cost overruns that may increase project
	costs;                                 
|
| |  | receipt of zoning, occupancy and other required governmental
	permits and authorizations;              
|
| |  | incurring development costs for projects that are not pursued to
	completion;                          
|
| |  | so-called acts of God such as hurricanes, floods or
	fires that could adversely impact a project; and
|
| |  | governmental restrictions on the nature or size of a project.                                          

We cannot assure you that any development project will be
completed on time or within budget.

Our Timeshare Business Is Subject to Extensive Regulation
and Risk of Default.In October 1999, the Company
completed the acquisition of Vistana, Inc. (Vistana).
 Vistana markets and sells vacation ownership interests
(VOIs), which typically entitle the buyer to
ownership of a fully-furnished resort unit for a one-week period
on either an annual or an alternate-year basis. Vistana also
acquires, develops and operates timeshare resorts, and provides
financing to purchasers of VOIs. These activities are all subject
 to extensive regulation by the federal government and the states
 in which timeshare resorts are located and in which its VOIs are
 marketed and sold. In addition, the laws of most states in which
 we sell VOIs grant the purchaser of this type of interest the
right to rescind the purchase contract at any time within a
statutory rescission period. Although we believe that we are in
material compliance with all applicable federal, state, local and
 foreign laws and regulations to which timeshare marketing, sales
 and operations are currently subject, changes in these
requirements or a determination by a regulatory authority that we
 were not in compliance could adversely affect us. Additionally,
if the purchaser of a VOI defaults, we may not have recovered our
 marketing, selling, and general and administrative cost per VOI.

Environmental Regulations Could Make Us Liable for Cleaning
 Up Hazardous Substances.Environmental laws, ordinances
and regulations of various federal, state, local and foreign
governments regulate certain of our operations and could make us
liable for the costs of managing, removing or cleaning up
hazardous or toxic substances on, under or in property we
currently own or operate or that we previously owned or operated.
 Those laws could impose liability without regard to whether we
knew of, or were responsible for, the presence of hazardous or
toxic substances. The presence of hazardous or toxic substances,
or the failure to properly clean up substances when present,
could jeopardize our ability to develop, use, sell or rent the
real property or to borrow using the real property as collateral.
 If we arrange for the disposal or treatment of hazardous or
toxic wastes, we could be liable for the costs of removing or
cleaning up wastes at the disposal or treatment facility, even if
 we never owned or operated that facility. Other laws, ordinances
 and regulations could require us to manage, abate or remove
lead- or asbestos-containing materials. Similarly, the operation
and closure of storage tanks are often regulated by federal,
state, local and foreign laws. Finally, certain laws, ordinances
and regulations, particularly those governing the management or
preservation of wetlands, coastal zones and threatened or
endangered species, could limit our ability to develop, use, sell
 or rent our real property.

General Economic Conditions May Negatively Impact Our
Ability to Achieve Important Financial Tests.Moderate or
 severe economic downturns or adverse conditions may adversely
affect our hotel operations. These conditions may be widespread
or isolated to one or more geographic regions. As a result,
recessions or other general economic conditions may have a
negative impact on our ability to achieve or sustain substantial
improvements in earnings.

4



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International Operations Are Subject to Special Political
and Monetary Risks.We have significant international
operations which as of December 31, 1999 included 113 owned,
 managed or franchised properties in Europe (including 31
properties with majority ownership); 33 owned, managed or
franchised properties in Latin America (including 15 properties
with majority ownership); and 68 owned, managed or franchised
properties in the Asia/ Pacific region (including three
properties with majority ownership). International operations
generally are subject to various political and other risks that
are not present in U.S. operations. These risks include the risk
of war or civil unrest, expropriation and nationalization. In
addition, some international jurisdictions restrict the
repatriation of non-U.S. earnings. Various international
jurisdictions also have laws limiting the right and ability of
non-U.S. entities to pay dividends and remit earnings to
affiliated companies unless specified conditions have been met.
In addition, sales in international jurisdictions typically are
made in local currencies, which subject us to risks associated
with currency fluctuations. Currency devaluations and unfavorable
 changes in international monetary and tax policies could have a
material adverse effect on our profitability and financing plans,
 as could other changes in the international regulatory climate
and international economic conditions. Other than Italy, where
our risks are heightened due to the relatively large number of
properties we own, our properties are geographically diversified
and are not concentrated in any particular region.

We Are Uncertain What Long-Term Effect the Adoption of the
Euro Will Have on Us.On January 1, 1999, 11 of the
15 member countries of the European Union (the
Participating Countries) established fixed conversion
 rates between their existing sovereign currencies and the Euro.
Following the introduction of the Euro, the legacy currencies of
the Participating Countries will remain legal tender during a
transition period ending on January 1, 2002. During the
transition period, both the legacy currency and the Euro will be
legal tender in the respective Participating Countries, and
currency conversions will be computed by a triangulation with
reference to conversion rates between the respective currencies
and the Euro. We currently operate in substantially all of the
Participating Countries. Although the adoption of the Euro by the
 Participating Countries has not yet had any material effect on
us, it is possible that over the long-term the Euro adoption will
 result in increased competition in the European hotel market.

Pending the Disposition of the Desert Inn, Our Gaming
Operations Subject Us to Certain Additional Risks.
Although we have sold Caesars World, Inc. and other related
gaming assets (Caesars) and intend to sell the Desert
 Inn Resort & Casino (the Desert Inn), our gaming
 operations are subject to regulatory requirements that will
continue to impact Starwood until the sale of the Desert Inn is
completed. These requirements include extensive licensing,
regulatory controls for gaming operations that are administered
by various governmental entities, the financial risk inherent in
commercial gambling ventures and increased domestic and
international competition from both established casinos and newly
 emerging gaming operations.

Risks Relating to Acts of God and War

The Companys financial and operating performance may be
adversely affected by acts of God, such as natural disasters, in
both the locations in which the Company owns and/or operates
significant properties and areas of the world from which the
Company draws a large number of customers. Similarly, wars,
political unrest and other forms of civil strife have in the
past, and may in the future, cause the Companys results to
differ materially from anticipated results.

Investing Through Partnerships or Joint Ventures Decreases Our
 Ability to Manage Risk

Instead of purchasing hotel properties directly, we have from
time to time invested, and may continue to invest, as a
co-venturer. Joint venturers often have shared control over the
operation of the joint venture assets. Therefore, joint venture
investments may involve risks such as the possibility that the
co-venturer in an investment might become bankrupt, or have
economic or business interests or goals that are inconsistent
with our business interests or goals, or be in a position to take
 action contrary to our instructions or requests or contrary to
our policies or objectives. Consequently, actions by a
co-venturer might subject hotel properties owned by the joint
venture to additional risk. Although we generally seek to
maintain sufficient control of any joint venture, we may be
unable to take action without the approval of our joint venture
partners. Alternatively, our joint venture partners could take
actions binding on a joint venture without our consent.

5



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Item 1.  Business.

General

Starwood is one of the worlds largest hotel and leisure
companies. The Company conducts its hotel business both directly
and through its subsidiaries, including ITT Sheraton Corporation
(Sheraton), the Trust and Ciga S.p.A.
(Ciga). The Companys brand names include
Sheraton, Westin, The Luxury Collection, St.
Regis, W
and Four Points. Through these
brands, Starwood is well represented in most major markets around
 the world.

The Companys revenue and earnings are derived primarily
from hotel and leisure operations, which include the operation of
 the Companys owned hotels; the operation of other hotels
for a management fee pursuant to long-term management contracts;
the receipt of franchise fees; and the development, ownership and
 operation of vacation ownership resorts, marketing and selling
VOIs in the resorts and providing financing to customers who
purchase such interests.

The Companys hotel and leisure business emphasizes the
global operation of full-service hotels primarily in the luxury
and upscale segment of the lodging industry. Starwood seeks to
acquire interests in or management rights with respect to hotels
in this segment. In the first quarter of 1998, Starwood completed
 two major transactions: the acquisition of Westin (the
Westin Merger) and the acquisition of ITT (the
ITT Merger). For further discussion of the ITT Merger
 and the Westin Merger, see the notes to financial statements of
this Joint Annual Report. At December 31, 1999, the
Companys portfolio of owned, managed or franchised hotels
totaled 716 hotels with approximately 218,000 rooms in 80
countries. This portfolio is comprised of 170 hotels that
Starwood owns or leases or in which Starwood has a majority
equity interest (substantially all of which hotels Starwood also
manages), 248 hotels managed by Starwood on behalf of third-party
 owners (including entities in which Starwood has a minority
equity interest) and 298 hotels for which Starwood receives
franchise fees. Additionally, at December 31, 1999, the
Company operated 12 vacation ownership resorts, with eight in
active sales.

The Trust was organized in 1969, and the Corporation was
incorporated in 1980, both under the laws of Maryland.

The Companys principal place of business is
777 Westchester Avenue, White Plains, New York, 10604, and
its telephone number is (914) 640-8100.

For a discussion of the Companys revenues, profits, assets
and geographical segments, see the notes to financial statements
of this Joint Annual Report. For additional information
concerning the Companys business, see Item 2,
Properties, of this Joint Annual Report.

Recent Developments

As of September 30, 1999, Starwood owned approximately 70.3%
 of the ordinary shares and approximately 29% of the outstanding
savings shares of Ciga. In October 1999, the Company
announced its intention to purchase all of the outstanding shares
 of Ciga not owned by Starwood. Following completion of the
tender offer in February 2000, Starwood now owns
approximately 99% of the ordinary shares and approximately 86% of
 the savings shares. The aggregate purchase price of the
incremental shares was approximately $290 million.

On December 30, 1999, the Company completed the sale of
Caesars for approximately $3.0 billion in cash. The Company used
the proceeds to immediately pay off $2.5 billion of increasing
rate notes and to reduce its bank revolver by approximately $500
million.

In September and October 1999, the Company sold
substantially all of its interest in Lampsa, SA, a Greek company
that owns the Grande Bretagne Hotel in Athens, Greece. The
Company owned its interest in Lampsa, SA through its then 70.3%
ownership of Ciga. The Company received gross proceeds (before

6



---





On October 1, 1999, the Company completed the acquisition of
 Vistana. Vistanas principal operations include the
acquisition, development and operation of high quality vacation
ownership resorts; marketing and selling VOIs in the resorts; and
 providing financing to customers who purchase such interests.
The Company financed the acquisition of Vistana with cash of
approximately $110 million, the assumption of approximately $280
million of debt and the issuance of approximately 10.1 million
Shares.

In April 1999, the Company disposed of its remaining
interest in Madison Square Garden, L.P. (MSG) for net
 cash proceeds of approximately $87 million. Additionally, in
February 1999, Starwood sold its remaining interest of
approximately 9.5 million shares of ITT Educational Services,
Inc. (Educational Services) in a public offering and
contemporaneous sale to Educational Services for net proceeds of
approximately $310 million.

Competitive Strengths

Management believes that the following factors contribute to the
Companys position as a leader in the lodging industry and
provide a foundation for the Companys business strategy:

Brand Strength.Starwood believes that it has
strong brand leadership in major markets worldwide based on the
global recognition of the Companys lodging brands. The
strength of the Companys brands is evidenced, in part, by
the superior ratings received from the Companys hotel
guests and from industry publications. For example, the Condé Nast Traveler Magazine 1999 Gold List Readers
Choice Pollincluded 50 Starwood properties as part of the
top 500 places to stay in the world. Starwood owns or manages
more Gold Listwinners than any other hotel company in the
 world. With the Companys well known lodging brands,
Starwood benefits from a luxury and upscale branding strategy
that provides strong operating performance from new customer
penetration and customer loyalty. During 1999 and 1998, Starwood
selected approximately 11 and 25, respectively, of its owned
hotels, which had been operated on a non-branded or
non-proprietary-branded basis, and converted them to proprietary
brands owned by the Company. In 1999, the Company also added an
additional 112 hotels with approximately 25,000 rooms to its
branded hotel system. This program has enhanced and expanded the
Companys global presence and brand recognition.

Frequent Guest Program.The Companys loyalty
program, Starwood Preferred Guest
(SPG), was awarded the 1999 Hotel Program of the year
 by consumers via the prestigious Freddie Awards. SPG, despite
being the newest hotel loyalty program in the industry, also
received awards for Best Customer Service, Best Web Site, Best
Elite-Level Program and Best Award Redemption. SPG, deemed unique
 in the hotel industry for its policy of no blackout dates and no
 capacity controls, enables members to redeem stays when they
want and where they want, a feature not offered by competitors.

Significant Presence in Top Markets.The
Companys luxury and upscale full-service hotel assets are
well positioned in North America, Europe, Asia, Latin America and
 Africa. These assets are primarily located in major cities and
resort areas that management believes have historically
demonstrated a strong breadth, depth and growing demand for
luxury and upscale full-service hotels, in which the supply of
sites suitable for hotel development has been limited and in
which development of such sites is relatively expensive.

Premier and Distinctive Properties.Starwood
controls a distinguished and diversified group of hotel
properties throughout the world, including The St. Regis in New
York, New York; The Phoenician in Scottsdale, Arizona; the Hotel
Danieli in Venice, Italy; and the Palace Hotel in Madrid, Spain.
These are among the leading hotels in the industry and are at the
 forefront of providing the highest quality and service.

Scale.As one of the largest hotel companies
focusing on the luxury and upscale full-service lodging market,
Starwood has the scale to support its core marketing and
reservation functions. The Company also believes that its scale
will contribute to lowering its cost of operations through
purchasing economies in such areas as insurance,
telecommunications, employee benefits, food and beverage,
furniture, fixtures and equipment and operating supplies.

7



---



Diversification of Cash Flow and Assets.Management
 believes that the diversity of the Companys brands, market
 segments served, revenue sources and geographic locations
provides a broad base from which to enhance revenue and profits
and to strengthen the Companys global brands. This
diversity limits the Companys exposure to any particular
lodging asset, brand or geographic region.

While Starwood focuses on the luxury and upscale portion of the
full-service lodging market, the Companys brands cater to a
 diverse group of sub-markets within this market. For example,
The Luxury Collection caters to high-end hotel and resort
clientele while Four Points hotels deliver full-service hotel
amenities at more affordable rates. Management believes that the
diversity of the Companys brands and customer base reduces
the likelihood of competition for customers at any one of the
Companys hotels from other hotels within its portfolio.
Instead, management believes that this diversity serves to
increase the Companys market share within markets where
Starwood operates more than one brand.

Starwood derives its cash flow from multiple sources, including
owned hotels, management and franchise fees, and is
geographically diverse with operations in six continents. The
following table reflects the Companys properties by revenue
 source for the year ended December 31, 1999:

|                              |  |               |     | 
|----------------------------- |  | ------------- | --- | 
|                              |  | Number of    
|                              |  | Properties(a)
|                              |  |              
|Owned hotels(b)               |  |               | 170 | 
|                             
|                             
|                             
|                             
|Managed and franchised hotels |  |               | 503 | 
|                             
|                             
|                             
|                             
|Unconsolidated joint ventures |  |               | 43  | 
|                              |  |               |     | 
|Total                         |  |               | 716 | 
|                              |  |               |     | 




(a)  Excludes 12 vacation ownership resorts.


(b)  Includes wholly owned, majority owned
and leased hotels.


The following table shows the Companys geographical
presence by major geographic area for the year ended
December 31, 1999:

|                           |  |               |     | 
|-------------------------- |  | ------------- | --- | 
|                           |  | Number of    
|                           |  | Properties(a)
|                           |  |              
|North America              |  |               | 438 | 
|                          
|                          
|                          
|                          
|Europe                     |  |               | 113 | 
|                          
|                          
|                          
|                          
|Latin America(b)           |  |               | 33  | 
|                          
|                          
|                          
|                          
|Asia Pacific(c)            |  |               | 68  | 
|                          
|                          
|                          
|                          
|Africa and the Middle East |  |               | 64  | 
|                           |  |               |     | 
|Total                      |  |               | 716 | 
|                           |  |               |     | 




(a)  Excludes 12 vacation ownership resorts.


(b)  Includes Mexico.


(c)  Includes Australia.


Business Strategy

The Companys primary business objective is to maximize
earnings and cash flow by increasing the profitability of the
Companys existing portfolio, selectively acquiring
interests in additional assets, increasing the number of the
Companys hotel management contracts and franchise
agreements and acquiring, developing and selling VOIs. The
Company plans to increase earnings by leveraging its global
assets, broad customer base and other resources by taking
advantage of the Companys scale to reduce costs.

8



---



Growth Opportunities.Management has identified
several internal growth opportunities that are expected to
enhance the Companys operating performance and
profitability, including:



| |   |                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Refining the positioning of the Companys brands to further
	its strategy of strengthening brand identity. By re-branding
	certain owned hotels to one of Starwoods proprietary
	brands, Starwood will seek to further solidify its brand
	reputation and market presence, leading to enhanced revenue per
	available room (REVPAR) performance;
|
| |  | Expanding the Companys role as a third-party manager of
	hotel properties. This allows Starwood to expand the presence of
	its lodging brands and gain additional cash flow generally with
	modest capital commitment;                                                                                                                            
|
| |  | Franchising the Sheraton, Westin and Four Points brands to
	selected third-party operators, thereby expanding the
	Companys market presence, enhancing the exposure of its
	hotel brands and providing additional income through franchise
	fees;                                                                                                 
|
| |  | Continuing the integration of the Companys owned, managed
	and franchised hotels into a single, multi-brand reservations
	system, coordinating the global sales efforts, and expanding the
	Companys Internet presence and sales capabilities to
	increase revenue and improve customer service;                                                 
|
| |  | Growing the Companys frequent guest program, which the
	Company believes will increase occupancy rates and provide the
	Companys customers with benefits based upon loyalty to the
	Companys hotels;                                                                                                                                            
|
| |  | Enhancing the Companys marketing efforts by integrating the
	 Companys proprietary customer databases, so as to sell
	additional products and services to existing customers, improve
	occupancy rates and create additional marketing opportunities;                                                                                            
|
| |  | Optimizing the Companys use of its real estate assets to
	improve ancillary revenue, such as restaurant, beverage and
	parking revenue from the Companys hotel properties;                                                                                                                                                                       
|
| |  | Continuing to build the new W hotel brand to appeal
	to upscale business travelers and other customers seeking
	full-service new brands such as St. Regis and hotels in major
	markets; and                                                                                                                                                      
|
| |  | Developing additional vacation ownership resorts near select
	hotel locations.                                                                                                                                                                                                                                                                     

Starwood intends to explore opportunities to expand and diversify
 the Companys hotel portfolio through minority investments
and selective acquisitions of properties domestically and
internationally that meet some or all of the following criteria:



| |   |                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Luxury and upscale full-service hotels in major metropolitan
	areas and business centers;                                                                                                                                                                                                        
|
| |  | Major tourist hotels, destination resorts or conference centers
	that have favorable demographic trends and are located in markets
	 with significant barriers to entry or with major room demand
	generators such as office or retail complexes, airports, tourist
	attractions or universities;
|
| |  | Undervalued hotels whose performance can be increased by
	re-branding to one of the Companys hotel brands, the
	introduction of better and more efficient management techniques
	and practices and/or the injection of capital for renovating,
	expanding or repositioning the property; and    
|
| |  | Portfolios of hotels or hotel companies that exhibit some or all
	of the criteria listed above, where the purchase of several
	hotels in one transaction enables Starwood to obtain favorable
	pricing or obtain attractive assets that would otherwise not be
	available.                       

Starwood may also selectively choose to develop and construct
desirable hotel properties to help the Company meet its strategic
 goals, such as the development of the W hotels in San
Francisco, California and Seattle, Washington which opened in
May 1999 and September 1999, respectively.

Competition

The hotel industry is highly competitive. Competition is
generally based on quality and consistency of room, restaurant
and meeting facilities and services, attractiveness of locations,
 availability of a global

9



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Starwood encounters strong competition as a hotel operator and
developer. There are over 500 hotel management companies in the
United States, including several that operate more than 100
properties. While some of the Companys competitors are
private management firms, several are large national and
international chains that own and operate their own hotels, as
well as manage hotels for third-party owners, under a variety of
brands that compete directly with the Companys brands. In
addition, hotel management contracts are typically long-term
arrangements, but most allow the hotel owner to replace the
management firm if certain financial or performance criteria are
not met.

Governmental Regulation and Licensing

Nevada Gaming Regulation.The ownership and
operation of casino gaming facilities by Starwood in Nevada is
subject to the Nevada Gaming Control Act and the regulations
promulgated thereunder (the Nevada Act), and the
extensive licensing and regulatory control of the Nevada Gaming
Commission (the Nevada Commission), the Nevada State
Gaming Control Board (the Nevada Board) and the Clark
 County Liquor and Gaming Licensing Board (the Clark County
 Board, and together with the Nevada Commission and the
Nevada Board, collectively the Nevada Gaming
Authorities).

The gaming laws, regulations and supervisory procedures of Nevada
 seek to (i) prevent unsavory or unsuitable persons from
having any direct or indirect involvement with gaming at any time
 or in any capacity; (ii) establish and maintain responsible
 accounting practices and procedures; (iii) maintain
effective control over the financial practices of licensees,
including establishing minimum procedures for internal fiscal
affairs and the safeguarding of assets and revenues, providing
reliable record-keeping, and making periodic reports to the
applicable casino gaming authority; (iv) prevent cheating
and fraudulent practices; and (v) provide a source of state
and local revenues through taxation and licensing fees. Changes
to these laws, regulations and supervisor procedures could have
an adverse effect on Starwoods casino gaming operations in
Nevada.

Starwood and ITT are registered with the Nevada Commission as
publicly traded corporations and Starwood has been found suitable
 by the Nevada Gaming Authorities to own all of the outstanding
capital stock of ITT. The Nevada Gaming Authorities have found
suitable ITT as the sole shareholder of Sheraton. Sheraton is
registered with the Nevada Commission as an intermediary company
and been found suitable by the Nevada Gaming Authorities to own
all the outstanding capital stock of Sheraton Gaming Corporation
(SGC). Similarly, SGC is registered with the Nevada
Commission as an intermediary company and been found suitable by
the Nevada Gaming Authorities to own all the outstanding capital
stock of Sheraton Desert Inn Corporation (SDI, and
together with Sheraton and SGC, collectively the Sheraton
Desert Inn Companies). SDI operates the Desert Inn pursuant
 to a license granted by the Nevada Gaming Authorities. These
casino gaming licenses are not transferable and must be renewed
periodically by the payment of various gaming license fees and
taxes.

No person may become a stockholder of, or receive any percentage
of profits from, SDI without first obtaining certain required
licenses and approvals from the Nevada Gaming Authorities. The
Nevada Gaming Authorities may investigate any individual who has
a material relationship to, or material involvement with, a
corporation which is involved in gaming activities. Officers,
directors and key employees of SDI must be individually licensed
by, and changes in corporate positions must be reported to, the
Nevada Gaming Authorities, which changes may be disapproved by
the Nevada Gaming Authorities. Certain of Starwoods
officers, directors and key employees and those of
Starwoods subsidiaries who are actively and directly
involved in Starwoods gaming activities have been, and
others may be, required to be licensed or found suitable by the
Nevada Gaming Authorities. The Nevada Gaming Authorities may deny
 an application for licensing for any cause which they deem
reasonable. A finding of suitability is comparable to licensing,
and both require submission of detailed personal and financial
information followed by a thorough investigation. If

10



---





Starwood, ITT and the Sheraton Desert Inn Companies are required
to submit detailed financial and operating reports to the Nevada
Commission. Substantially all loans, leases, sales of securities
and similar financing transactions by SDI must be reported to or
approved by the Nevada Commission. Nevada law prohibits a
corporation registered by the Nevada Commission from making a
public offering of its securities without the prior approval of
the Nevada Commission if any part of the proceeds of the offering
 of the securities is, or the securities themselves are, to be
used either to (i) finance the construction, acquisition or
operation of gaming facilities in Nevada; or (ii) retire or
extend obligations incurred for one or more such purposes.

If it were determined that the Nevada Act was violated by SDI,
the gaming license SDI holds could be limited, conditioned,
suspended or revoked. In addition, at the discretion of the
Nevada Commission, Starwood, ITT, the Sheraton Desert Inn
Companies and the persons involved could be subject to
substantial fines for each separate violation of the Nevada Act.
Furthermore, a supervisor could be appointed by the Nevada
Commission to operate the gaming property of SDI and, under
certain circumstances, earnings generated during the
supervisors appointment (except for the reasonable rental
value of the affected gaming property) could be forfeited to the
State of Nevada. Any suspension or revocation of the licenses or
approvals, the imposition of substantial fines, or the
appointment of a supervisor, would have a material adverse effect
 on SDI, as the case may be.

The Nevada Gaming Authorities may investigate and require a
finding of suitability of any holder of any class of
Starwoods voting securities at any time. Nevada law
requires any person who acquires more than 5% of any class of
Starwoods voting securities to report the acquisition to
the Nevada Commission and such person may be investigated and
found suitable or not suitable. Any person who becomes a
beneficial owner of more than 10% of any class of Starwoods
 voting securities must apply for a finding of suitability by the
 Nevada Commission within 30 days after the Nevada Board
Chairman mails a written notice requiring such filing, and must
pay the costs and fees incurred by the Nevada Board in connection
 with the investigation. Under certain circumstances, an
institutional investor, as defined by the Nevada Act,
 that acquires more than 10% but not more than 15% of
Starwoods voting securities may apply to the Nevada
Commission for a waiver of such finding of suitability
requirements if such institutional investor holds the voting
securities for investment purposes only. An institutional
investor will not be deemed to hold voting securities for
investment purposes unless the voting securities were acquired
and are held in the ordinary course of business as an
institutional investor and not for the purpose of causing,
directly or indirectly, the election of a majority of the members
 of either the Board of Directors of the Corporation or the Board
 of Trustees of the Trust, any change in Starwoods
corporate charter, bylaws, management, policies or operations or
any of Starwoods casino gaming operations, or any other
action which the Nevada Commission finds to be inconsistent with
holding Starwoods voting securities for investment purposes
 only. Activities that are not deemed to be inconsistent with
holding voting securities for investment purposes only include
(i) voting on all matters voted on by stockholders;
(ii) making financial and other inquiries of management of
the type normally made by securities analysts for informational
purposes and not to cause a change in its management, policies or
 operations; and (iii) such other activities as the Nevada
Commission may determine to be consistent with such investment
intent. If the stockholder who must be found suitable is a
corporation, partnership, trust or other business entity, it must
 submit detailed business and financial information, including a
list of beneficial holders of its ownership interests. Any person
 who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the
Nevada Commission or by the Chairman of the Nevada Board may be
found unsuitable. Any person found unsuitable who holds, directly
 or indirectly, any beneficial ownership of Starwoods debt
or equity voting securities beyond such period or periods of time
 as may be prescribed by the Nevada Commission may be guilty of a
 gross misdemeanor. Starwood, ITT or the Sheraton Desert Inn
Companies could be subject to disciplinary action if, without the
 prior approval of the Nevada Commission

11



---





Regulations of the Nevada Commission provide that control of a
registered publicly traded corporation, such as Starwood and ITT,
 cannot be changed through merger, consolidation, acquisition of
assets, management or consulting agreements, or any form of
takeover without the prior approval of the Nevada Commission.
Persons seeking approval to control a registered publicly traded
corporation must satisfy the Nevada Commission as to a variety of
 stringent standards prior to assuming control of such
corporation. The failure of a person to obtain such approval
prior to assuming control over the registered publicly traded
corporation may constitute grounds for finding such person
unsuitable. Regulations of the Nevada Commission also prohibit
certain repurchases of securities by registered publicly traded
corporations without the prior approval of the Nevada Commission.
 Transactions covered by these regulations are generally aimed at
 discouraging repurchases of securities at a premium over market
price from certain holders of more than three percent of the
outstanding securities of the registered publicly traded
corporation. The regulations of the Nevada Commission also
require prior approval for a plan of
recapitalization. Generally, a plan of recapitalization is
a plan proposed by the management of a registered publicly traded
 corporation that contains recommended action in response to a
proposed corporate acquisition opposed by management of the
corporation if such acquisition would require the prior approval
of the Nevada Commission.

License fees and taxes, computed in various ways depending on the
 type of gaming involved, are payable to the State of Nevada and
to Clark County where SDIs gaming operations are conducted.
 Depending on the particular fee or tax involved, these
assessments are payable either monthly, quarterly or annually and
 are based upon either (i) a percentage of the gross gaming
revenues received by the casino operations; (ii) the number
of slot machines or other gaming devices operated by the casino;
or (iii) the number of table games operated by the casino. A
 casino entertainment tax also is paid by the licensees where
entertainment is furnished in connection with the selling of food
 or refreshments.

The sale of alcoholic beverages by SDI is subject to licensing,
control and regulation by the Clark County Board. Such liquor
licenses are revocable and are not transferable. The Clark County
 Board has full power to limit, condition, suspend or revoke any
liquor license, and any disciplinary action of this nature or
license revocation would have a material adverse effect on
SDIs gaming operations.

Provisions of the Corporations Articles of
Incorporation Related to Casino Gaming.The Articles of
Incorporation provide that (i) all Starwoods
securities are subject to redemption to the extent necessary to
prevent the loss, or to secure the reinstatement, of any casino
gaming license held by any of Starwoods subsidiaries in any
 jurisdiction within or without the United States; (ii) all
Starwoods securities are held subject to the condition that
 if a holder is found by a gaming authority in any jurisdiction
to be disqualified or unsuitable pursuant to any gaming law, such
 holder will be required to dispose of all such securities;
failing such disposition, the Corporation may redeem the
securities at the lesser of their market price or the
disqualified holders original purchase price; and
(iii) it is unlawful for any such disqualified person to (a)
 receive payments of interest or dividends on any such
securities; (b) exercise, directly or indirectly, any rights
conferred by any such securities; or (c) receive any
remuneration in any form, for services rendered or otherwise,
from the subsidiary that holds the gaming license in the
applicable jurisdiction.

Environmental Matters

Starwood is subject to certain requirements and potential
liabilities under various federal, state and local environmental
laws, ordinances and regulations (Environmental
Laws). For example, a current or previous owner or operator
 of real property may become liable for the costs of removal or
remediation of hazardous or

12



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Environmental Laws are not the only source of environmental
liability. Under the common law, owners and operators of real
property may face liability for personal injury or property
damage because of various environmental conditions such as
alleged exposure to hazardous or toxic substances (including, but
 not limited to, ACMs, PCBs and CFCs), poor indoor air quality,
radon or poor drinking water quality.

Although Starwood has incurred and expects to incur remediation
and other environmental costs during the ordinary course of
operations, management anticipates that such costs will not have
a material adverse effect on the operations or financial
condition of the Company.

Seasonality and Diversification

The hotel industry is seasonal in nature; however, the periods
during which the Companys properties experience higher
hotel revenue activities vary from property to property and
depend principally upon location. The Companys revenues
historically have been lower in the first quarter than in the
second, third or fourth quarters.

Comparability of Owned Hotel Results

Starwood continually updates and renovates its owned, leased and
consolidated joint venture hotels. While undergoing renovation,
these hotels are generally not operating at full capacity and, as
 such, these renovations can negatively impact Starwoods
revenues and EBITDA.(1)









|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | EBITDA is defined as income before interest
	expense, income tax expense, 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.

13



---





Employees

At December 31, 1999, Starwood employed approximately
120,000 persons at its corporate offices, owned and managed
hotels and timeshare resorts, of whom approximately 45% were
employed in the United States. At December 31, 1999,
approximately 33% of the U.S.-based employees were covered by
various collective bargaining agreements providing, generally,
for basic pay rates, working hours, other conditions of
employment and orderly settlement of labor disputes. Generally,
labor relations have been maintained in a normal and satisfactory
 manner, and management believes that the Companys employee
 relations are good.

Item 2.  Properties.

Starwood is one of the largest hotel and leisure companies in the
 world, with operations in 80 countries around the world.
Starwood considers its hotels generally to be premier
establishments with respect to desirability of location, size,
facilities, physical condition, quality and variety of services
offered in the markets in which they are located. Although
obsolescence arising from age and condition of facilities can
adversely effect the Companys hotel properties, Starwood
expends substantial funds to renovate and maintain its facilities
 in order to remain competitive. For further information, see
Item 7, Managements Discussion and Analysis of
Financial Condition and Results of OperationsLiquidity and
Capital ResourcesCapital Expenditures, in this Joint
Annual Report.

The Companys lodging business included 716 owned, managed
or franchised hotels with approximately 218,000 rooms at
December 31, 1999, predominantly under six brands:
St. Regis (luxury full-service hotels and resorts), The
Luxury Collection (luxury full-service hotels and resorts),
Westin (luxury and upscale full-service hotels and resorts),
Sheraton (upscale full-service hotels and resorts),
W (stylish boutique full-service urban hotels) and Four
Points (moderately priced hotels). At December 31, 1999, 170
 of these hotels were owned or leased by Starwood or an entity in
 which Starwood has a majority equity interest, 248 were managed
by Starwood on behalf of third-party owners (including entities
in which Starwood has a minority equity interest), 298 were owned
 and operated by franchisees using one of the Companys
brands or were otherwise represented by Starwood. Additionally,
at December 31, 1999, Starwood operated 12 vacation
ownership resorts, with eight in active sales.

The following table sets forth the number of hotels, number of
rooms, average daily rate (ADR), average occupancy
rate and REVPAR achieved by the Companys 144 owned, leased
and consolidated joint venture hotels (excluding 24 hotels under
significant renovation in 1999 and two hotels without prior year
results) (Same-Store Hotels) by region and worldwide
at December 31, 1999 and 1998.

|                 |  |              |     |       |  |                         |        |           |  |        |        |      |  |      |        |      |  |  |      |   |  |  |      |   |  |   |        |  |  |   |        | 
|---------------- |  | ------------ | --- | ----- |  | ----------------------- | ------ | --------- |  | ------ | ------ | ---- |  | ---- | ------ | ---- |  |  | ---- | - |  |  | ---- | - |  | - | ------ |  |  | - | ------ | 
|                 |  |              |     |       |  |                        
|                 |  |              |     |       |  | Year Ended December 31,
|                 |  |              |     |       |  |                        
|                 |  |              |     |       |  |                         |        |           |  |       
|                 |  |              |     |       |  |                         |        | Average   |  |       
|                 |  |              |     |       |  | ADR                     |        | Occupancy |  | REVPAR
|                 |  |              |     |       |  |                         |        |           |  |       
|Region           |  | Hotels(a)(b) |     | Rooms |  | 1999                    |        | 1998      |  | 1999   |        | 1998 |  | 1999 |        | 1998
|                 |  |              |     |       |  |                         |        |           |  |        |        |      |  |      |        |     
|North America    |  |              | 97  |       |  |                         | 31,979 |           |  | $      | 142.28 |      |  | $    | 138.38 |      |  |  | 71.7 | % |  |  | 70.2 | % |  | $ | 101.99 |  |  | $ | 97.18  | 
|                
|                
|                
|                
|Europe           |  |              | 30  |       |  |                         | 6,651  |           |  | $      | 206.11 |      |  | $    | 192.68 |      |  |  | 70.8 | % |  |  | 71.1 | % |  | $ | 145.95 |  |  | $ | 137.08 | 
|                
|                
|                
|                
|Latin America(c) |  |              | 14  |       |  |                         | 5,202  |           |  | $      | 134.48 |      |  | $    | 136.76 |      |  |  | 63.6 | % |  |  | 65.7 | % |  | $ | 85.51  |  |  | $ | 89.89  | 
|                
|                
|                
|                
|Asia Pacific(d)  |  |              | 3   |       |  |                         | 1,117  |           |  | $      | 133.32 |      |  | $    | 127.23 |      |  |  | 77.2 | % |  |  | 74.8 | % |  | $ | 102.99 |  |  | $ | 95.19  | 
|                 |  |              |     |       |  |                         |        |           |  |        |        |      |  |      |        |      |  |  |      |   |  |  |      |   |  |   |        |  |  |   |        | 
|Worldwide        |  |              | 144 |       |  |                         | 44,949 |           |  |        |        |      |  |      |        |      |  |  |      |   |  |  |      |   |  |   |        |  |  |   |        | 
|                 |  |              |     |       |  |                         |        |           |  |        |        |      |  |      |        |      |  |  |      |   |  |  |      |   |  |   |        |  |  |   |        | 




|    |                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------
|(a) | Excludes 24 hotels under significant
	renovation in 1999 and two hotels without prior year results.
|   
|(b) | Excludes 12 vacation ownership resorts.                                                            
|   
|(c) | Includes Mexico.                                                                                   
|   
|(d) | Includes Australia.                                                                                

Hotel Management and Franchising

Hotel and resort properties in the United States are often owned
by entities that neither manage hotels nor own a brand name.
Hotel owners typically enter into management contracts with hotel
 management

14



---





Managed Hotels. Through its subsidiaries, Starwood
manages hotels worldwide, usually under a long-term agreement
with the hotel owner (including entities in which Starwood has a
minority equity interest). The Companys responsibilities
under hotel management contracts typically include hiring,
training and supervising the managers and employees that operate
these facilities. For additional fees, Starwood provides
reservation services and coordinates national advertising and
certain marketing and promotional services. Starwood prepares and
 implements annual budgets for the hotels it manages and is
responsible for allocating property-owner funds for periodic
maintenance and repair of buildings and furnishings. At
December 31, 1999, Starwood managed 248 hotels
worldwide under long-term agreements.

Management contracts typically provide for base fees tied to
gross revenue and incentive fees tied to profits. In the
Companys experience, owners seek hotel managers that can
provide attractively priced base, incentive, marketing and
franchise fees combined with demonstrated sales and marketing
expertise and operations-focused management designed to enhance
profitability. Some of the Companys management contracts
permit the hotel owner to terminate the agreement when the hotel
is sold or otherwise transferred to a third party, as well as if
Starwood fails to meet established performance criteria. In
addition, many hotel owners seek an equity or debt investment
from Starwood to help finance hotel renovations or conversion to
a new Starwood brand and to align the interests of the owner and
the Company. The Companys ability or willingness to make
such investments may determine, in part, whether Starwood will be
 offered, will accept, or will retain a particular management
contract.

Brand Franchising. Through its subsidiaries,
Starwood franchises its Sheraton, Westin and Four Points brand
names and generally derives licensing and other fees from
franchisees based on a fixed percentage of franchise hotel room
revenue, as well as fees for other services, including
centralized reservations, sales and marketing, public relations
and national and international media advertising. In addition, a
franchisee may also purchase hotel supplies, including
brand-specific products, from certain Starwood-approved vendors.
Starwood approves certain plans for, and the location of,
franchised hotels and reviews their design.

As of December 31, 1999, there were 291 franchised
properties with approximately 71,000 rooms operating under
the Sheraton, Westin, and Four Points brands.

External Growth

On October 1, 1999, the Company completed the acquisition of
 Vistana, one of the premier developers and operators of high
quality vacation interval ownership. Vistanas principal
operations include the acquisition, development and operation of
vacation ownership resorts; marketing and selling VOIs in the
resorts; and providing financing to customers who purchase such
interests. The Company financed the acquisition of Vistana with
cash of approximately $110 million, the assumption of
approximately $280 million of debt and the issuance of
approximately 10.1 million Shares.

During the year ended December 31, 1999, the Company signed
management and franchise agreements for 112 hotels with
approximately 25,000 rooms under its brands.

15



---



Internal Growth

The following table summarizes average occupancy rates, ADR and
REVPAR on a year-to-year basis for the Companys Same-Store
Hotels for the years ended December 31, 1999 and 1998:

|                 |  |                         |        |      |  |        |        |  |  |  |      |  
|---------------- |  | ----------------------- | ------ | ---- |  | ------ | ------ |  |  |  | ---- | -
|                 |  |                         |        |     
|                 |  | Year Ended December 31, |        |     
|                 |  |                         |        |     
|                 |  | 1999                    |        | 1998 |  | Change
|                 |  |                         |        |      |  |       
|Worldwide        |  |                         |        |      |  |        |        |  |  |  |      |  
|                
|                
|                
|                
|Number of hotels |  | 144                     |        |      |  |       
|                
|                
|                
|                
|Number of rooms  |  | 44,949                  |        |      |  |       
|                
|                
|                
|                
|REVPAR           |  | $                       | 106.35 |      |  | $      | 101.95 |  |  |  | 4.3  | %
|                
|                
|                
|                
|ADR              |  | $                       | 150.32 |      |  | $      | 145.78 |  |  |  | 3.1  | %
|                
|                
|                
|                
|Occupancy        |  |                         | 70.7%  |      |  |        | 69.9%  |  |  |  | 0.8  |  
|                
|                
|                
|                
|North America    |  |                         |        |      |  |        |        |  |  |  |      |  
|                
|                
|                
|                
|Number of hotels |  | 97                      |        |      |  |       
|                
|                
|                
|                
|Number of rooms  |  | 31,979                  |        |      |  |       
|                
|                
|                
|                
|REVPAR           |  | $                       | 101.99 |      |  | $      | 97.18  |  |  |  | 4.9  | %
|                
|                
|                
|                
|ADR              |  | $                       | 142.28 |      |  | $      | 138.38 |  |  |  | 2.8  | %
|                
|                
|                
|                
|Occupancy        |  |                         | 71.7%  |      |  |        | 70.2%  |  |  |  | 1.5  |  
|                
|                
|                
|                
|International    |  |                         |        |      |  |        |        |  |  |  |      |  
|                
|                
|                
|                
|Number of hotels |  | 47                      |        |      |  |       
|                
|                
|                
|                
|Number of rooms  |  | 12,970                  |        |      |  |       
|                
|                
|                
|                
|REVPAR           |  | $                       | 117.29 |      |  | $      | 113.82 |  |  |  | 3.0  | %
|                
|                
|                
|                
|ADR              |  | $                       | 171.46 |      |  | $      | 164.44 |  |  |  | 4.3  | %
|                
|                
|                
|                
|Occupancy        |  |                         | 68.4%  |      |  |        | 69.2%  |  |  |  | (0.8 | )

Item 3.  Legal Proceedings.

Incorporated by reference to the description of legal proceedings
 in Note 21, Commitments and Contingencies, in
the notes to financial statements set forth in Part II,
Item 8, Financial Statements and Supplementary
Data.



|        |                                                     
|------- | ----------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders.

Not applicable.

Executive Officers of the Registrants

See Part III, Item 10, of this Joint Annual Report for
information regarding the executive officers of the Registrants,
which information is incorporated herein by reference.

PART II

Item 5.  Market for Registrants Common
 Equity and Related Stockholder Matters.

Market Information

The Shares are traded on the New York Stock Exchange (the
NYSE) under the symbol HOT. The
Class A Shares are all currently held by the Corporation and
 have never been traded.

16



---



The following table sets forth, for the fiscal periods indicated,
 the high and low sale prices per Share on the NYSE Composite
Tape.

|               |  |      |       |     |  |   |       | 
|-------------- |  | ---- | ----- | --- |  | - | ----- | 
|               |  | High |       | Low
|               |  |      |       |    
|1999           |  |      |       |     |  |   |       | 
|              
|              
|              
|              
|Fourth quarter |  | $    | 24.50 |     |  | $ | 19.50 | 
|              
|              
|              
|              
|Third quarter  |  | $    | 31.00 |     |  | $ | 21.75 | 
|              
|              
|              
|              
|Second quarter |  | $    | 37.75 |     |  | $ | 28.00 | 
|              
|              
|              
|              
|First quarter  |  | $    | 34.19 |     |  | $ | 22.69 | 
|              
|              
|              
|              
|1998           |  |      |       |     |  |   |       | 
|              
|              
|              
|              
|Fourth quarter |  | $    | 31.38 |     |  | $ | 18.75 | 
|              
|              
|              
|              
|Third quarter  |  | $    | 49.19 |     |  | $ | 29.19 | 
|              
|              
|              
|              
|Second quarter |  | $    | 54.38 |     |  | $ | 44.44 | 
|              
|              
|              
|              
|First quarter  |  | $    | 57.88 |     |  | $ | 49.50 | 

Holders

As of March 27, 2000, there were approximately 31,800
holders of record of Shares and one holder of record (the
Corporation) of the Class A Shares.

Distributions Made/ Declared

The following table sets forth the frequency and amount of
distributions made by the Trust to holders of Shares for the
years ended December 31, 1999 and 1998:

|               |  |               |      |    
|-------------- |  | ------------- | ---- | ---
|               |  | Distributions
|               |  | Made         
|               |  |              
|1999           |  |               |      |    
|              
|              
|              
|              
|Fourth quarter |  | $             | 0.15 | (a)
|              
|              
|              
|              
|Third quarter  |  | $             | 0.15 |    
|              
|              
|              
|              
|Second quarter |  | $             | 0.15 |    
|              
|              
|              
|              
|First quarter  |  | $             | 0.15 |    
|              
|              
|              
|              
|1998           |  |               |      |    
|              
|              
|              
|              
|Fourth quarter |  | $             | 0.15 | (a)
|              
|              
|              
|              
|Third quarter  |  | $             | 0.52 |    
|              
|              
|              
|              
|Second quarter |  | $             | 0.52 |    
|              
|              
|              
|              
|First quarter  |  | $             | 0.52 |    




|    |                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The Trust declared distributions for the fourth
	quarter of 1999 and 1998 to shareholders of record on
	December 31, 1999 and 1998, respectively. The distributions
	were paid in January 2000 and 1999, respectively.

The Corporation has not paid any cash dividends since its
organization and does not anticipate that it will make any such
distributions in the foreseeable future.

As a consequence of the Reorganization, holders of Class B
Shares are now entitled, subject to certain conditions, to
receive a non-cumulative annual dividend, at an initial rate of
$0.60 per Share, to the extent the dividend is authorized by the
Board of Trustees of the Trust. The annual dividend was increased
 to an annual rate of $0.69 per Share in 2000 and is expected to
increase 15% per year thereafter. Unless dividends for the then
current quarterly dividend period have been paid on the
Class B Shares, the Trust is not permitted to pay a dividend
 on the Class A Shares (except in certain circumstances).
Under the terms of the Companys current credit facilities,
the Trust may pay unlimited dividends to the Corporation or any
wholly owned subsidiary thereof and during any period of twelve
consecutive calendar months, the Trust may pay cash dividends to
its shareholders (excluding the Corporation) in an aggregate
initial amount not to exceed the

17



---





Conversion of Securities; Sale of Unregistered Securities

During 1999, the Trust consented to the exchange of approximately
 320,000 shares of Class B Exchangeable Preferred Shares
(Class B EPS) by certain stockholders for an
equal number of shares of Class A Exchangeable Preferred
Shares (Class A EPS). Additionally, the Trust
consented to the exchange of approximately 1.0 million shares of
Class A EPS for an equal number of Shares.

During 1999, the Company exchanged approximately 5.2 million
limited partnership units (LP Units) of the Realty
Partnership and the Operating Partnership held by third parties
for Shares on a one-for-one basis.

Item 6.  Selected Financial Data.

The following financial and operating data should be read in
conjunction with the information set forth under
Managements Discussion and Analysis of Financial
Condition and Results of Operations and the consolidated
financial statements of the Company and related notes thereto
appearing elsewhere in this Joint Annual Report and incorporated
herein by reference. The historical information represents the
historical results of ITT up to the date of the ITT Merger,
because the ITT Merger was treated as a reverse purchase for
accounting purposes. This income statement and operating data
excludes the results of the discontinued lines of business, which
 include gaming, Educational Services and ITT World Directories
(WD).

|                                                           |  |                                      |        |      |  |      |        |      |  |      |       |   |  |   |       |   |  |   |        |  
|---------------------------------------------------------- |  | ------------------------------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ----- | - |  | - | ----- | - |  | - | ------ | -
|                                                           |  |                                     
|                                                           |  | Year Ended December 31,             
|                                                           |  |                                     
|                                                           |  | 1999                                 |        | 1998 |  | 1997 |        | 1996 |  | 1995
|                                                           |  |                                      |        |      |  |      |        |      |  |     
|                                                           |  |                                     
|                                                           |  | (In millions, except per Share data)
|                                                          
|                                                          
|                                                          
|                                                          
|Income Statement Data                                      |  |                                      |        |      |  |      |        |      |  |      |       |   |  |   |       |   |  |   |        |  
|                                                          
|                                                          
|                                                          
|                                                          
|Revenues                                                   |  | $                                    | 3,862  |      |  | $    | 3,325  |      |  | $    | 1,762 |   |  | $ | 1,646 |   |  | $ | 1,606  |  
|                                                          
|                                                          
|                                                          
|                                                          
|Income (loss) from continuing operations                   |  | $                                    | (638   | )    |  | $    | 220    |      |  | $    | (233  | ) |  | $ | 156   |   |  | $ | 101    |  
|                                                          
|                                                          
|                                                          
|                                                          
|Basic earnings (loss) per Share from continuing operations |  | $                                    | (3.41  | )    |  | $    | 1.06   |      |  | $    | (1.85 | ) |  | $ | 1.25  |   |  | $ | 0.86   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Operating Data                                             |  |                                      |        |      |  |      |        |      |  |      |       |   |  |   |       |   |  |   |        |  
|                                                          
|                                                          
|                                                          
|                                                          
|Cash from continuing operations                            |  | $                                    | 571    |      |  | $    | 43     |      |  | $    | 8     |   |  | $ | 332   |   |  | $ | 316    |  
|                                                          
|                                                          
|                                                          
|                                                          
|Cash from/(used for) investing activities                  |  | $                                    | 3,172  |      |  | $    | 2,340  |      |  | $    | 1,132 |   |  | $ | (356  | ) |  | $ | (2,440 | )
|                                                          
|                                                          
|                                                          
|                                                          
|Cash from/(used for) financing activities                  |  | $                                    | (3,335 | )    |  | $    | (2,056 | )    |  | $    | (425  | ) |  | $ | 259   |   |  | $ | 2,079  |  
|                                                          
|                                                          
|                                                          
|                                                          
|Aggregate cash distributions                               |  | $                                    | 116    |      |  | $    | 324    | (a)  |  | $    |      |   |  | $ |      |   |  | $ |       |  
|                                                          
|                                                          
|                                                          
|                                                          
|Cash distribution per Share                                |  | $                                    | 0.60   |      |  | $    | 1.71   |      |  | $    |      |   |  | $ |      |   |  | $ |       |  

|                                                                                |  |                 |        |      |  |      |        |      |  |      |       |  |  |   |       |  |  |   |       | 
|------------------------------------------------------------------------------- |  | --------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                                                                |  |                
|                                                                                |  | At December 31,
|                                                                                |  |                
|                                                                                |  | 1999            |        | 1998 |  | 1997 |        | 1996 |  | 1995
|                                                                                |  |                 |        |      |  |      |        |      |  |     
|                                                                                |  |                
|                                                                                |  | (In millions)  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Balance Sheet Data                                                              |  |                 |        |      |  |      |        |      |  |      |       |  |  |   |       |  |  |   |       | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Total assets                                                                    |  | $               | 12,923 |      |  | $    | 13,417 |      |  | $    | 6,790 |  |  | $ | 7,452 |  |  | $ | 6,769 | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Long-term debt, net of current maturities and including
	redeemable Class B EPS |  | $               | 4,779  |      |  | $    | 5,951  |      |  | $    |      |  |  | $ | 841   |  |  | $ | 572   | 




|    |                                                                                                
|--- | -----------------------------------------------------------------------------------------------
|(a) | Excludes $3.0 billion of dividends paid to ITT
	stockholders in connection with the ITT Merger.

Item 7.  Managements Discussion and
Analysis of Financial Condition and Results of Operations.

To facilitate a meaningful comparison between periods, this
Managements Discussion and Analysis focuses on the
comparison of historical information for the year ended
December 31, 1999 with the Historical As Adjusted (as
defined below) information for the year ended December 31,
1998. Pro forma information for selling, general and
administrative and interest expense for these same periods is
also provided. Management

18



---





19



---



UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF
OPERATIONS

For the Year Ended December 31, 1999


The following unaudited condensed consolidated pro forma
statement of operations for the year ended December 31, 1999
 gives effect as of January 1, 1999 to certain actual and
planned asset dispositions and certain cost savings relating to
the ITT Merger. The pro forma information is based upon the
historical financial information for the Company for the year
ended December 31, 1999 and the assumptions and adjustments
set forth below. The pro forma information does not purport to
present what actual results would have been had such
transactions, in fact, occurred at January 1, 1999, or to
project results for any future period.

|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|--------------------------------------------------- |  | ------------------------------------ | ------ | ----------- |  | --------- | --- | ---- |  | - | ------ | -
|                                                    |  |                                     
|                                                    |  | Year Ended December 31, 1999        
|                                                    |  |                                     
|                                                    |  |                                      |        | Pro Forma   |  |          
|                                                    |  | Historical                           |        | Adjustments |  | Pro Forma
|                                                    |  |                                      |        |             |  |          
|                                                    |  |                                     
|                                                    |  | (In millions, except per Share data)
|                                                   
|                                                   
|                                                   
|                                                   
|Revenues                                            |  |                                      |        |             |  |           |     |      |  |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|Owned, leased and consolidated joint venture hotels |  | $                                    | 3,391  |             |  | $         |    |      |  | $ | 3,391  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Management and franchise fees                       |  |                                      | 285    |             |  |           |    |      |  |   | 285    |  
|                                                   
|                                                   
|                                                   
|                                                   
|Other                                               |  |                                      | 186    |             |  |           |    |      |  |   | 186    |  
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|                                                    |  |                                      | 3,862  |             |  |           |    |      |  |   | 3,862  |  
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|Costs and Expenses                                  |  |                                      |        |             |  |           |     |      |  |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|Owned, leased and consolidated joint venture hotels |  |                                      | 2,313  |             |  |           |    |      |  |   | 2,313  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Other                                               |  |                                      | 47     |             |  |           |    |      |  |   | 47     |  
|                                                   
|                                                   
|                                                   
|                                                   
|Selling, general and administrative                 |  |                                      | 173    |             |  |           | (7  | )(a) |  |   | 166    |  
|                                                   
|                                                   
|                                                   
|                                                   
|Restructuring and other special charges             |  |                                      | 3      |             |  |           |    |      |  |   | 3      |  
|                                                   
|                                                   
|                                                   
|                                                   
|Depreciation and amortization                       |  |                                      | 476    |             |  |           |    |      |  |   | 476    |  
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|                                                    |  |                                      | 3,012  |             |  |           | (7  | )    |  |   | 3,005  |  
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|                                                    |  |                                      | 850    |             |  |           | 7   |      |  |   | 857    |  
|                                                   
|                                                   
|                                                   
|                                                   
|Interest expense, net                               |  |                                      | (493   | )           |  |           | 120 | (b)  |  |   | (362   | )
|                                                    |  |                                      |        |             |  |           | 4   | (c)  |  |   |        |  
|                                                    |  |                                      |        |             |  |           | 7   | (d)  |  |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|Gain on sales of real estate and investments        |  |                                      | 191    |             |  |           |    |      |  |   | 191    |  
|                                                   
|                                                   
|                                                   
|                                                   
|Miscellaneous expense                               |  |                                      | (15    | )           |  |           |    |      |  |   | (15    | )
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|                                                    |  |                                      | 533    |             |  |           | 138 |      |  |   | 671    |  
|                                                   
|                                                   
|                                                   
|                                                   
|Income tax expense                                  |  |                                      | (1,076 | )           |  |           | (50 | )(e) |  |   | (1,126 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Minority equity                                     |  |                                      | (95    | )           |  |           |    |      |  |   | (95    | )
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|Loss from continuing operations                     |  | $                                    | (638   | )           |  | $         | 88  |      |  | $ | (550   | )
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|Earnings per Share  basic                          |  | $                                    | (3.41  | )           |  |           |     |      |  | $ | (2.94  | )
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|Earnings per Share  diluted                        |  | $                                    | (3.41  | )           |  |           |     |      |  | $ | (2.94  | )
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|Weighted average number of Shares                   |  |                                      | 189    |             |  |           |     |      |  |   | 189    |  
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  
|Weighted average number of Shares assuming dilution |  |                                      | 189    |             |  |           |     |      |  |   | 189    |  
|                                                    |  |                                      |        |             |  |           |     |      |  |   |        |  




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents the estimated savings resulting from
	the April 1, 1999 combination of certain identified benefit
	plans as a result of the ITT Merger as if the new combined plans
	had been in place as of January 1, 1999.                                                                                                                                                                                                                                                                                                      
|   
|(b) | Represents the reduction of interest expense
	assuming the partial paydown of the Companys senior secured
	 notes facility (Senior Secured Notes Facility) with
	the net proceeds of approximately $3.0 billion from the
	December 30, 1999 sale of Caesars and the estimated net
	proceeds of approximately $275  million from the planned
	disposition of the Desert Inn, net of the interest allocated to
	discontinued operations in the historical results (see Notes 5
	and 24 in the notes to financial statements).
|   
|(c) | Represents the reduction of interest expense
	assuming the paydown of a portion of the Companys senior
	credit facility (Senior Credit Facility) with the net
	 proceeds of approximately $397 million from the April 1999
	sale of MSG and the February 1999 sale of Educational Services,
	as if these dispositions had occurred on January 1, 1999.                                                                                                                                                                     
|   
|(d) | Represents reduced deferred loan fee amortization
	on debt assumed to have been paid down as of January 1, 1999
	 with proceeds from the dispositions discussed in notes (b)
	and (c) above.                                                                                                                                                                                                                                                                                                                                  
|   
|(e) | Represents the tax effects of the pro forma
	adjustments described in (a) through (d) above.                                                                                                                                                                                                                                                                                                                                                                                                                                  

20



---



UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF
OPERATIONS

For the Year Ended December 31, 1998


The following unaudited condensed consolidated pro forma
statement of operations for the year ended December 31, 1998
 gives effect as of January 1, 1998 to the ITT Merger and
certain actual and planned asset dispositions. The pro forma
information for the year ended December 31, 1998 is based
upon the historical information for the Company for the year
ended December 31, 1998 combined with the historical results
 of the Corporation and the Trust, inclusive of Westin, from
January 1, 1998 to the closing of the ITT Merger on
February 23, 1998 (Historical As Adjusted) and
other assumptions and adjustments set forth below. This statement
 does not purport to present what actual results would have been
had such transactions, in fact, occurred at January 1, 1998,
 or to project results for any future period.

|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|--------------------------------------------------- |  | ------------------------------------ | ----- | ----------- |  | ----------- | --- | ----------- |  | --------- | ----- | - |  | - | ---- | ---- |  | - | ----- | -
|                                                    |  |                                     
|                                                    |  | Year Ended December 31, 1998        
|                                                    |  |                                     
|                                                    |  |                                      |       | Other       |  |            
|                                                    |  |                                      |       | Pro Forma   |  | Historical  |     | Pro Forma   |  |          
|                                                    |  | Historical                           |       | Starwood(a) |  | As Adjusted |     | Adjustments |  | Pro Forma
|                                                    |  |                                      |       |             |  |             |     |             |  |          
|                                                    |  |                                     
|                                                    |  | (In millions, except per Share data)
|                                                   
|                                                   
|                                                   
|                                                   
|Revenues                                            |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|                                                   
|                                                   
|                                                   
|                                                   
|Owned, leased and consolidated joint venture hotels |  | $                                    | 2,983 |             |  | $           | 241 |             |  | $         | 3,224 |   |  | $ |     |      |  | $ | 3,224 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Management and franchise fees                       |  |                                      | 226   |             |  |             | 6   |             |  |           | 232   |   |  |   |     |      |  |   | 232   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Other                                               |  |                                      | 116   |             |  |             | 14  |             |  |           | 130   |   |  |   |     |      |  |   | 130   |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|                                                    |  |                                      | 3,325 |             |  |             | 261 |             |  |           | 3,586 |   |  |   |     |      |  |   | 3,586 |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|Costs and Expenses                                  |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|                                                   
|                                                   
|                                                   
|                                                   
|Owned, leased and consolidated joint venture hotels |  |                                      | 2,030 |             |  |             | 176 |             |  |           | 2,206 |   |  |   |     |      |  |   | 2,206 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Selling, general and administrative                 |  |                                      | 210   |             |  |             | 11  |             |  |           | 221   |   |  |   | (42  | )(b) |  |   | 179   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Restructuring and other special charges             |  |                                      | 149   |             |  |             |    |             |  |           | 149   |   |  |   |     |      |  |   | 149   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Depreciation and amortization                       |  |                                      | 399   |             |  |             | 43  |             |  |           | 442   |   |  |   | 13   | (c)  |  |   | 455   |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|                                                    |  |                                      | 2,788 |             |  |             | 230 |             |  |           | 3,018 |   |  |   | (29  | )    |  |   | 2,989 |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|                                                    |  |                                      | 537   |             |  |             | 31  |             |  |           | 568   |   |  |   | 29   |      |  |   | 597   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Interest expense, net                               |  |                                      | (447  | )           |  |             | (25 | )           |  |           | (472  | ) |  |   | (39  | )(d) |  |   | (357  | )
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   | 45   | (e)  |  |   |       |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   | 90   | (f)  |  |   |       |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   | 3    | (g)  |  |   |       |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   | 16   | (h)  |  |   |       |  
|                                                   
|                                                   
|                                                   
|                                                   
|Gain on sales of real estate and investments        |  |                                      | 55    |             |  |             |    |             |  |           | 55    |   |  |   |     |      |  |   | 55    |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|                                                    |  |                                      | 145   |             |  |             | 6   |             |  |           | 151   |   |  |   | 144  |      |  |   | 295   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Income tax (expense) benefit                        |  |                                      | 89    |             |  |             | (2  | )           |  |           | 87    |   |  |   | (205 | )(i) |  |   | (118  | )
|                                                   
|                                                   
|                                                   
|                                                   
|Minority equity                                     |  |                                      | (14   | )           |  |             | 1   |             |  |           | (13   | ) |  |   |     |      |  |   | (13   | )
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|Income (loss) from continuing operations            |  | $                                    | 220   |             |  | $           | 5   |             |  | $         | 225   |   |  | $ | (61  | )    |  | $ | 164   |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|Earnings per Share  basic                          |  | $                                    | 1.06  |             |  |             |     |             |  |           |       |   |  |   |      |      |  | $ | 0.76  |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|Earnings per Share  diluted                        |  | $                                    | 1.05  |             |  |             |     |             |  |           |       |   |  |   |      |      |  | $ | 0.75  |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|Weighted average number of Shares                   |  |                                      | 192   |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   | 195   |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  
|Weighted average number of Shares assuming dilution |  |                                      | 194   |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   | 196   |  
|                                                    |  |                                      |       |             |  |             |     |             |  |           |       |   |  |   |      |      |  |   |       |  




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents the historical results of the
	Corporation and the Trust, inclusive of Westin, for the period
	from January 1, 1998 to the closing of the ITT Merger on
	February 23, 1998.                                                                                                                                                                                                                                                                                                                    
|   
|(b) | Represents the effects of termination of certain
	executives under contractual severance agreements, net of
	additional costs for new executives under employment contracts,
	removal of duplicate third-party consulting fees, termination of
	certain advertising contracts and rental agreements (less related
	 termination fees) and the estimated savings resulting from the
	combination of certain identified benefit plans as if the new
	combined plans had been in place as of January 1, 1998.

21



---





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) | Represents the amortization expense related to the
	 goodwill and intangible assets recorded as a result of the
	purchase consideration exceeding the fair market value of the
	combined net assets of Starwood (inclusive of Westin), as if the
	merger transactions had taken place on January 1, 1998.                                                                                                                                                                                                                        
|   
|(d) | Represents the interest expense on the additional
	debt incurred to finance the ITT Merger for the period
	January 1, 1998 through February 23, 1998 at the
	Companys average borrowing rate.                                                                                                                                                                                                                                                                                                                                   
|   
|(e) | Represents the reduction of interest expense
	assuming the paydown of a portion of the Senior Credit Facility
	with the net proceeds of approximately $932 million from the
	dispositions of certain non-core assets, as if the dispositions
	had occurred on January 1, 1998. The dispositions include
	ITTs interest in WBIS+, Channel 31 in New York City;
	MSG; Educational Services; and the sale of an aircraft.                                                                                                          
|   
|(f) | Represents the reduction of interest expense
	assuming the partial paydown of the Senior Secured Notes Facility
	 with the net proceeds of approximately $3.0 billion from
	the December 30, 1999 sale of Caesars and the estimated
	$275 million of net proceeds from the planned disposition of
	 the Desert Inn, net of the interest allocated to discontinued
	operations in the historical results (see Notes  5 and 24 in
	 the notes to financial statements), as if these dispositions had
	 occurred on January 1, 1998.
|   
|(g) | Represents the reduction of interest expense for
	the paydown of term loans with the net proceeds of $239 million
	from the sale of 4.6 million Shares on February 24,
	1998 as if such offering had taken place on January 1, 1998.                                                                                                                                                                                                                                                                                             
|   
|(h) | Represents reduced deferred loan fee amortization
	on debt assumed to have been paid down as of January 1, 1998
	 with proceeds from the actual and planned asset dispositions
	described in (e) and (f) above.                                                                                                                                                                                                                                                                                                                  
|   
|(i) | Represents the adjustment needed to reflect an
	effective tax rate of 40% on historical net income and the pro
	forma adjustments, assuming the Reorganization had occurred
	effective January 1, 1998.                                                                                                                                                                                                                                                                                                                          

YEAR ENDED DECEMBER 31, 1999 COMPARED WITH

HISTORICAL AS ADJUSTED YEAR ENDED DECEMBER 31, 1998


Continuing Operations

Revenues.Revenues increased 7.7% to $3.862 billion
 for the year ended December 31, 1999 when compared to the
corresponding period in 1998, primarily due to the 5.2% increase
in revenues for the Companys owned, leased and consolidated
 joint venture hotels to $3.391 billion for the year ended
December 31, 1999 when compared to the corresponding period
of 1998. The increase resulted primarily from the 5.5% increase
in revenues at the Companys Same-Store Hotels to $2.826
billion for the year ended December 31, 1999 when compared
to $2.679 billion in the same period of 1998. The increase also
resulted from the acquisition, in July 1999, of the Westin hotel
in Maui, Hawaii (the Company previously had a 95% non-controlling
 interest in this property), the opening of the 423-room
W hotel in San Francisco, California in May 1999 and the
426-room W hotel in Seattle, Washington in September 1999
and the reopening of the W hotel in New York, New York in
December 1998, which was partially closed during most of
1998 due to significant renovation and conversion from the former
 Doral Inn. The increase in revenues for the year ended
December 31, 1999 was offset, in part, by a $39 million
 decrease in revenues as a result of the sale of nine hotels in
May 1998 and the sales of The Westin Central Park South in New
York, New York in July 1999 and the Ritz Carlton in Kansas City,
Missouri in November 1999. The increase in revenues at the
Same-Store Hotels resulted from an increase in REVPAR at these
hotels of 4.3% to $106 for the year ended December 31, 1999
when compared to the same period of 1998. The increase in REVPAR
at these hotels was attributed to an increase in ADR of 3.1% to
$150 for the year ended December 31, 1999 when compared to
the corresponding 1998 period. Occupancy for Same-Store Hotels
rose to 70.7% from 69.9% in the year ended December 31, 1999
 when compared to the same period in 1998. REVPAR at Same-Store
Hotels in North America increased 4.9% for the year ended
December 31, 1999 when compared to the same period of 1998.
REVPAR at the Companys international owned, leased and
consolidated joint venture hotels increased 3.0% for the year
ended December 31, 1999 when compared to the same period of
1998.

Management and franchise fees earned by Starwood increased 22.8%
to $285 million for the year ended December 31, 1999
when compared to $232 million in the corresponding period of
 1998. The increase resulted from the addition of hotels to the
Companys management and franchise system, the stronger
performance at the Companys existing managed and franchised
 hotels, and fees earned as a result of the early termination of
certain management contracts. The Company added 112 hotels to the
 management and franchise system during the year ended
December 31, 1999, offset by 25 hotels deleted from the
 system during the same period.

22



---



Other revenues, which include the revenues from unconsolidated
joint ventures, the sale of VOIs, fees earned on the operation of
 vacation ownership resorts and gains realized from the financing
 of timeshare receivables, increased to $186 million for the year
 ended December 31, 1999 from $130 million in the same
period of 1998. The increase was primarily due to the acquisition
 of Vistana on October 1, 1999. VOI sales in the fourth
quarter of 1999 increased 4.9% when compared to VOI sales
reported by Vistana in the same period of 1998.

Costs and Expenses.Costs and expenses for the
Companys owned, leased and consolidated joint venture
hotels increased 4.9% to $2.313 billion for the year ended
December 31, 1999 when compared to $2.206 billion in the
corresponding period of 1998. The increase in costs and expenses
is due primarily to the reopening of hotels in late 1998 that
were not operating at full capacity during most of 1998 because
they were under renovation as well as the addition of the Westin
hotel in Maui, Hawaii and the opening of the W hotels in San
Francisco, California and Seattle, Washington discussed above.
EBITDA margins at Same-Store Hotels increased to 32.7% for the
year ended December 31, 1999 from 31.7% in 1998.

Selling, general and administrative expenses were $173 million
and $221 million for the years ended December 31, 1999
and 1998, respectively. The decrease was primarily due to the
inclusion, in the 1998 period, of a $30 million charge
primarily related to the vesting of certain restricted stock
granted in 1998 to the former President and Chief Operating
Officer of the Company. The decrease was also due to savings
associated with the ITT Merger and Westin Merger that resulted in
 the ITT World Headquarters closure in New York, New York and a
significant downsizing at the Westin office in Seattle,
Washington and the Sheraton office in Boston, Massachusetts,
partially offset by the increase in corporate employees at the
Companys new headquarters in White Plains, New York.

EBITDA.EBITDA at the Companys owned, leased
and consolidated joint venture hotels rose approximately 6.4% to
$1.078 billion for the year ended December 31, 1999 when
compared to the same period in 1998. This increase is due, in
part, to the addition of the Westin hotel in Maui, Hawaii and the
 W hotels in San Francisco, California and Seattle,
Washington and the reopening of the W hotel in New York, New
 York discussed previously, offset by an approximate
$13 million reduction in EBITDA as a result of the sale of
nine hotels in May 1998 and The Westin Central Park South in New
York, New York in July 1999 and the Ritz Carlton in Kansas City,
Missouri in November 1999. EBITDA for the Companys
Same-Store Hotels increased to $924 million for the year
ended December 31, 1999 from $849 million for the year
ended December 31, 1998. The EBITDA improvement at the
Same-Store Hotels was due primarily to the increase in ADR
discussed previously.

Depreciation and Amortization.Depreciation and
amortization expense increased to $476 million in the year
ended December 31, 1999 compared to $442 million in the
 corresponding period of 1998. The increase in depreciation
expense for the year ended December 31, 1999 was primarily
attributed to the addition of the Westin hotel in Maui, Hawaii
and the opening of the W hotels in San Francisco, California
 and Seattle, Washington, offset by a reduction in depreciation
expense as a result of the sale of nine hotels in May 1998 and
two hotels in 1999. The increase in depreciation expense for the
year ended December 31, 1999 was also attributed to the
completion, in December 1998, of a significant renovation of the
W hotel in New York, New York.

Net Interest Expense.Interest expense for the
years ended December 31, 1999 and 1998, which is net of
interest income of $23 million and $26 million,
respectively, and discontinued operations allocations of
$163 million and $175 million, respectively, was
$493 million and $472 million, respectively. The
increase relates primarily to the debt incurred to finance the
ITT Merger and Westin Merger and the repurchase of Shares and
capital expenditures, offset by the reduction in debt with
approximately $6.8 billion in proceeds from dispositions of
non-core assets since February 1998. In addition, 1998 interest
expense included a $40 million non-recurring charge associated
with the settlement of certain forward interest rate swap
agreements.

Discontinued Operations

Results for the Companys gaming operations and former
investments in WD and Educational Services are included in
discontinued operations in the years ended December 31, 1999
 and 1998. Net loss from

23



---





The after-tax loss on the disposition of discontinued operations
for the year ended December 31, 1999 was $71 million
and includes, on an after-tax basis, a $173 million gain on
the sale of the Companys remaining interest in Educational
Services, offset by a $183 million loss on the sale of
Caesars and an estimated $61 million loss on the planned
disposition of the Desert Inn. After-tax gains of $1.162 billion
were recognized in the year ended December 31, 1998 in
connection with the majority sale of Educational Services and the
 disposition of WD.

Revenues from discontinued gaming operations increased 11.9% to
$1.541 billion for the year ended December 31, 1999 when
compared to the corresponding period of 1998. Costs and expenses
from discontinued gaming operations for the year ended
December 31, 1999 increased 3.0% to $1.191 billion when
compared to the same period of 1998. Costs and expenses in 1998
include a third quarter restructuring charge of $55 million
relating to a write-down of certain receivables and an investment
 in a shared services center established by ITT. The increase in
revenues and costs and expenses resulted primarily from the
opening of Caesars Indiana in November 1998. The results of the
discontinued gaming operations from April 1, 1999 (date of
announcement of the formal plan to dispose of gaming operations)
through December 31, 1999 are included in the net loss on
the disposition of discontinued operations for the year ended
December 31, 1999 as noted previously.

EBITDA from discontinued gaming operations for the year ended
December 31, 1999 was $350 million compared to $276 million
in the corresponding period of 1998. EBITDA excludes the third
quarter 1998 restructuring charge of $55 million discussed above.
 The increase in gaming EBITDA resulted from improved performance
 at Caesars Atlantic City and the opening of Caesars Indiana.

PRO FORMA YEAR ENDED DECEMBER 31, 1999 COMPARED WITH

PRO FORMA YEAR ENDED DECEMBER 31, 1998


The discussion and analysis above regarding Historical and
Historical As Adjusted results is applicable to the operating
results of the Company on a pro forma basis except for selling,
general and administrative expenses and interest expense.
Therefore, the following discussion and analysis of pro forma
results is provided to facilitate a meaningful comparison of
these expenses between periods.

Continuing Operations

Costs and Expenses.Selling, general and
administrative expenses decreased to $166 million from $179
million for the year ended December 31, 1999 and 1998,
respectively. The decrease was primarily due to the inclusion, in
 the 1998 period, of a $30 million charge primarily related to
the vesting of certain restricted stock granted earlier in 1998
to the former President and Chief Operating Officer of the
Company. Excluding this $30 million charge, selling, general and
administrative expenses increased approximately $17 million
primarily due to the increase in corporate employees at the
Companys new headquarters in White Plains, New York. The
Company increased its corporate staff in White Plains primarily
during the latter part of 1998 despite closing down the ITT World
 Headquarters in New York, New York and significantly downsizing
the Westin corporate office in Seattle, Washington and the
Sheraton corporate office in Boston, Massachusetts during the
early part of 1998.

Net Interest Expense.Interest expense for the
years ended December 31, 1999 and 1998, which is net of
interest income of $23 million and $26 million, respectively, and
 discontinued operations allocations of $294 million and $281
million in 1999 and 1998, respectively, increased to $362 million
 in 1999 from $357 million in 1998. This increase primarily
relates to the increase in the average debt balance due to
capital expenditures and the repurchase of approximately $451
million of Shares since the middle of the second quarter of 1998
in connection with the Companys Share repurchase program,
partially offset by the inclusion, in the third

24



---





HISTORICAL AS ADJUSTED YEAR ENDED DECEMBER 31, 1998

COMPARED WITH YEAR ENDED DECEMBER 31, 1997


Because the ITT Merger was accounted for using reverse purchase
accounting, the historical statement of income for the year ended
 December 31, 1998 includes the accounts of the Trust and
the Corporation for the period from the closing of the ITT Merger
 on February 23, 1998 through December 31, 1998 and the
 accounts of ITT for the twelve months ended December 31,
1998. The historical statement of operations for the year ended
December 1997 includes the results of ITT only. This
Managements Discussion and Analysis focuses on the
comparison of Historical As Adjusted information for the year
ended December 31, 1998 with the historical information for
the year ended December 31, 1997.

Continuing Operations

Revenues.Revenues increased to $3.586 billion for
the year ended December 31, 1998 when compared to $1.762
billion in the corresponding period in 1997. The increase in
revenues was primarily due to the increase in revenues for the
Companys owned, leased and consolidated joint venture
hotels to $3.224 billion for the year ended December 31,
1998 when compared to $1.550 billion in the corresponding period
of 1997. Since the ITT Merger is accounted for as a reverse
purchase and the reflected historical amounts accordingly are
those of ITT, the increase in hotel revenue was due primarily to
the inclusion of the results of approximately 120 hotels owned by
 Starwood (including Westin) as of the date of the ITT Merger,
including hotels acquired as a result of the Westin Merger.

Management and franchise fees earned by Starwood increased 33.3%
to $232 million for the year ended December 31, 1998 when
compared to $174 million in the corresponding period of 1997. The
 increase resulted primarily from the reverse purchase accounting
 treatment and the inclusion of approximately 50 hotels managed
by Starwood and Westin and approximately 30 hotels franchised by
Westin in the 1998 results as a result of the ITT Merger and
Westin Merger.

Other revenues were $130 million for the year ended
December 31, 1998 versus $38 million in the same period of
1997. The increase was due primarily to the reverse purchase
accounting treatment and the inclusion of investments in
unconsolidated joint venture hotels owned by Starwood and Westin
in the 1998 results as a result of the ITT Merger and Westin
Merger.

Costs and Expenses.Costs and expenses for the
Companys owned, leased and consolidated joint venture
hotels increased to $2.206 billion for the year ended
December 31, 1998 when compared to $1.116 billion in the
corresponding period of 1997. The increase was due primarily to
the reverse purchase accounting treatment and the inclusion of
the results of approximately 120 hotels owned, leased or
consolidated by Starwood (including Westin) in the 1998 results.

Selling, general and administrative expenses were $221 million
and $137 million for the years ended December 31, 1998 and
1997, respectively. The increase was primarily due to the reverse
 purchase accounting treatment, the inclusion of Starwood and
Westin in the 1998 results and the increase in corporate
employees at the Companys new headquarters in White Plains,
 New York, offset by the savings associated with the ITT Merger
and Westin Merger that resulted in the ITT World Headquarters
closure in New York, New York and a significant downsizing at the
 Westin office in Seattle, Washington and the Sheraton office in
Boston, Massachusetts.

Depreciation and Amortization.Depreciation and
amortization expense increased to $442 million in the year ended
December 31, 1998 compared to $199 million in the
corresponding period of 1997. The increase was primarily due to
the reverse purchase accounting treatment and the inclusion of
approximately 120 hotels owned by Starwood (including Westin)
prior to the ITT Merger, the amortization of goodwill related to
the ITT Merger and the commencement of depreciation on certain
newly completed hotel projects.

25



---



Net Interest Expense.Interest expense for the
years ended December 31, 1998 and 1997, which is net of
interest income of $26 million and $17 million, respectively, and
 discontinued operations allocations of $175 million and $210
million, respectively, was $472 million and $16 million,
respectively. The increase relates primarily to the $4 billion of
 debt incurred to finance the ITT Merger and Westin Merger.

Discontinued Operations

Results for the Companys gaming operations and former
investments in WD and Educational Services are included in
discontinued operations in the years ended December 31, 1998
 and 1997. Net loss from discontinued operations was $80 million
and $12 million for the years ended December 31, 1998 and
1997, respectively. These results include the allocation of
pretax corporate interest expense of $175 million and $210
million in the years ended December 31, 1998 and 1997,
respectively.

After-tax gains of $1.162 billion were recognized in the year
ended December 31, 1998 in connection with the sale of
Educational Services and the disposition of WD.

Revenues from discontinued gaming operations increased 13.6% to
$1.377 billion for the year ended December 31, 1998 when
compared to the corresponding period of 1997. Costs and expenses
from discontinued gaming operations for the year ended
December 31, 1998 increased 17.8% to $1.156 billion when
compared to the same period of 1997. Costs and expenses include a
 third quarter 1998 restructuring charge of $55 million relating
to a write-down of certain receivables and an investment in a
shared services center established by ITT. The increase in
revenues and costs and expenses resulted primarily from
additional rooms and gaming capacity at Caesars Palace and
Caesars Atlantic City.

EBITDA from discontinued gaming operations for the year ended
December 31, 1998 was $276 million (excluding the third
quarter 1998 restructuring charge of $55 million discussed above)
 compared to $225 million in the corresponding period of 1997.
The increase in gaming EBITDA resulted from additional rooms and
gaming capacity at Caesars Palace and Caesars Atlantic City.

LIQUIDITY AND CAPITAL RESOURCES

Capital Expenditures

Starwood incurs capital expenditures for upgrading and ongoing
maintenance of acquired and existing hotels to the Companys
 standards. During the year ended December 31, 1999, the
Company spent approximately $521 million on improving and
upgrading its owned hotel properties.

Cash Flow from Operating Activities

Cash flow from operating activities is the principal source of
cash to be used to fund the Companys operating expenses,
interest expense, capital expenditures and distribution payments
by the Trust. Starwood anticipates that cash flow provided by
operating activities will be sufficient to service short-and
long-term indebtedness, fund maintenance requirements and capital
 expenditures and meet operating cash requirements, including
distributions to shareholders by the Trust. During each of the
quarters of 1999, the Trust paid a distribution of $0.15 per
Share. The Companys annual dividend was increased 15% in
2000 to an annual rate of $0.69 per Share.

Cash Flow from Investing and Financing Activities

In addition to cash flow from operating activities, Starwood
intends to finance the acquisition of additional hotel
properties, investments, hotel renovations and capital
improvements and provide for general corporate purposes through
the Companys credit facilities described below, through
dispositions of certain non-core assets and, when market
conditions warrant, through the issuance of additional equity or
debt securities. Since February 1998 through the date of this
filing, Starwood has completed over $6.8 billion of asset sales
and dispositions, the proceeds of which were used primarily to
reduce existing debt.

26



---



As a result of the Reorganization, Starwood will pay
significantly more in federal income taxes and, due to lower
distribution requirements, will have the ability to retain
significantly more earnings than was previously the case.
Starwood anticipates that its enhanced ability to retain earnings
 will allow it to utilize cash flow from operating activities to
fund both capital expenditures and acquisitions.

Loans and Credit Facilities.On February 23,
1998, Starwood obtained two credit facilities ($5.6 billion in
total) with Lehman Brothers, Bankers Trust Company and The Chase
Manhattan Bank to fund the cash portion of the ITT Merger
consideration, to refinance a portion of the Companys
existing indebtedness and to provide funds for general corporate
purposes. The Senior Credit Facility and the Senior Secured Notes
 Facility comprise Starwoods primary remaining credit
facilities. On December 30, 1999, Starwood completed the
sale of Caesars and repaid $2.5 billion of the Senior Secured
Notes Facility and paid down approximately $500 million under the
 Revolving Credit Facility.

In September 1998, the Company entered into a $1 billion,
five-year term borrowing facility (Tranche II).
In January 1999, the Company completed a $542 million
long-term financing (the Mortgage Loan), secured by
mortgages on a portfolio of 11 hotels. The Mortgage Loan is due
in February 2009 and the proceeds from the Mortgage Loan
were used to pay down the one-year term loan under the Senior
Credit Facility.

Following is a summary of the Companys debt portfolio as of
 December 31, 1999:

|                                 |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |           | 
|-------------------------------- | ------------------------- | --------------------- | - | -------------- |  | -------------- | ------ | ---------------- |  | -------- | ------- | ----------- |  |  | ---- | ---- | - |  | ---------- | --------- | 
|                                 |                           |                       |   | Amount         |  |                |        |                  |  |         
|                                 |                           |                       |   | Outstanding at |  |                |        | Interest Rate at |  |         
|                                 |                           | Amount of             |   | December 31,   |  |                |        | December 31,     |  | Average 
|                                 |                           | Facility              |   | 1999           |  | Interest Terms |        | 1999             |  | Maturity
|                                 |                           |                       |   |                |  |                |        |                  |  |         
|                                 |                           |                       |   |                |  |                |        |                 
|                                 |                           | (Dollars in millions) |   |                |  |                |        |                 
|                                
|                                
|                                
|                                
|Floating Rate Debt               |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |          
|                                
|                                
|                                
|                                
|Senior Credit Facility:          |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |          
|                                
|                                
|                                
|                                
|                                 | Five-Year Term Loan       |                       | $ | 1,000          |  |                | $      | 1,000            |  |          |         | LIBOR+1.00% |  |  |      | 6.82 | % |  |            | 3.2 years | 
|                                
|                                
|                                
|                                
|                                 | Revolving Credit Facility |                       |   | 1,100          |  |                |        | 336              |  |          |         | LIBOR+1.00% |  |  |      | 6.82 | % |  |            | 3.2 years | 
|                                
|                                
|                                
|                                
|Senior Secured Notes Facility:   |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |          
|                                
|                                
|                                
|                                
|                                 | Tranche II Loans          |                       |   | 1,000          |  |                |        | 1,000            |  |          |         | LIBOR+2.75% |  |  |      | 8.57 | % |  |            | 3.0 years | 
|                                
|                                
|                                
|                                
|Mortgages and other              |                           |                       |   |                |  |                | 534    |                  |  |          | Various |             |  |  | 7.21 | %    |   |  | 5.2 years  |          
|                                
|                                
|                                
|                                
|Long-term interest rate swaps(a) |                           |                       |   |                |  |                | (1,021 | )                |  |          |         |             |  |  | 6.82 | %    |   |  |           |          
|                                 |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |          
|Total/average                    |                           |                       |   |                |  | $              | 1,849  |                  |  |          |         |             |  |  | 7.87 | %    |   |  | 3.4 years  |          
|                                 |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |          
|Fixed Rate Debt                  |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |          
|                                
|                                
|                                
|                                
|ITT public debt                  |                           |                       |   |                |  | $              | 1,995  |                  |  |          |         |             |  |  | 6.79 | %    |   |  | 7.6 years  |          
|                                
|                                
|                                
|                                
|Mortgages and other              |                           |                       |   |                |  |                | 931    |                  |  |          |         |             |  |  | 7.29 | %    |   |  | 10.7 years |          
|                                
|                                
|                                
|                                
|Long-term interest rate swaps(a) |                           |                       |   |                |  |                | 1,021  |                  |  |          |         |             |  |  | 7.01 | %    |   |  |           |          
|                                 |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |          
|Total/average                    |                           |                       |   |                |  | $              | 3,947  |                  |  |          |         |             |  |  | 6.96 | %    |   |  | 8.6 years  |          
|                                 |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |          
|Total Debt                       |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |          
|                                
|                                
|                                
|                                
|Total debt and average terms     |                           |                       |   |                |  | $              | 5,796  |                  |  |          |         |             |  |  | 7.26 | %    |   |  | 6.1 years  |          
|                                 |                           |                       |   |                |  |                |        |                  |  |          |         |             |  |  |      |      |   |  |            |          




|    |                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Excludes $2.2 billion of interest rate swaps with
	original maturities of less than one year (see Item 7A,
	Quantitative and Qualitative Disclosures about Market
	Risk, of this Joint Annual Report).

Starwood has a substantial amount of indebtedness and a working
capital deficiency of $1.1 billion at December 31, 1999.
Starwood has no significant debt maturing until
November 2000, at which time $700 million of the ITT public
debt is due. Based upon the current level of operations,
management believes that the Companys cash flow from
operations, together with available borrowings under the Senior
Credit Facility (approximately $816 million at December 31,
1999) and capacity with additional borrowings, will be adequate
to meet the Companys anticipated requirements for working
capital, capital expenditures, marketing and advertising
expenditures, program and other discretionary investments,
interest payments and scheduled

27



---





Stock Sales and Repurchases

At December 31, 1999, Starwood had approximately 189 million
 Shares, 9.9 million LP Units and 3.7 exchangeable preferred
shares outstanding.

In 1998, the Board of Directors of the Company approved the
repurchase of up to $1 billion of Shares under a Share repurchase
 program (the Share Repurchase Program). Pursuant to
the Share Repurchase Program, Starwood has repurchased
13.3 million Shares (including 500,000 Shares of equity put
option contracts) in the open market for an aggregate cost of
$451 million. Additionally, the Company repurchased 6.8 million
Shares for an aggregate cost of $385 million as settlement of the
 forward equity transactions (see Note 17 in the notes to
financial statements).

During 1999, the Trust consented to the exchange of approximately
 320,000 shares of Class B EPS into an equal number of
shares of Class A EPS. Additionally, the Trust
consented to the exchange of approximately 1.0 million
shares of Class A EPS for an equal number of Shares.

OTHER MATTERS

Year 2000

The Company did not experience any significant malfunctions or
errors in its computer systems when the date changed from 1999 to
 2000. Based on operations since January 1, 2000, the
Company does not expect any significant impact to its ongoing
business as a result of the Year 2000 issue. The Company is not
aware of any significant Year 2000 issues or problems that may
have arisen for its significant customers and suppliers. Although
 Year 2000 problems may not become evident until long after
January 1, 2000, based on the Companys Year 2000
readiness process and experience at the end of 1999 and in early
2000, the Company does not expect significant Year 2000-related
business disruptions in the future.

The Company expended approximately $15 million through
December 31, 1999 on its Year 2000 readiness efforts. These
efforts included review, evaluation, assessment and remediation
efforts for the central facilities and owned hotel properties.

European Union Currency Conversions

On January 1, 1999, the Participating Countries established
fixed conversion rates between their existing sovereign
currencies and the Euro. Following the introduction of the Euro,
the legacy currencies of the Participating Countries will remain
legal tender during a transition period ending on January 1,
 2002. During the transition period, both the legacy currency and
 the Euro will be legal tender in the respective Participating
Countries. During the transition period, currency conversions
will be computed by a triangulation with reference to conversion
rates between the respective currencies and the Euro. The Company
 currently operates in substantially all of the Participating
Countries. The effect on the Company of the adoption of the Euro
by the Participating Countries in which it operates is currently
uncertain. However, it is possible that the Euro adoption will
result in increased competition within the European market. In
addition, a number of the

28



---





Item 7A.  Quantitative and Qualitative
Disclosures about Market Risk.

The Company seeks to reduce earnings and cash flow volatility
associated with changes in interest rates and foreign currency
exchange rates by entering into financial arrangements intended
to provide a hedge against a portion of the risks associated with
 such volatility. The Company continues to have exposure to such
risks to the extent they are not hedged.

Interest rate swap agreements are the primary instruments used to
 manage interest rate fluctuation affecting the Companys
variable rate debt. The Company currently has six outstanding
long-term interest rate swap agreements under which the Company
pays a fixed interest rate and receives variable interest rates.
At year-end, the Company had an additional nine short-term swap
agreements ($2.2 billion) in place to protect against potential
high LIBOR rates due to Year 2000 concerns. All of the short-term
 Year 2000 swaps have since expired. The following table sets
forth the scheduled maturities and the total fair value of the
Companys debt portfolio:

|                                           |  |                 |     |              |  |              |     |      |  |      |       |            |  |      |       |      |  |   |    |  |  |   |       |  |  |  |        |  |  |   |       | 
|------------------------------------------ |  | --------------- | --- | ------------ |  | ------------ | --- | ---- |  | ---- | ----- | ---------- |  | ---- | ----- | ---- |  | - | -- |  |  | - | ----- |  |  |  | ------ |  |  | - | ----- | 
|                                           |  |                 |     |              |  | Total Fair  
|                                           |  | At December 31, |     | Total at     |  | Value at    
|                                           |  |                 |     | December 31, |  | December 31,
|                                           |  | 2000            |     | 2001         |  | 2002         |     | 2003 |  | 2004 |       | Thereafter |  | 1999 |       | 1999
|                                           |  |                 |     |              |  |              |     |      |  |      |       |            |  |      |       |     
|Liabilities                                |  |                 |     |              |  |              |     |      |  |      |       |            |  |      |       |      |  |   |    |  |  |   |       |  |  |  |        |  |  |   |       | 
|                                          
|                                          
|                                          
|                                          
|Fixed rate (in millions)                   |  | $               | 741 |              |  | $            | 79  |      |  | $    | 42    |            |  | $    | 285   |      |  | $ | 38 |  |  | $ | 1,741 |  |  |  | $2,926 |  |  | $ | 2,744 | 
|                                          
|                                          
|                                          
|                                          
|Average interest rate                      |  |                 |     |              |  |              |     |      |  |      |       |            |  |      |       |      |  |   |    |  |  |   |       |  |  |  | 6.96%  |  |  |   |       | 
|                                          
|                                          
|                                          
|                                          
|Floating rate (in millions)                |  | $               | 247 |              |  | $            | 233 |      |  | $    | 268   |            |  | $    | 2,000 |      |  | $ | 3  |  |  | $ | 119   |  |  |  | $2,870 |  |  | $ | 2,870 | 
|                                          
|                                          
|                                          
|                                          
|Average interest rate                      |  |                 |     |              |  |              |     |      |  |      |       |            |  |      |       |      |  |   |    |  |  |   |       |  |  |  | 7.51%  |  |  |   |       | 
|                                          
|                                          
|                                          
|                                          
|Interest Rate Swaps                        |  |                 |     |              |  |              |     |      |  |      |       |            |  |      |       |      |  |   |    |  |  |   |       |  |  |  |        |  |  |   |       | 
|                                          
|                                          
|                                          
|                                          
|Long-term variable to fixed (in  millions) |  |                 |     |              |  |              |     |      |  | $    | 1,021 |            |  |      |       |      |  |   |    |  |  |   |       |  |  |  | $1,021 |  |  |   |       | 
|                                          
|                                          
|                                          
|                                          
|Average pay rate                           |  |                 |     |              |  |              |     |      |  |      |       |            |  |      |       |      |  |   |    |  |  |   |       |  |  |  | 6.01%  |  |  |   |       | 
|                                          
|                                          
|                                          
|                                          
|Average receive rate                       |  |                 |     |              |  |              |     |      |  |      |       |            |  |      |       |      |  |   |    |  |  |   |       |  |  |  | LIBOR  |  |  |   |       | 

Foreign currency forward transactions are used by the Company to
hedge exposure to foreign currency exchange rate fluctuations. As
 of December 31, 1999, the British Pound and French Franc
were the principal currencies hedged by the Company. Changes in
the value of forward foreign exchange contracts designated as
hedges of foreign currency denominated assets and liabilities are
 classified in the same manner as changes in the underlying
assets and liabilities. At December 31, 1999, the notional
amount of the Companys open forward foreign exchange
contracts protecting the value of the Companys foreign
currency denominated assets and liabilities was approximately
$46 million. These three-month contracts matured in
February 2000. A hypothetical 10% change in currency
exchange rates would result in an increase or decrease of
approximately $5 million to the fair value of the forward
foreign exchange contracts at December 31, 1999, which would
 be offset by an opposite effect on the related hedged positions.

The Company enters into a derivative financial arrangement only
to the extent it meets the objectives described above, and the
Company does not engage in such transactions for speculative
purposes.

See Notes 16 and 19 in the notes to financial
statements filed as part of this Joint Annual Report and
incorporated herein by reference for further description of
derivative financial instruments.

29



---



Item 8.  Financial Statements and
Supplementary Data.

The financial statements and supplementary data required by this
Item are included in Item 14 of this Joint Annual Report and
 are incorporated herein by reference.



|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on Accounting
	 and Financial Disclosure.

Not applicable.

PART III

Item 10.  Directors, Trustees and Executive
Officers of the Registrants.

The Board of Directors of the Corporation and the Board of
Trustees of the Trust (together, the Board) currently
 comprise members, each of whom is elected for a three-year term.
 The following table sets forth, for each of the members of the
Board as of the date of this Joint Annual Report, the class to
which such Director or Trustee has been elected and certain other
 information regarding such Director or Trustee.

Directors and Trustees Whose Terms Expire at the 2002 Annual
Meeting

|                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                     
|---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------
|Name (Age)             |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Service Period                                      
|                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                     
|Bruce W. Duncan (48)   |  | Chairman, President and Chief Executive Officer of The Cadillac
	Fairview Corporation Limited, a real estate operating company
	since December 1995. From October 1994 to
	December 1995, Mr.  Duncan was President of Blakely
	Capital, Inc., a private firm focusing on investments in real
	estate and telecommunications. From January 1992 to
	October 1994, Mr. Duncan was President and Co-Chief
	Executive Officer of JMB Institutional Realty Corporation
	providing advice and management for investments in real estate by
	 tax-exempt investors and from 1978 to 1992, he worked for JMB
	Realty Corporation where he served as Executive Vice President
	and a member of the Board of Directors. Mr. Duncan is a
	trustee of Amresco Capital Trust and Kenyon College, is a member
	of the Board of Directors of The Cadillac Fairview Corporation
	Limited, NAREIT and the Canadian Institute of Public Real Estate
	Companies. |  | Director since April 1999
	Trustee since August 1995
|                      
|                      
|                      
|                      
|                      
|Michael A. Leven (62)  |  | Chairman of the Board, President and Chief Executive Officer of
	U.S. Franchise Systems, a hotel franchising and development
	company, since September 1995. From October 1990 to
	September 1995, Mr. Leven was President and Chief Operating
	Officer of Holiday Inn Worldwide, a hotel operating company.
	Mr. Leven is a director of U.S. Franchise Systems and
	Servico, Inc. Mr.  Leven is also a member of the Board of
	Governors and the Chairman of the BioMedical Services Board of
	the American Red Cross.                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Director since August 1995
	Trustee since April 1999
|                      
|                      
|                      
|                      
|                      
|Stephen R. Quazzo (40) |  | Managing Director, Chief Executive Officer and co-founder of
	Transwestern Investment Company, L.L.C., a real estate principal
	investment firm, since March 1996. From April 1991 to
	March  1996, Mr. Quazzo was President of Equity
	Institutional Investors, Inc., a                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Director since April 1999
	Trustee since August 1995

30



---



|                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                          
|-------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------
|Name (Age)                                                           |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Service Period                                                                           
|                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                          
|                                                                     |  | subsidiary of Equity Group Investments, Inc., a Chicago-based
	holding company controlled by Samuel Zell. Mr. Quazzo is an
	advisory board member of City Year Chicago.                                                                                                                                                                                                                                                                                                                                                                                                        |  |                                                                                          
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Daniel H. Stern (39)                                                 |  | President of Reservoir Capital Group, L.L.C., a New York-based
	investment management firm, since July 1997. Mr. Stern
	was a Trustee of the Trust from August 1995 to
	November 1997. From December 1992 to July 1997,
	Mr. Stern was President of Ziff Brothers Investments,
	L.L.C., a diversified investment management firm. Mr.  Stern
	 is also a Trustee of the Big Apple Circus and the Lincoln Center
	 Film Society.                                                                                                                                                |  | Director since November 1997
	Trustee from August 1995 to November 1997; since April 1999
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Raymond S. Troubh (73)                                               |  | Financial consultant and a former Governor of the American Stock
	Exchange. He was also a general partner of Lazard
	Frères & Co., an investment banking firm.
	Mr. Troubh is a director of ARIAD Pharmaceuticals, Inc.,
	Diamond Offshore Drilling, Inc., Foundation Health Systems, Inc.,
	 General American Investors Company, Olsten Corporation, Triarc
	Companies, Inc. and WHX Corporation and is a Trustee of MicroCap
	Liquidating Trust and Petrie Stores Liquidating Trust.                                                                                         |  | Director since April 1999
	Trustee since April 1998                                      
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Directors and Trustees Whose Terms Expire at the 2001 Annual Meeting
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Madison F. Grose (46)                                                |  | Managing Director or Senior Managing Director and General Counsel
	 or Co-General Counsel of Starwood Capital (and its predecessor
	entities) since July 1992. From November 1983 through
	June  1992, he was a Partner in the law firm of Pircher,
	Nichols & Meeks. Mr. Grose is also a trustee of
	Starwood Financial Inc., a specialized real estate finance
	company organized as a REIT, and an executive officer of Starwood
	 Capital.                                                                                                                                 |  | Director since April 1999
	Trustee since December 1994                                   
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Eric Hippeau (48)                                                    |  | Chairman and Chief Executive Officer of Ziff-Davis Inc. since
	1993. Mr. Hippeau joined Ziff-Davis Inc. in 1989 as
	Publisher of PC Magazine, was named Executive Vice President in
	1990 and President and Chief Operating Officer in
	February 1991. Prior to joining Ziff-Davis Inc.,
	Mr. Hippeau held a number of positions with International
	Data Group (IDG), including Vice President of
	Computer Publications in Latin America and Publisher of
	IDGs InfoWorld magazine. Mr. Hippeau is a Director of
	Ziff-Davis, Inc., Global Crossing Ltd., and Yahoo! Inc. |  | Director since
	April 1999
	Trustee since April 1999                                     
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Earle F. Jones (73)                                                  |  | Chairman of the Board of Directors of the Corporation from
	February 1989 to September  1997. He has been
	Co-Chairman since 1988 of Mississippi Management, Inc., d/b/a MMI
	 hotel group a hotel company, and is the Co-Chairman of MMI
	Dining Systems. From 1967 to 1968, Mr. Jones was President
	of the International Association of Holiday Inns and served two
	terms as a director. Mr. Jones is a member of the board of
	trustees                                                                                                                                   |  | Director since September 1985
	Trustee since April 1999                                  

31



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|                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                       
|-------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------
|Name (Age)                                                           |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Service Period                                        
|                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                       
|                                                                     |  | for each of the Jackson Municipal Airport Authority, Greater
	Jackson Foundation, Millsaps College and Jackson 2000, and is
	Co-Chairman of the Mississippi Olympic Committee. Mr. Jones
	is also President of MM Louisiana Inc. (a wholly owned subsidiary
	 of Mississippi Management, Inc.), Inn of Lake City, Inc., Seas,
	Inc., Orlando Plaza Hotel Corp. and Cabot Lodge, Inc. He is a
	general partner of Gainesville Cabot Lodge, Ltd., Jackson North
	Cabot Lodge Ltd. and Hattiesburg Cabot Lodge, Ltd. Mr. Jones
	 is a general partner of Orlando Plaza Suite Hotel, Ltd-A, which
	filed a petition under Chapter 11 of the U.S. Bankruptcy
	Code in May 1996. An order confirming the debtors plan
	 of restructuring was issued by the court on January  27,
	1997.                                                                                                                 |  |                                                       
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|George J. Mitchell (66)                                              |  | Special Counsel to the law firm of Verner, Liipfert, Bernhard,
	McPherson and Hand since January 1995. Senator Mitchell
	served as a United States Senator from January 1980 to
	January 1995, and was the Majority Leader from 1989 to 1995.
	 Senator Mitchell serves as a director of Walt Disney Company,
	FedEx Corporation, Xerox Corporation, UNUM/ Provident Corp.,
	Casella Waste Systems, Inc., Unilever N.V. and Staples, Inc. In
	addition, Senator Mitchell serves as President of the Economic
	Club of Washington. From 1995 to 1997, Senator Mitchell served as
	 the Special Advisor to the President of the United States on
	economic initiatives in Ireland. At the request of the British
	and Irish Governments, he served as Chairman of the International
	 Commission on Disarmament in Northern Ireland, and as Chairman
	of the peace negotiations in Northern Ireland. |  | Director since April 1999
	Trustee since November 1997
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Daniel W. Yih (41)                                                   |  | General partner of Chilmark Partners, L.P. since June 1995.
	Mr. Yih served as interim Chief Financial Officer of Midway
	Airlines (from September 1995 to December 1995),
	President of Merco-Savory, Inc., a manufacturer of food
	preparation equipment (from March 1995 to June  1995), and
	as a senior executive of Welbilt Corporation (from
	September 1993 to March  1995).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Director since August 1995
	Trustee since April 1999  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Directors and Trustees Whose Terms Expire at the 2000 Annual Meeting
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Jean-Marc Chapus (40)                                                |  | Managing Director and Portfolio Manager of Trust Company of the
	West and President of TCW/ Crescent Mezzanine L.L.C., a private
	investment fund, since March 1995. Prior to that time,
	Mr.  Chapus was a Managing Director and Principal of
	Crescent Capital Corporation with primary responsibility for the
	firms private lending and private placement activities.
	Mr. Chapus was a Director of the Corporation from
	August 1995 to November 1997. Mr. Chapus is
	currently a member of the Board of Directors of Home Asset                                                                                                                                                                                                                                                                                                                                                             |  | Director since August 1995
	Trustee since April 1999  

32



---



|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                                           
|------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------
|Name (Age)               |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Service Period                                            
|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                                           
|                         |  | Management Company, Magnequench International, Inc. and Auto
	Town, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                                                           
|                        
|                        
|                        
|                        
|                        
|Jonathan D. Eilian (32)  |  | Senior Managing Director, Managing Director or executive officer
	of Starwood Capital and its predecessor entities since its
	formation in 1991. Prior to being a founding member of Starwood
	Capital, Mr. Eilian served as an Associate for JMB Realty
	Corporation, a real estate investment firm, and for The Palmer
	Group, L.P., a private investment firm specializing in corporate
	acquisitions. Mr. Eilian is currently a Trustee of Starwood
	Financial Inc., a member of the board of directors of
	Phase2Media, a member of the Young Presidents Organization, and
	is a member of the board of the Wharton Real Estate Center.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Director since August 1995
	Trustee since April 1999      
|                        
|                        
|                        
|                        
|                        
|Barry S. Sternlicht (39) |  | Chairman (since September 1997) and Chief Executive Officer
	(since January 1999) of the Corporation. Mr. Sternlicht
	 has served as Chairman and Chief Executive Officer of the Trust
	since January 1995. Mr. Sternlicht was Chief Executive
	Officer of Starwood Financial Inc. from September 1996 to
	November 1997. Mr.  Sternlicht has been the Chairman of
	 the Board of Trustees of Starwood Financial Inc. since
	September 1996. Mr. Sternlicht also has been the
	President and Chief Executive Officer of Starwood Capital and its
	 predecessor entities since its formation in 1991.
	Mr. Sternlicht is a member of the Urban Land Institute and
	of the National Multi-Family Housing Council. Mr. 
	Sternlicht is a member of the Board of Directors of Health
	Market.com, Inc., the Juvenile Diabetes Foundation International
	and the Council for Christian and Jewish Understanding, is a
	member of the Young Presidents Organization and is on the Board
	of Directors of Junior Achievement for Fairfield County,
	Connecticut, the Greenwich YMCA and the Harvard Club in New York
	City. |  | Director since December 1994
	Trustee since September 1997

33



---



Executive Officers of the Registrants

The following table includes certain information with respect to
each of Starwoods current executive officers.

|                      |  |     |    |             |  |                                                                                                                                                                 
|--------------------- |  | --- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                  |  | Age |    | Position(s)
|                      |  |     |    |            
|Barry S. Sternlicht   |  |     | 39 |             |  | Chairman, Chief Executive Officer and a Director of the
	Corporation and Chairman, Chief Executive Officer and a Trustee
	of the Trust                          
|                     
|                     
|                     
|                     
|Robert F. Cotter      |  |     | 48 |             |  | Chief Operating Officer of the Corporation                                                                                                                      
|                     
|                     
|                     
|                     
|Ronald C. Brown       |  |     | 45 |             |  | Executive Vice President and Chief Financial Officer of the
	Corporation and Vice President, Chief Financial Officer and Chief
	 Accounting Officer of the Trust
|                     
|                     
|                     
|                     
|Steven R. Goldman     |  |     | 38 |             |  | Executive Vice President, Acquisitions and Development of the
	Corporation and Vice President of the Trust                                                      
|                     
|                     
|                     
|                     
|Thomas C. Janson, Jr. |  |     | 44 |             |  | Executive Vice President, General Counsel and Secretary of the
	Corporation and Vice President, General Counsel and Assistant
	Secretary of the Trust           

Barry S. Sternlicht.Mr. Sternlicht has been
Chairman (since September 1997) and Chief Executive Officer
(since January 1999) of the Corporation. Mr. Sternlicht
 has served as Chairman and Chief Executive Officer of the Trust
since January 1995. Mr. Sternlicht also has been the
President and Chief Executive Officer of Starwood Capital and its
 predecessor entities since its formation in 1991.
Mr. Sternlicht is currently the Chairman of the Board of
Trustees of Starwood Financial Inc.

Robert F. Cotter.Mr. Cotter was named Chief
Operating Officer of the Corporation in February 2000.
Mr. Cotter was named President, International Operations, in
 December of 1999 after serving as President, Europe, for
Starwood since March of 1998. Mr. Cotter previously served
as President, Sheraton Europe Division, from June 1994 to
March 1998; President, Sheraton Asia-Pacific Division, from
January 1993 to June 1994; and held numerous sales and
marketing positions in the United States and Asia since 1973.

Ronald C. Brown.Mr. Brown has been Vice
President, Chief Financial Officer and Chief Accounting Officer
of the Trust since January 1999 and Executive Vice President
 and Chief Financial Officer of the Corporation since
March 1998 and was Senior Vice President and Chief Financial
 Officer of the Trust from July 1995 through
March 1998. Prior to joining the Trust, Mr. Brown was
President of Sonoran Hotel Advisors, L.L.C., a hotel REIT
advisory firm, from August 1994 to July 1995. From
December 1990 to August 1994, Mr. Brown held
various positions with Doubletree Corporation, a hotel operating
company, including Chief Financial Officer and President. From
December 1990 to April 1992, Mr. Brown was Executive Vice
President Chief Financial Officer for Canadian Pacific Hotels
Corporation, a hotel operating company. Mr. Brown is also a
Director of Phoenix Childrens Hospital.

Steven R. Goldman.Mr. Goldman has been a Vice
 President of the Trust and the Executive Vice President,
Acquisitions and Development, of the Corporation since
January 1999 and was Executive Vice President of the Trust
from March 1998 to January 1999. Mr. Goldman was Senior
 Vice President of the Trust from September 1996 through
March 1998 and Senior Vice President of the Corporation from
 March 1995 to September 1996. Mr. Goldman was a
Vice President of Starwood Capital, specializing in hotel
acquisitions and hotel asset management from August 1993 to
February 1995. From 1990 to 1993, he was Senior Development
Manager of Disney Development Company, the real estate investment
 development and management division of Disney.

Thomas C. Janson, Jr.Mr. Janson joined
the Corporation as Executive Vice President, General Counsel and
Secretary in October 1998 and became Vice President, General
 Counsel and Assistant Secretary of the Trust in January 1999.
Prior to joining the Corporation, Mr. Janson practiced law
as a partner with Skadden, Arps, Slate, Meagher & Flom LLP
for more than five years.

34



---



The executive officers of Starwood serve at the pleasure of the
Board of Directors or the Board of Trustees, as applicable. There
 is no family relationship among any of the Directors, Trustees
or executive officers of the Corporation or the Trust.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Directors,
Trustees and executive officers of Starwood, and persons who own
more than 10 percent of the outstanding Shares, to file with
 the SEC (and provide a copy to Starwood) certain reports
relating to their ownership of Shares and other equity securities
 of Starwood.

To Starwoods knowledge, based solely on a review of the
copies of these reports furnished to Starwood during the fiscal
year ended December 31, 1999, and written representations
that no other reports were required, all Section 16(a) filing
requirements applicable to its Directors, Trustees, executive
officers and greater than 10 percent beneficial owners were
complied with for the most recent fiscal year, except that Earle
F. Jones failed to timely file a Form 4 in January 2000
 reporting a transfer of Shares to a charitable annuity trust in
December 1999 and L. Dennis Kozlowski failed to timely file
a Form 4 in October 1999 reporting a purchase of Shares
 in September 1999.

Item 11.  Executive Compensation.

The information called for by Item 11 is incorporated by
reference from the information under the following captions in
the Proxy Statement: Summary of Cash and Certain Other
Compensation, Executive Compensation,
Option Grants, Option Exercises and
Holdings, Compensation of Directors and
Trustees, Employment and Compensation Agreements with
 Executive Officers, Compensation Committee
Interlocks and Insider Participation and Certain
Relationships and Related Transactions.

Item 12.  Security Ownership of Certain
Beneficial Owners and Management.

The information called for by Item 12 is incorporated by
reference from the information under the caption Security
Ownership of Certain Beneficial Owners and Management in
the Proxy Statement.

Item 13.  Certain Relationships and Related
Transactions.

The information called for by Item 13 is incorporated by
reference from the information under the caption Certain
Relationships and Related Transactions in the Proxy
Statement.

PART IV

Item 14.  Exhibits, Financial Statements,
Financial Statement Schedules and Reports on Form 8-K.

(a)  The following documents are filed as a part of this
Joint Annual Report:



| |    |                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | The financial statements and financial statement schedules listed
	 in the Index to Financial Statements and Schedules following the
	 signature pages hereof.

35



---



2.  Exhibits:

|        |     |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | --- | ---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |                       
|Number  |     | Description of Exhibit
|        |     |                       
|        | 2.1 |                        |  | Formation Agreement, dated as of November 11, 1994, among
	the Trust, the Corporation, Starwood Capital and the Starwood
	Partners (incorporated by reference to Exhibit 2 to the
	Trusts and the Corporations Joint Current Report on
	Form 8-K dated November 16, 1994). (The SEC file
	numbers of all filings made by the Corporation and the Trust
	pursuant to the Securities Act of 1934, as amended, and
	referenced herein are: 1-7959 (the Corporation) and 1-6828 (the
	Trust)).                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 2.2 |                        |  | Form of Amendment No. 1 to Formation Agreement, dated as of
	July 1995, among the Trust, the Corporation and the Starwood
	 Partners (incorporated by reference to Exhibit  10.23 to
	the Trusts and the Corporations Joint Registration
	Statement on Form S-2 filed with the SEC on June 29,
	1995 (Registration Nos. 33-59155 and 33-59155-01)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 2.3 |                        |  | Transaction Agreement, dated as of September 8, 1997, by and
	 among the Trust, the Corporation, Realty Partnership, Operating
	Partnership, WHWE L.L.C., Woodstar Investor Partnership
	(Woodstar), Nomura Asset Capital Corporation, Juergen
	 Bartels, Westin Hotels & Resorts Worldwide, Inc., W&S
	Lauderdale Corp., W&S Seattle Corp., Westin St. John
	Hotel Company, Inc., W&S Denver Corp., W&S Atlanta Corp.
	and W&S Hotel L.L.C. (incorporated by reference to
	Exhibit 2 to the Trusts and the Corporations
	Joint Current Report on Form 8-K dated September 9,
	1997, as amended by the Form 8-K/A dated December 18,
	1997).                                                                                                                                                                                                                                                                                                       
|        | 2.4 |                        |  | Amended and Restated Agreement and Plan of Merger, dated as of
	November 12, 1997, by and among the Corporation, the Trust,
	Chess Acquisition Corp. (Chess) and ITT (incorporated
	 by reference to Exhibit 2.1 to the Trusts and the
	Corporations Joint Current Report on Form 8-K dated
	November 13, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 2.5 |                        |  | Agreement and Plan of Restructuring, dated as of September 
	16, 1998, and amended as of November 30, 1998, among the
	Corporation, ST Acquisition Trust
	(ST Trust) and the Trust (incorporated by
	reference to Annex A to the Trusts and the
	Corporations Joint Proxy Statement dated December  3,
	1998 (the 1998 Proxy Statement)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 2.6 |                        |  | Form of Stock Purchase Agreement, dated as of February 23,
	1998, between the Trust and the Corporation (incorporated by
	reference to Exhibit 10.4 to the Trusts and the
	Corporations Joint Annual Report on Form 10-K for the
	year ended December 31, 1997 (the 1997
	Form 10-K)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 3.1 |                        |  | Amended and Restated Declaration of Trust of the Trust, amended
	and restated as of January 6, 1999 (incorporated by
	reference to Exhibit 1 to the Trusts Registration
	Statement on Form 8-A filed on December 21, 1998 (the
	Trust Form 8-A), except that the following
	changes were made on January 6, 1999, upon the filing by the
	 Trust and ST Trust of the Articles of Merger of ST Trust
	into the Trust (the Articles of Merger) with, and the
	 acceptance thereof for record by, the State Department of
	Assessments and Taxation of the State of Maryland (the
	SDAT): Section 6.14 specifies January 6,
	1999 as the date of the Intercompany Agreement;
	Section 6.19.1 specifies January  6, 1999 as the date
	of the acceptance for record by the SDAT of the Articles of
	Merger; and the definition of Intercompany Agreement
	in Section 6.19.2 specifies January 6, 1999 as the date
	 of the Intercompany Agreement).
|        | 3.2 |                        |  | Charter of the Corporation, amended and restated as of
	February 1, 1995, as amended through March 26, 1999
	(incorporated by reference to Exhibit 3.2 to the
	Trusts and the Corporations Joint Annual Report on
	Form 10-K for the year ended December 31, 1998, as
	amended by the Form  10-K/A filed May 17, 1999 (as so
	amended, the 1998 Form  10-K)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 3.3 |                        |  | Bylaws of the Trust, as amended through November 19, 1998
	(incorporated by reference to Exhibit 2 to the Trust
	Form  8-A).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 3.4 |                        |  | Bylaws of the Corporation, as amended through March 15, 1999
	 (incorporated by reference to Exhibit 3 to the
	Corporations and the Trusts Joint Current Report on
	Form  8-K dated March 15, 1999 (the March 15
	 Form 8-K)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

36



---



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | ----- | ---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 4.1   |                        |  | Amended and Restated Intercompany Agreement, dated as of
	January 6, 1999, between the Corporation and the Trust
	(incorporated by reference to Exhibit 3 to the Trust
	Form  8-A, except that on January 6, 1999, the
	Intercompany Agreement was executed and dated as of
	January 6, 1999).                                                                                                                                       
|        | 4.2   |                        |  | Rights Agreement, dated as of March 15, 1999, between the
	Corporation and Chase Mellon Shareholder Services, L.L.C., as
	Rights Agent (incorporated by reference to Exhibit 4 to the
	March 15 Form 8-K).                                                                                                                                                                                                                           
|        | 4.3   |                        |  | Amended and Restated Indenture, dated as of November 15,
	1995, as Amended and Restated as of December 15, 1995
	between ITT Corporation (formerly known as ITT Destinations,
	Inc.) and the First National Bank of Chicago, as trustee
	(incorporated by reference to Exhibit 4.A.IV to the First
	Amendment to ITTs Registration Statement on Form S-3
	filed November 13, 1996).                                                 
|        | 4.4   |                        |  | First Indenture Supplement, dated as of December 31, 1998,
	among ITT, the Corporation and the Bank of New York (incorporated
	 by reference to Exhibit 4.1 to the Trusts and the
	Corporations Joint Current Report on Form 8-K filed
	January 8, 1999).                                                                                                                                                                          
|        | 4.5   |                        |  | The Registrants hereby agree to file with the Commission a copy
	of any instrument, including indentures, defining the rights of
	long-term debt holders of the Registrants and their consolidated
	subsidiaries upon the request of the Commission.                                                                                                                                                                                 
|        | 10.1  |                        |  | Third Amended and Restated Limited Partnership Agreement for
	Realty Partnership, dated January 6, 1999, among the Trust
	and the limited partners of Realty Partnership (incorporated by
	reference to Exhibit 10.1 to the 1998 Form 10-K).                                                                                                                                                                                         
|        | 10.2  |                        |  | Third Amended and Restated Limited Partnership Agreement for
	Operating Partnership, dated January 6, 1999, among the
	Corporation and the limited partners of Operating Partnership
	(incorporated by reference to Exhibit 10.2 to the 1998
	Form 10-K).                                                                                                                                                                            
|        | 10.3  |                        |  | Form of Amended and Restated Lease Agreement, entered into as of
	January 1, 1993, between the Trust as Lessor and the
	Corporation (or a subsidiary) as Lessee (incorporated by
	reference to Exhibit 10.19 to the Trusts and the
	Corporations Joint Annual Report on Form 10-K for the
	year ended December 31, 1992).                                                                                                          
|        | 10.4  |                        |  | Employment Agreement, dated May 24, 1999, between the
	Corporation and Ronald C. Brown.(1)(2)                                                                                                                                                                                                                                                                                                                                        
|        | 10.5  |                        |  | Employment Agreement, dated October 1, 1998, between the
	Corporation and Thomas C. Janson, Jr. (incorporated by
	reference to Exhibit 10.9 to the 1998 Form 10-K.)(1)                                                                                                                                                                                                                                                               
|        | 10.6  |                        |  | Indemnification Agreement, dated as of August 24, 1998,
	between the Corporation and Thomas C. Janson, Jr., as
	amended by Amendment Nos. 1 and 2 thereto (incorporated by
	reference to Exhibit 10.1 to the Trusts and the
	Corporations Joint Quarterly Report on Form 10-Q for
	the quarterly period ended September 30, 1998, as amended by
	 the Form 10-Q/A filed November 30, 1998 (as so
	amended, the 1998 Form 10-Q3)).
|        | 10.7  |                        |  | Employment Agreement, dated March 25, 1998, between the
	Trust and Steven R. Goldman (incorporated by reference to
	the Exhibit 10.11 to the 1997 Form 10-K).(1)                                                                                                                                                                                                                                                                     
|        | 10.8  |                        |  | Starwood Hotels & Resorts 1995 Long-Term Incentive Plan
	(Amended and Restated as of December 3, 1998) (incorporated
	by reference to Annex D to the 1998 Proxy Statement).(1)                                                                                                                                                                                                                                                       
|        | 10.9  |                        |  | Starwood Hotels & Resorts Worldwide, Inc. 1995 Long-Term
	Incentive Plan (Amended and Restated as of December 3, 1998)
	 (incorporated by reference to Annex E to the 1998 Proxy
	Statement).(1)                                                                                                                                                                                                                                     
|        | 10.10 |                        |  | Incentive and Non-Qualified Share Option Plan (1986) of the Trust
	 (incorporated by reference to Exhibit 10.8 to the
	Trusts and the Corporations Joint Annual Report on
	Form  10-K for the year ended August 31, 1986 (the
	1986 Form  10-K)).(1)                                                                                                                                                                             

37



---



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | ----- | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.11 |                        |  | Corporation Stock Non-Qualified Stock Option Plan (1986) of the
	Trust (incorporated by reference to Exhibit 10.9 to the 1986
	 Form 10-K).(1)                                                                                                                                                                                                                                                                    
|        | 10.12 |                        |  | Stock Option Plan (1986) of the Corporation (incorporated by
	reference to Exhibit 10.10 to the 1986 Form 10-K).(1)                                                                                                                                                                                                                                                                                               
|        | 10.13 |                        |  | Trust Shares Option Plan (1986) of the Corporation (incorporated
	by reference to Exhibit 10.11 to the 1986 Form 10-K).
	(1)                                                                                                                                                                                                                                                                                      
|        | 10.14 |                        |  | Form of Indemnification Agreement and Amendment No. 1 to
	Indemnification Agreement between the Trust and each of its
	Trustees and executive officers (incorporated by reference to
	Exhibit 10.7 to the Trusts and the Corporations
	Joint Annual Report on Form 10-K for the year ended
	December 31, 1995 (the 1995 Form 10-K)).
	(1)                                                                     
|        | 10.15 |                        |  | Form of Indemnification Agreement and Amendment No. 1 to
	Indemnification Agreement between the Corporation and each of its
	 Directors and executive officers (incorporated by reference to
	Exhibit 10.8 to the 1995 Form 10-K).(1)                                                                                                                                                                             
|        | 10.16 |                        |  | Form of Amendment No. 2 to Indemnification Agreement, dated
	June 26, 1997, between the Trust and each of its Trustees
	and executive officers (incorporated by reference to
	Exhibit 10.1 to the Trusts and the Corporations
	Joint Quarterly Report on Form 10-Q for the quarterly period
	 ended June 30, 1997 (the 1997
	Form 10-Q2)).(1)                                                                 
|        | 10.17 |                        |  | Form of Amendment No. 2 to Indemnification Agreement, dated
	June 26, 1997, between the Corporation and each of its
	Directors and executive officers (incorporated by reference to
	Exhibit 10.2 to the 1997 Form 10-Q2).(1)                                                                                                                                                                                     
|        | 10.18 |                        |  | Form of Trademark License Agreement, dated as of December 
	10, 1997, between Starwood Capital and the Trust (incorporated by
	 reference to Exhibit 10.22 to the 1997 Form 10-K).                                                                                                                                                                                                                                
|        | 10.19 |                        |  | Exchange Rights Agreement, dated as of January 1, 1995,
	among the Trust, the Corporation, Realty Partnership, Operating
	Partnership and the Starwood Partners (incorporated by reference
	to Exhibit 2B to the Trusts and the Corporations
	 Joint Current Report on Form 8-K dated January 31,
	1995 (the Formation Form 8-K)).                                                                            
|        | 10.20 |                        |  | Registration Rights Agreement, dated as of January 1, 1995,
	among the Trust, the Corporation and Starwood Capital
	(incorporated by reference to Exhibit 2C to the Formation
	Form 8-K).                                                                                                                                                                                                                         
|        | 10.21 |                        |  | Exchange Rights Agreement, dated as of June 3, 1996, among
	the Trust, the Corporation, Realty Partnership, Operating
	Partnership, Philadelphia HIR Limited Partnership and
	Philadelphia HSR Limited Partnership (incorporated by reference
	to Exhibit 10.1 to the Trusts and the
	Corporations Joint Quarterly Report on Form 10-Q for
	the quarterly period ended June 30, 1996 (the 1996
	Form  10-Q2)).
|        | 10.22 |                        |  | Registration Rights Agreement, dated as of June 3, 1996,
	among the Trust, the Corporation and Philadelphia HSR Limited
	Partnership (incorporated by reference to Exhibit  10.2 to
	the 1996 Form 10-Q2).                                                                                                                                                                                                        
|        | 10.23 |                        |  | Units Exchange Rights Agreement, dated as of February 14,
	1997, by and among, inter alia, the Trust, the
	Corporation, Realty Partnership, Operating Partnership and the
	Starwood Partners (incorporated by reference to Exhibit 
	10.34 to the 1997 Form 10-K).                                                                                                                                                
|        | 10.24 |                        |  | Class A Exchange Rights Agreement, dated as of
	February  14, 1997, by and among, inter alia, the
	Trust, the Corporation, Operating Partnership and the Starwood
	Partners (incorporated by reference to Exhibit 10.35 to the
	1997 Form 10-K).                                                                                                                                                                  
|        | 10.25 |                        |  | Exchange Rights Agreement, dated as of March 11, 1997, among
	 the Corporation, the Trust, Realty Partnership, Operating
	Partnership and the Hermitage, L.P. (incorporated by reference to
	 Exhibit 10.41 to the 1997 Form 10-K).                                                                                                                                                                               

38



---



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- | ----- | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.26 |                        |  | Registration Rights Agreement, dated as of March 11, 1997,
	among the Corporation, the Trust, Realty Partnership, Operating
	Partnership and the Hermitage, L.P. (incorporated by reference to
	 Exhibit 10.42 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                
|        | 10.27 |                        |  | Credit Agreement, dated as of September 10, 1997, between
	Realty Partnership and the Trust and Bankers Trust Company
	(BTC), Lehman Brothers Holdings Inc. d/b/a Lehman
	Capital, a division of Lehman Brothers Holdings Inc.
	(Lehman Capital), BankBoston, N.A., and Bank of
	Montreal (incorporated by reference to Exhibit 10.1 to the
	Trusts and the Corporations Joint Quarterly Report on
	 Form 10-Q for the quarterly period ended September 30,
	 1997, as amended by the Form 10-Q/A dated November 10,
	 1997).                   
|        | 10.28 |                        |  | Exchange Rights Agreement, dated as of January 2, 1998,
	among, inter alia, the Trust, Realty Partnership and
	Woodstar (incorporated by reference to Exhibit 10.50 to the
	1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                          
|        | 10.29 |                        |  | Exchange Rights Agreement, dated as of January 2, 1998,
	among, inter alia, the Corporation, Operating Partnership
	and Woodstar (incorporated by reference to Exhibit 10.51 to
	the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                 
|        | 10.30 |                        |  | Registration Rights Agreement, dated as of January 2, 1998,
	among, inter alia, the Trust, the Corporation, and
	Woodstar (incorporated by reference to Exhibit 10.52 to the
	1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                        
|        | 10.31 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the Trust
	 and New Remington Partners (incorporated by reference to
	Exhibit 10.54 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                      
|        | 10.32 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the Trust
	 and Savannah Limited Partnership (incorporated by reference to
	Exhibit 10.56 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                
|        | 10.33 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the Trust
	 and N.Y. Overnight Partners, L.P. (incorporated by reference to
	Exhibit 10.58 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                               
|        | 10.34 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the Trust
	 and D.C. Overnight Partners, L.P. (incorporated by reference to
	Exhibit 10.60 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                               
|        | 10.35 |                        |  | Credit Agreement, dated as of February 23, 1998, among the
	Trust, Realty Partnership, the Corporation, Chess (and ITT as its
	 successor by merger), certain additional borrowers, various
	lenders, BTC and The Chase Manhattan Bank (Chase
	Bank), as Administrative Agents, and Lehman Commercial
	Paper Inc. (Lehman Paper) and Bank of Montreal, as
	Syndication Agents (incorporated by reference to Exhibit 
	10.1 to the Trusts and the Corporations Joint Current
	 Report on Form 8-K dated February 23, 1998 (the
	ITT Form 8-K)).
|        | 10.36 |                        |  | First Amendment to the Credit Agreement, dated as of March 
	3, 1998, among the Trust, Realty Partnership, the Corporation,
	ITT, the lenders party to the Credit Agreement, BTC and Chase
	Bank, as Administrative Agents, and Lehman Paper and Bank of
	Montreal, as Syndication Agents, and the new lenders
	(incorporated by reference to Exhibit 10.2 to the ITT
	Form 8-K).                                                                                                                                                                     
|        | 10.37 |                        |  | Second Amendment to the Credit Agreement, dated as of April 
	 30, 1998, among the Trust, Realty Partnership, the Corporation,
	ITT, the lenders party to the Credit Agreement, BTC and Chase
	Bank, as Administrative Agents, and Lehman Paper and Bank of
	Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.2 to the Trusts and the Corporations
	Joint Quarterly Report on Form 10-Q for the quarterly period
	 ended June 30, 1998 (the 1998
	Form 10-Q2)).                                                          
|        | 10.38 |                        |  | Third Amendment to the Credit Agreement, dated as of June 
	15, 1998, among the Trust, Realty Partnership, the Corporation,
	ITT, the lenders party to the Credit Agreement, BTC and Chase
	Bank, as Administrative Agents, and Lehman Paper and Bank of
	Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.3 to the 1998 Form 10-Q2).                                                                                                                                                                                        

39



---



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | ----- | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.39 |                        |  | Fourth Amendment to the Credit Agreement, dated as of July 
	15, 1998, among the Trust, Realty Partnership, the Corporation,
	ITT, the lenders party to the Credit Agreement, BTC and Chase
	Bank, as Administrative Agents, and Lehman Paper and Bank of
	Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.4 to the 1998 Form 10-Q2).                                                                                                                                                                                                                                                                                    
|        | 10.40 |                        |  | Fifth Amendment to the Credit Agreement, dated as of August 
	 26, 1998, among the Trust, Realty Partnership, the Corporation,
	ITT, the lenders party to the Credit Agreement, BTC and Chase
	Bank, as Administrative Agents, and Lehman Paper and Bank of
	Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.2 to the 1998 Form 10-Q3).                                                                                                                                                                                                                                                                                  
|        | 10.41 |                        |  | Sixth Amendment to the Credit Agreement, dated as of
	December 15, 1998, among the Trust, Realty Partnership, the
	Corporation, ITT, the lenders party to the Credit Agreement, BTC
	and Chase Bank, as Administrative Agents, and Lehman Paper and
	Bank of Montreal, as Syndication Agents (incorporated by
	reference to Exhibit 10.50 to the 1998 Form 10-K).                                                                                                                                                                                                                                                                                  
|        | 10.42 |                        |  | Seventh Amendment to the Credit Agreement, dated as of
	February 1999, among the Trust, Realty Partnership, the
	Corporation, ITT, the lenders party to the Credit Agreement, BTC
	and Chase Bank, as Administrative Agents, and Lehman Paper and
	Bank of Montreal, as Syndication Agents (incorporated by
	reference to Exhibit 10.51 to the 1998 Form 10-K).                                                                                                                                                                                                                                                                                    
|        | 10.43 |                        |  | Eighth Amendment to the Credit Agreement and Modification to
	Pledge and Security Agreement, dated as of July 2, 1999,
	among the Trust, Realty Partnership, the Corporation, ITT, the
	lenders party to the Credit Agreement, BTC and Chase Bank, as
	Administrative Agents, Lehman Paper and Bank of Montreal, as
	Syndication Agents, and BTC, as Collateral Agent (incorporated by
	 reference to Exhibit 10.1 to the Corporations and the
	 Trusts Joint Quarterly Report on Form 10-Q for the
	quarterly period ended September 30, 1999, as amended by the
	 Form 10-Q/A filed November 16, 1999 (as so amended,
	the 1999 Form 10-Q3)).
|        | 10.44 |                        |  | Ninth Amendment to the Credit Agreement and Modification to
	Pledge and Security Agreement, dated as of September 20,
	1999, among the Trust, Realty Partnership, the Corporation, ITT,
	the lenders party to the Credit Agreement, BTC and Chase Bank, as
	 Administrative Agents, Lehman Paper and Bank of Montreal, as
	Syndication Agents, and BTC, as Collateral Agent (incorporated by
	 reference to Exhibit 10.2 to the 1999 Form 10-Q3).                                                                                                                                                                                                  
|        | 10.45 |                        |  | Pledge and Security Agreement, dated as of February 23,
	1998, executed and delivered by the Trust, the Corporation and
	the other Pledgors party thereto, in favor of BTC as Collateral
	Agent (incorporated by reference to Exhibit  10.63 to the
	1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                              
|        | 10.46 |                        |  | Second Amended and Restated Senior Secured Note Agreement, dated
	December 30, 1999, among the Corporation, the Trust, the
	guarantors listed therein, the lenders listed therein, Lehman
	Paper, as Arranger and Administrative Agent, and Alex Brown and
	Chase Securities Inc., as Syndication Agents.(2)                                                                                                                                                                                                                                                                                                                                       
|        | 10.47 |                        |  | Loan Agreement, dated as of February 23, 1998, between the
	Trust and the Corporation, together with Promissory Note executed
	 in connection therewith, by the Corporation to the order of the
	Trust, in the principal amount of $3,282,000,000 (incorporated by
	 reference to Exhibit 10.65 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                            
|        | 10.48 |                        |  | Loan Agreement, dated as of February 23, 1998, between the
	Trust and the Corporation, together with Promissory Note executed
	 in connection therewith, by the Corporation to the order of the
	Trust, in the principal amount of $100,000,000 (incorporated by
	reference to Exhibit 10.66 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                               
|        | 10.49 |                        |  | Loan Agreement, dated as of February 23, 1998, between the
	Trust and the Corporation, together with Promissory Note executed
	 in connection therewith, by the Corporation to the order of the
	Trust, in the principal amount of $50,000,000 (incorporated by
	reference to Exhibit 10.67 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                

40



---



|        |       |                        |  |                                                                                                                                                                                                                                                                                
|------- | ----- | ---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.50 |                        |  | Loan Agreement, dated as of January 27, 1999, among the
	Borrowers named therein, as Borrowers, Starwood Operator I
	LLC, as Operator, and Lehman Capital (incorporated by reference
	to Exhibit 10.58 to the 1998 Form 10-K).                                                 
|        | 10.51 |                        |  | Aircraft Dry Lease Agreement, entered into as of February 
	6, 1998, between Star Flight, L.L.C. and ITT Flight Operation,
	Inc., as amended by First Amendment thereto, dated as of
	August 25, 1998 (incorporated by reference to
	Exhibit 10.4 to the 1998 Form 10-Q3).     
|        | 10.52 |                        |  | Form of Severance Agreement, dated December 1999, between
	the Corporation and each of Barry S. Sternlicht,
	Ronald C. Brown, Steve R. Goldman and Thomas C.
	Janson, Jr.(2)                                                                                                   
|        | 10.53 |                        |  | Separation Agreement, dated as of February 10, 2000, by and
	between the Corporation and Susan R. Bolger.(2)                                                                                                                                                                   
|        | 10.54 |                        |  | Separation Agreement, dated as of April 30, 1999, by and
	between the Corporation and Richard D. Nanula (incorporated
	by reference to Exhibit 10.6 to the Corporations and
	the Trusts Joint Quarterly Report on Form 10-Q for the
	 quarterly period ended March 31, 1999).
|        | 12.1  |                        |  | Calculation of Ratio of Earnings to Total Fixed Charges. (2)                                                                                                                                                                                                                   
|        | 21.1  |                        |  | Subsidiaries of the Registrants.                                                                                                                                                                                                                                               
|        | 23.1  |                        |  | Consent of Arthur Andersen LLP.(2)                                                                                                                                                                                                                                             
|        | 27.1  |                        |  | Financial Data Schedule for the Corporation.(2)                                                                                                                                                                                                                                
|        | 27.2  |                        |  | Financial Data Schedule for the Trust.(2)                                                                                                                                                                                                                                      




|    |                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|(1) | Management contract or compensatory plan or
	arrangement required to be filed as an exhibit pursuant to
	Item 14(c) of Form  10-K.
|   
|(2) | Filed herewith.                                                                                                                   

(b)  Reports on Form 8-K.



| |                                                                      
| | ---------------------------------------------------------------------
| | No reports on Form 8-K were filed during the fourth quarter
	of 1999.

41



---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.



| |                          
| | -------------------------
| | STARWOOD HOTELS & RESORTS
| | WORLDWIDE, INC.          

Date: March 27, 2000

| |     |                        
| | --- | -----------------------
| | By: | /s/ BARRY S. STERNLICHT

| |                                     
| | ------------------------------------
| |                                     
| | Barry S. Sternlicht                 
| | Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons
on behalf of the Registrant in the capacities and on the dates
indicated.

|                                           |  |                                                                                                    |  |               
|------------------------------------------ |  | -------------------------------------------------------------------------------------------------- |  | --------------
|Signature                                  |  | Title                                                                                              |  | Date          
|                                           |  |                                                                                                    |  |               
|/s/ BARRY S. STERNLICHTBarry S. Sternlicht |  | Chairman, Chief Executive Officer and Director (Principal
	Executive Officer)                      |  | March 27, 2000
|                                          
|/s/ RONALD C. BROWNRonald C. Brown         |  | Executive Vice President and Chief Financial Officer (Principal
	Financial and Accounting Officer) |  | March 27, 2000
|                                          
|/s/ JEAN-MARC CHAPUSJean-Marc Chapus       |  | Director                                                                                           |  | March 27, 2000
|                                          
|/s/ JONATHAN D. EILIANJonathan D. Eilian   |  | Director                                                                                           |  | March 27, 2000
|                                          
|/s/ MADISON F. GROSEMadison F. Grose       |  | Director                                                                                           |  | March 27, 2000
|                                          
|/s/ ERIC HIPPEAUEric Hippeau               |  | Director                                                                                           |  | March 27, 2000
|                                          
|/s/ EARLE F. JONESEarle F. Jones           |  | Director                                                                                           |  | March 27, 2000
|                                          
|/s/ MICHAEL A. LEVENMichael A. Leven       |  | Director                                                                                           |  | March 27, 2000
|                                          
|/s/ GEORGE J. MITCHELLGeorge J. Mitchell   |  | Director                                                                                           |  | March 27, 2000

42



---



|                                       |  |          |  |               
|-------------------------------------- |  | -------- |  | --------------
|Signature                              |  | Title    |  | Date          
|                                       |  |          |  |               
|/s/ STEPHEN R. QUAZZOStephen R. Quazzo |  | Director |  | March 27, 2000
|                                      
|/s/ DANIEL H. STERNDaniel H. Stern     |  | Director |  | March 27, 2000
|                                      
|/s/ RAYMOND S. TROUBHRaymond S. Troubh |  | Director |  | March 27, 2000
|                                      
|/s/ DANIEL W. YIHDaniel W. Yih         |  | Director |  | March 27, 2000

43



---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.



| |                          
| | -------------------------
| | STARWOOD HOTELS & RESORTS

Date: March 27, 2000

| |     |                        
| | --- | -----------------------
| | By: | /s/ BARRY S. STERNLICHT

| |                                     
| | ------------------------------------
| |                                     
| | Barry S. Sternlicht                 
| | Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons
on behalf of the Registrant in the capacities and on the dates
indicated.

|                                           |  |                                                                                                                    |  |               
|------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------ |  | --------------
|Signature                                  |  | Title                                                                                                              |  | Date          
|                                           |  |                                                                                                                    |  |               
|/s/ BARRY S. STERNLICHTBarry S. Sternlicht |  | Chairman, Chief Executive Officer and Trustee (Principal
	Executive Officer)                                       |  | March 27, 2000
|                                          
|/s/ RONALD C. BROWNRonald C. Brown         |  | Vice President, Chief Financial Officer and Chief Accounting
	Officer (Principal Financial and Accounting Officer) |  | March 27, 2000
|                                          
|/s/ JEAN-MARC CHAPUSJean-Marc Chapus       |  | Trustee                                                                                                            |  | March 27, 2000
|                                          
|/s/ JONATHAN D. EILIANJonathan D. Eilian   |  | Trustee                                                                                                            |  | March 27, 2000
|                                          
|/s/ MADISON F. GROSEMadison F. Grose       |  | Trustee                                                                                                            |  | March 27, 2000
|                                          
|/s/ ERIC HIPPEAUEric Hippeau               |  | Trustee                                                                                                            |  | March 27, 2000
|                                          
|/s/ EARLE F. JONESEarle F. Jones           |  | Trustee                                                                                                            |  | March 27, 2000
|                                          
|/s/ MICHAEL A. LEVENMichael A. Leven       |  | Trustee                                                                                                            |  | March 27, 2000
|                                          
|/s/ GEORGE J. MITCHELLGeorge J. Mitchell   |  | Trustee                                                                                                            |  | March 27, 2000

44



---



|                                       |  |         |  |               
|-------------------------------------- |  | ------- |  | --------------
|Signature                              |  | Title   |  | Date          
|                                       |  |         |  |               
|/s/ STEPHEN R. QUAZZOStephen R. Quazzo |  | Trustee |  | March 27, 2000
|                                      
|/s/ DANIEL H. STERNDaniel H. Stern     |  | Trustee |  | March 27, 2000
|                                      
|/s/ RAYMOND S. TROUBHRaymond S. Troubh |  | Trustee |  | March 27, 2000
|                                      
|/s/ DANIEL W. YIHDaniel W. Yih         |  | Trustee |  | March 27, 2000

45



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

AND STARWOOD HOTELS & RESORTS


INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

|                                           |                                                                                                                                           |      |      |      | 
|------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------- | ---- | ---- | ---- | 
|                                           |                                                                                                                                           | Page
|                                           |                                                                                                                                           |     
|Report of Independent Public Accountants   |                                                                                                                                           |      | F-2  |     
|                                          
|                                          
|                                          
|                                          
|                                          
|Starwood Hotels & Resorts Worldwide, Inc.: |                                                                                                                                           |      |      |     
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Balance Sheets as of December 31, 1999 and
	1998.                                                                            |      |      | F-3  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Operations for the Years Ended
	December 31, 1999, 1998 and 1997                                               |      |      | F-4  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Comprehensive Income for the Years
	Ended December 31, 1999, 1998 and 1997.                                    |      |      | F-5  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Equity for the Years Ended
	December 31, 1999, 1998 and 1997.                                                  |      |      | F-6  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Cash Flows for the Years Ended
	December 31, 1999, 1998 and 1997                                               |      |      | F-7  | 
|                                          
|                                          
|                                          
|                                          
|                                          
|Starwood Hotels & Resorts:                 |                                                                                                                                           |      |      |     
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Balance Sheets as of December 31, 1999 and
	1998.                                                                            |      |      | F-8  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Operations for the Year Ended
	December 31, 1999 and the Period from February 23, 1998
	 to December 31, 1998. |      |      | F-9  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Cash Flows for the Year Ended
	December 31, 1999 and the Period from February 23, 1998
	 to December 31, 1998. |      |      | F-10 | 
|                                          
|                                          
|                                          
|                                          
|                                          
|Notes to Financial Statements              |                                                                                                                                           |      | F-11 |     
|                                          
|                                          
|                                          
|                                          
|                                          
|Schedules:                                 |                                                                                                                                           |      |      |     
|                                          
|                                          
|                                          
|                                          
|                                           | Schedule II  Valuation and Qualifying Accounts                                                                                           |      |      | S-1  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Schedule III  Real Estate and Accumulated
	Depreciation                                                                                  |      |      | S-2  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Schedule IV  Mortgage Loans on Real Estate                                                                                               |      |      | S-6  | 

F-1



---



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Starwood Hotels & Resorts Worldwide, Inc. and Starwood
Hotels & Resorts:

We have audited the accompanying consolidated balance sheets of
Starwood Hotels & Resorts Worldwide, Inc. (a Maryland
corporation) and its subsidiaries (the Company) and
Starwood Hotels & Resorts (a Maryland real estate
investment trust) and its subsidiaries (the Trust) as
 of December 31, 1999 and 1998, and the related consolidated
 statements of operations, comprehensive income, equity, and cash
 flows for each of the three years ended December 31, 1999
of the Company and the consolidated statements of operations and
cash flows for the year ended December 31, 1999 and the
period from February 23, 1998 to December 31, 1998 of
the Trust as set forth in the accompanying Index to Financial
Statements and Schedules. These financial statements and
schedules are the responsibility of the Companys and
Trusts management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
 about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of the Company and the Trust at December 31, 1999 and 1998,
and the results of the Companys operations and cash flows
for each of the three years in the period ended December 31,
 1999 and the Trusts operations and cash flows for the year
 ended December 31, 1999 and the period from
February 23, 1998 to December 31, 1998 in conformity
with accounting principles generally accepted in the United
States.

As explained in the Notes to Financial Statements, effective
January 1, 1997, the Company changed its method of
accounting for start-up costs.

Our audits were made for the purpose of forming an opinion on the
 basic financial statements taken as a whole. The schedules
listed in the Index to Financial Statements and Schedules are
presented for purposes of complying with the Securities and
Exchange Commissions rules and are not a part of the basic
financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.



| |                    
| | -------------------
| | Arthur Andersen LLP

New York, New York







F-2



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |       |       | 
|---------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------ | ----- | ----- | - | ------ | ----- | ----- | 
|                                                                                   |                                                                                                                                                                                              |                           
|                                                                                   |                                                                                                                                                                                              | December 31,              
|                                                                                   |                                                                                                                                                                                              |                           
|                                                                                   |                                                                                                                                                                                              | 1999                       |        | 1998 
|                                                                                   |                                                                                                                                                                                              |                            |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|ASSETS                                                                            
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Current assets:                                                                    |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Cash and cash equivalents                                                                                                                                                                    |                            | $      | 436   |       |   | $      | 157   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accounts receivable, net of allowance for doubtful accounts of
	$62 and $55                                                                                                                  |                            |        | 468   |       |   |        | 484   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Inventories                                                                                                                                                                                  |                            |        | 167   |       |   |        | 58    |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Prepaid expenses and other                                                                                                                                                                   |                            |        | 105   |       |   |        | 75    |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              | Total current assets       |        |       | 1,176 |   |        |       | 774   | 
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Investments                                                                        |                                                                                                                                                                                              |                            | 442    |       |       |   | 379    |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Plant, property and equipment, net                                                 |                                                                                                                                                                                              |                            | 7,777  |       |       |   | 7,877  |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Goodwill and intangible assets, net                                                |                                                                                                                                                                                              |                            | 2,872  |       |       |   | 2,714  |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Other assets                                                                       |                                                                                                                                                                                              |                            | 552    |       |       |   | 570    |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Net assets of discontinued operations                                              |                                                                                                                                                                                              |                            | 104    |       |       |   | 1,103  |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              | $                          | 12,923 |       |       | $ | 13,417 |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|LIABILITIES AND STOCKHOLDERS EQUITY                                              
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Current liabilities:                                                               |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accounts payable                                                                                                                                                                             |                            | $      | 205   |       |   | $      | 169   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accrued expenses                                                                                                                                                                             |                            |        | 810   |       |   |        | 708   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Short-term borrowings and current maturities of long-term debt                                                                                                                               |                            |        | 988   |       |   |        | 687   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accrued taxes and other                                                                                                                                                                      |                            |        | 300   |       |   |        | 183   |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              | Total current liabilities  |        |       | 2,303 |   |        |       | 1,747 | 
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Long-term debt                                                                     |                                                                                                                                                                                              |                            | 4,643  |       |       |   | 5,802  |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Deferred income taxes                                                              |                                                                                                                                                                                              |                            | 1,470  |       |       |   | 529    |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Other liabilities                                                                  |                                                                                                                                                                                              |                            | 434    |       |       |   | 458    |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              |                            | 8,850  |       |       |   | 8,536  |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|Minority interest                                                                  |                                                                                                                                                                                              |                            | 228    |       |       |   | 244    |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|Equity put options                                                                 |                                                                                                                                                                                              |                            | 19     |       |       |   | 32     |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|Class B exchangeable preferred shares of the Trust, at
	redemption value of $38.50 |                                                                                                                                                                                              |                            | 136    |       |       |   | 149    |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|Commitments and contingencies                                                      |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Stockholders equity:                                                              |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Class A exchangeable preferred shares of the Trust; $0.01
	par value; authorized 30,000,000 shares; outstanding 3,669,546
	and 4,373,457 shares at December 31, 1999 and 1998,
	respectively |                            |        |      |       |   |        |      |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Corporation common stock; $0.01 par value; authorized
	1,050,000,000 shares; outstanding 189,271,522 and 175,574,135
	shares at December 31, 1999 and 1998, respectively                     |                            |        | 2     |       |   |        | 2     |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Trust common shares of beneficial interest; $0.01 par value;
	authorized 1,200,000,000 shares; outstanding 175,574,135 shares
	at December 31, 1998                                          |                            |        |      |       |   |        | 2     |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Trust Class B shares of beneficial interest; $0.01 par
	value; authorized 1,000,000,000 shares; outstanding 189,271,522
	shares at December 31, 1999                                         |                            |        | 2     |       |   |        |      |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Additional paid-in capital                                                                                                                                                                   |                            |        | 4,785 |       |   |        | 4,571 |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Deferred compensation                                                                                                                                                                        |                            |        | (5    | )     |   |        | (1    | )    
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Cumulative translation and marketable securities adjustments                                                                                                                                 |                            |        | (238  | )     |   |        | (120  | )    
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Retained earnings (accumulated deficit)                                                                                                                                                      |                            |        | (856  | )     |   |        | 2     |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              | Total stockholders equity |        |       | 3,690 |   |        |       | 4,456 | 
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              | $                          | 12,923 |       |       | $ | 13,417 |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      

The accompanying notes to financial statements are an integral
part of the above statements.

F-3



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per Share data)


|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |     |  
|------------------------------------------------------------ | ---------------------------------------------------------------------------------------------- | ----------------------- | ------ | ---- | - | ---- | ----- | ----- | - | - | ----- | --- | -
|                                                             |                                                                                                |                        
|                                                             |                                                                                                | Year Ended December 31,
|                                                             |                                                                                                |                        
|                                                             |                                                                                                | 1999                    |        | 1998 |   | 1997
|                                                             |                                                                                                |                         |        |      |   |     
|Revenues                                                     |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|                                                            
|                                                            
|                                                            
|                                                            
|Owned, leased and consolidated joint venture hotels          |                                                                                                | $                       | 3,391  |      |   | $    | 2,983 |       |   | $ | 1,550 |    
|                                                            
|                                                            
|                                                            
|                                                            
|Management and franchise fees                                |                                                                                                |                         | 285    |      |   |      | 226   |       |   |   | 174   |    
|                                                            
|                                                            
|                                                            
|                                                            
|Other                                                        |                                                                                                |                         | 186    |      |   |      | 116   |       |   |   | 38    |    
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|                                                             |                                                                                                |                         | 3,862  |      |   |      | 3,325 |       |   |   | 1,762 |    
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|Costs and Expenses                                           |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|                                                            
|                                                            
|                                                            
|                                                            
|Owned, leased and consolidated joint venture hotels          |                                                                                                |                         | 2,313  |      |   |      | 2,030 |       |   |   | 1,116 |    
|                                                            
|                                                            
|                                                            
|                                                            
|Other                                                        |                                                                                                |                         | 47     |      |   |      |      |       |   |   |      |    
|                                                            
|                                                            
|                                                            
|                                                            
|Selling, general and administrative                          |                                                                                                |                         | 173    |      |   |      | 210   |       |   |   | 137   |    
|                                                            
|                                                            
|                                                            
|                                                            
|Restructuring and other special charges                      |                                                                                                |                         | 3      |      |   |      | 149   |       |   |   | 640   |    
|                                                            
|                                                            
|                                                            
|                                                            
|Depreciation and amortization                                |                                                                                                |                         | 476    |      |   |      | 399   |       |   |   | 199   |    
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|                                                             |                                                                                                |                         | 3,012  |      |   |      | 2,788 |       |   |   | 2,092 |    
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|                                                             |                                                                                                |                         | 850    |      |   |      | 537   |       |   |   | (330  | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Interest expense, net of interest income of $23, $26 and $17 |                                                                                                |                         | (493   | )    |   |      | (447  | )     |   |   | (16   | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Gain on sales of real estate and investments                 |                                                                                                |                         | 191    |      |   |      | 55    |       |   |   | 432   |    
|                                                            
|                                                            
|                                                            
|                                                            
|Miscellaneous expense                                        |                                                                                                |                         | (15    | )    |   |      |      |       |   |   | (156  | )  
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|                                                             |                                                                                                |                         | 533    |      |   |      | 145   |       |   |   | (70   | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Income tax benefit (expense)                                 |                                                                                                |                         | (1,076 | )    |   |      | 89    |       |   |   | (154  | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Minority equity in net income                                |                                                                                                |                         | (95    | )    |   |      | (14   | )     |   |   | (9    | )  
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|Income (loss) from continuing operations                     |                                                                                                |                         | (638   | )    |   |      | 220   |       |   |   | (233  | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Discontinued operations:                                     |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Loss from operations, net of tax benefit (expense) and
	minority interest of $0, $31 and $(67) |                         |        |     |   |      |       | (80   | ) |   |       | (12 | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Gain (loss) on dispositions, net of tax and minority
	interest of $125 and $621                |                         |        | (71  | ) |      |       | 1,162 |   |   |       |    |  
|                                                            
|                                                            
|                                                            
|                                                            
|Extraordinary item                                           |                                                                                                |                         | (32    | )    |   |      |      |       |   |   | (42   | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Cumulative effect of accounting change                       |                                                                                                |                         |       |      |   |      |      |       |   |   | (11   | )  
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|Net income (loss)                                            |                                                                                                | $                       | (741   | )    |   | $    | 1,302 |       |   | $ | (298  | )  
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|Earnings Per Share  Basic                                   |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|                                                            
|                                                            
|                                                            
|                                                            
|Continuing operations                                        |                                                                                                | $                       | (3.41  | )    |   | $    | 1.06  |       |   | $ | (1.85 | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Discontinued operations                                      |                                                                                                |                         | (0.38  | )    |   |      | 5.64  |       |   |   | (0.09 | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Extraordinary item                                           |                                                                                                |                         | (0.17  | )    |   |      |      |       |   |   | (0.33 | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Cumulative effect of accounting change                       |                                                                                                |                         |       |      |   |      |      |       |   |   | (0.09 | )  
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|Net income (loss)                                            |                                                                                                | $                       | (3.96  | )    |   | $    | 6.70  |       |   | $ | (2.36 | )  
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|Earnings Per Share  Diluted                                 |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|                                                            
|                                                            
|                                                            
|                                                            
|Continuing operations                                        |                                                                                                | $                       | (3.41  | )    |   | $    | 1.05  |       |   | $ | (1.85 | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Discontinued operations                                      |                                                                                                |                         | (0.38  | )    |   |      | 5.58  |       |   |   | (0.09 | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Extraordinary item                                           |                                                                                                |                         | (0.17  | )    |   |      |      |       |   |   | (0.33 | )  
|                                                            
|                                                            
|                                                            
|                                                            
|Cumulative effect of accounting change                       |                                                                                                |                         |       |      |   |      |      |       |   |   | (0.09 | )  
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|Net income (loss)                                            |                                                                                                | $                       | (3.96  | )    |   | $    | 6.63  |       |   | $ | (2.36 | )  
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|Weighted average number of Shares                            |                                                                                                |                         | 189    |      |   |      | 192   |       |   |   | 126   |    
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    
|Weighted average number of Shares assuming dilution          |                                                                                                |                         | 189    |      |   |      | 194   |       |   |   | 126   |    
|                                                             |                                                                                                |                         |        |      |   |      |       |       |   |   |       |    

The accompanying notes to financial statements are an integral
part of the above statements.

F-4



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)


|                                               |                                                                       |                         |      |      |   |      |       |     |   |   |      |      |  
|---------------------------------------------- | --------------------------------------------------------------------- | ----------------------- | ---- | ---- | - | ---- | ----- | --- | - | - | ---- | ---- | -
|                                               |                                                                       |                        
|                                               |                                                                       | Year Ended December 31,
|                                               |                                                                       |                        
|                                               |                                                                       | 1999                    |      | 1998 |   | 1997
|                                               |                                                                       |                         |      |      |   |     
|Net income (loss)                              |                                                                       | $                       | (741 | )    |   | $    | 1,302 |     |   | $ | (298 | )   
|                                              
|                                              
|                                              
|                                              
|Other comprehensive income, net of taxes:      |                                                                       |                         |      |      |   |      |       |     |   |   |      |     
|Foreign currency translation adjustments      |                                                                       |                         |      |      |   |      |       |     |   |   |      |     
|                                              
|                                              
|                                              
|                                              
|                                               | Foreign currency translation arising during the period                |                         |      | (128 | ) |      |       | (18 | ) |   |      | (133 | )
|                                              
|                                              
|                                              
|                                              
|                                               | Reclassification adjustment for losses included in net income
	(loss) |                         |      | 1    |   |      |       | 32  |   |   |      |     |  
|Unrealized gains (losses) on securities, net  |                                                                       |                         |      |      |   |      |       |     |   |   |      |     
|                                              
|                                              
|                                              
|                                              
|                                               | Unrealized holding gains arising during the period                    |                         |      | 9    |   |      |       | 1   |   |   |      | 176  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Reclassification adjustment for gains included in net income
	(loss)  |                         |      |     |   |      |       |    |   |   |      | (114 | )
|                                               |                                                                       |                         |      |      |   |      |       |     |   |   |      |     
|                                               |                                                                       |                         | (118 | )    |   |      | 15    |     |   |   | (71  | )   
|                                               |                                                                       |                         |      |      |   |      |       |     |   |   |      |     
|Comprehensive income (loss)                    |                                                                       | $                       | (859 | )    |   | $    | 1,317 |     |   | $ | (369 | )   
|                                               |                                                                       |                         |      |      |   |      |       |     |   |   |      |     

The accompanying notes to financial statements are an integral
part of the above statements.

F-5



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In millions)


|                             |                                                             |                |    |             |   |             |   |           |   |        |     |        |   |        |   |    |   |   |   |   |  |  |     |     |   |   |   |   | 
|---------------------------- | ----------------------------------------------------------- | -------------- | -- | ----------- | - | ----------- | - | --------- | - | ------ | --- | ------ | - | ------ | - | -- | - | - | - | - |  |  | --- | --- | - | - | - | - | 
|                             |                                                             | Forward Equity |    |             |   |             |   |          
|                             |                                                             | Contracts      |    | Class B EPS |   | Class A EPS |   | Shares(a)
|                             |                                                             | and Equity     |    |             |   |             |   |          
|                             |                                                             | Put Options    |    | Shares      |   | Amount      |   | Shares    |   | Amount |     | Shares |   | Amount
|                             |                                                             |                |    |             |   |             |   |           |   |        |     |        |   |       
|Balance at December 31, 1996 |                                                             | $              |   |             |   |             |  |           |   | $      |    |        |   |        |  |    |   | $ |  |   |  |  | 126 |     |   | $ | 2 |  
|                            
|                            
|                            
|                            
|                             | Net loss                                                    |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Stock option transactions                                   |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     | 1   |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Foreign currency translation                                |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Unrealized gain on securities, net                          |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                             |                                                             |                |    |             |   |             |   |           |   |        |     |        |   |        |   |    |   |   |   |   |  |  |     |     |   |   |   |  
|Balance at December 31, 1997 |                                                             |                |   |             |   |             |  |           |   |        |    |        |   |        |  |    |   |   |  |   |  |  | 127 |     |   |   | 2 |  
|                            
|                            
|                            
|                            
|                             | Net income                                                  |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | ITT reverse purchase                                        |                |    | 125         |   |             |   | 5         |   |        |     | 212    |   |        |   | 6  |   |   |   |  |  |  |     | 57  |   |   |   | 2 | 
|                            
|                            
|                            
|                            
|                             | Cash dividend to ITT stockholders                           |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Stock option and restricted stock award transactions        |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     | 1   |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Share repurchases                                           |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     | (10 | ) |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Issuance of forward equity contracts                        |                |    | 245         |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     | 8   |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Settlement of forward equity contracts                      |                |    | (370        | ) |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     | (10 | ) |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Issuance of equity put options                              |                |    | 32          |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Conversion and cancellation of Class A EPS and Class B
	EPS |                |    |            |   |             |   | (1        | ) |        |     | (63    | ) |        |   | (2 | ) |   |   |  |  |  |     | 3   |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Change in minority interest                                 |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Foreign currency translation                                |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Unrealized gain on securities, net                          |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Dividends declared                                          |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                             |                                                             |                |    |             |   |             |   |           |   |        |     |        |   |        |   |    |   |   |   |   |  |  |     |     |   |   |   |  
|Balance at December 31, 1998 |                                                             |                | 32 |             |   |             | 4 |           |   |        | 149 |        |   |        | 4 |    |   |   |  |   |  |  | 176 |     |   |   | 4 |  
|                            
|                            
|                            
|                            
|                             | Net loss                                                    |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Stock option and restricted stock award transactions        |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     | 1   |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Issuance of equity put options                              |                |    | 19          |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Settlement of equity put options                            |                |    | (32         | ) |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Share repurchases                                           |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     | (3  | ) |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Conversion and cancellation of Class A EPS and Class B
	EPS |                |    |            |   |             |   |          |   |        |     | (13    | ) |        |   |   |   |   |   |  |  |  |     | 5   |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Vistana acquisition                                         |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     | 10  |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Foreign currency translation                                |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Unrealized gain on securities, net                          |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                            
|                            
|                            
|                            
|                             | Dividends declared                                          |                |    |            |   |             |   |          |   |        |     |       |   |        |   |   |   |   |   |  |  |  |     |    |   |   |   |  | 
|                             |                                                             |                |    |             |   |             |   |           |   |        |     |        |   |        |   |    |   |   |   |   |  |  |     |     |   |   |   |  
|Balance at December 31, 1999 |                                                             | $              | 19 |             |   |             | 4 |           |   | $      | 136 |        |   |        | 4 |    |   | $ |  |   |  |  | 189 |     |   | $ | 4 |  
|                             |                                                             |                |    |             |   |             |   |           |   |        |     |        |   |        |   |    |   |   |   |   |  |  |     |     |   |   |   |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                             |                                                             |            |       |              |   |                 |    |              |   |   |      |      |   |   |      |       |  
|---------------------------- | ----------------------------------------------------------- | ---------- | ----- | ------------ | - | --------------- | -- | ------------ | - | - | ---- | ---- | - | - | ---- | ----- | -
|                             |                                                             |            |       |              |   | Cumulative      |    |             
|                             |                                                             |            |       |              |   | Translation and |    | Retained    
|                             |                                                             | Additional |       |              |   | Marketable      |    | Earnings    
|                             |                                                             | Paid-in    |       | Deferred     |   | Securities      |    | (Accumulated
|                             |                                                             | Capital    |       | Compensation |   | Adjustments     |    | Deficit)    
|                             |                                                             |            |       |              |   |                 |    |             
|Balance at December 31, 1996 |                                                             | $          | 2,895 |              |   | $               |   |              |   | $ | (64  | )    |   | $ | 241  |      
|                            
|                            
|                            
|                            
|                             | Net loss                                                    |            |       |             |   |                 |    |             |   |   |      |     |   |   |      | (298  | )
|                            
|                            
|                            
|                            
|                             | Stock option transactions                                   |            |       | 39           |   |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Foreign currency translation                                |            |       |             |   |                 |    |             |   |   |      | (133 | ) |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Unrealized gain on securities, net                          |            |       |             |   |                 |    |             |   |   |      | 62   |   |   |      |      |  
|                             |                                                             |            |       |              |   |                 |    |              |   |   |      |      |   |   |      |      
|Balance at December 31, 1997 |                                                             |            | 2,934 |              |   |                 |   |              |   |   | (135 | )    |   |   | (57  | )    
|                            
|                            
|                            
|                            
|                             | Net income                                                  |            |       |             |   |                 |    |             |   |   |      |     |   |   |      | 1,302 |  
|                            
|                            
|                            
|                            
|                             | ITT reverse purchase                                        |            |       | 4,022        |   |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Cash dividend to ITT stockholders                           |            |       | (2,144       | ) |                 |    |             |   |   |      |     |   |   |      | (890  | )
|                            
|                            
|                            
|                            
|                             | Stock option and restricted stock award transactions        |            |       | 32           |   |                 |    | (1           | ) |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Share repurchases                                           |            |       | (371         | ) |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Issuance of forward equity contracts                        |            |       |             |   |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Settlement of forward equity contracts                      |            |       |             |   |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Issuance of equity put options                              |            |       | (30          | ) |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Conversion and cancellation of Class A EPS and Class B
	EPS |            |       | 50           |   |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Change in minority interest                                 |            |       | 78           |   |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Foreign currency translation                                |            |       |             |   |                 |    |             |   |   |      | 14   |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Unrealized gain on securities, net                          |            |       |             |   |                 |    |             |   |   |      | 1    |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Dividends declared                                          |            |       |             |   |                 |    |             |   |   |      |     |   |   |      | (353  | )
|                             |                                                             |            |       |              |   |                 |    |              |   |   |      |      |   |   |      |      
|Balance at December 31, 1998 |                                                             |            | 4,571 |              |   |                 | (1 | )            |   |   | (120 | )    |   |   | 2    |      
|                            
|                            
|                            
|                            
|                             | Net loss                                                    |            |       |             |   |                 |    |             |   |   |      |     |   |   |      | (741  | )
|                            
|                            
|                            
|                            
|                             | Stock option and restricted stock award transactions        |            |       | 12           |   |                 |    | (4           | ) |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Issuance of equity put options                              |            |       | (13          | ) |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Settlement of equity put options                            |            |       | 17           |   |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Share repurchases                                           |            |       | (64          | ) |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Conversion and cancellation of Class A EPS and Class B
	EPS |            |       | 14           |   |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Vistana acquisition                                         |            |       | 248          |   |                 |    |             |   |   |      |     |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Foreign currency translation                                |            |       |             |   |                 |    |             |   |   |      | (127 | ) |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Unrealized gain on securities, net                          |            |       |             |   |                 |    |             |   |   |      | 9    |   |   |      |      |  
|                            
|                            
|                            
|                            
|                             | Dividends declared                                          |            |       |             |   |                 |    |             |   |   |      |     |   |   |      | (117  | )
|                             |                                                             |            |       |              |   |                 |    |              |   |   |      |      |   |   |      |      
|Balance at December 31, 1999 |                                                             | $          | 4,785 |              |   | $               | (5 | )            |   | $ | (238 | )    |   | $ | (856 | )    
|                             |                                                             |            |       |              |   |                 |    |              |   |   |      |      |   |   |      |      




|    |                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents common stock of ITT prior to the ITT
	Merger and the Corporations common stock and the
	Trusts shares of beneficial interest subsequent to the ITT
	Merger.

The accompanying notes to financial statements are an integral
part of the above statements.

F-6



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |       |  
|-------------------------------------------------------- | ----------------------------------------------------------- | ----------------------- | ------ | ------ | - | ---- | ------ | ------ | - | - | ----- | ----- | -
|                                                         |                                                             |                        
|                                                         |                                                             | Year Ended December 31,
|                                                         |                                                             |                        
|                                                         |                                                             | 1999                    |        | 1998   |   | 1997
|                                                         |                                                             |                         |        |        |   |     
|Operating Activities                                     |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                        
|                                                        
|                                                        
|                                                        
|Net income (loss)                                        |                                                             | $                       | (741   | )      |   | $    | 1,302  |        |   | $ | (298  | )    
|                                                        
|                                                        
|                                                        
|                                                        
|Exclude:                                                 |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|Discontinued operations                                 |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Net loss from operations                                    |                         |        |       |   |      |        | 80     |   |   |       | 12    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Net (gain) loss on dispositions                             |                         |        | 71     |   |      |        | (1,162 | ) |   |       |      |  
|                                                        
|                                                        
|                                                        
|                                                        
|Extraordinary items                                      |                                                             |                         | 32     |        |   |      |       |        |   |   | 42    |      
|                                                        
|                                                        
|                                                        
|                                                        
|Cumulative effect of accounting change                   |                                                             |                         |       |        |   |      |       |        |   |   | 11    |      
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|Income (loss) from continuing operations                 |                                                             |                         | (638   | )      |   |      | 220    |        |   |   | (233  | )    
|                                                        
|                                                        
|                                                        
|                                                        
|Adjustments to income (loss) from continuing operations: |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Depreciation and amortization                               |                         |        | 476    |   |      |        | 399    |   |   |       | 199   |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Amortization of deferred loan costs                         |                         |        | 16     |   |      |        | 22     |   |   |       |      |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Non-cash portion of reorganization                          |                         |        | 936    |   |      |        |       |   |   |       |      |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Non-cash portion of restructuring and other special charges |                         |        | 7      |   |      |        | 85     |   |   |       |      |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Provision for doubtful accounts                             |                         |        | 9      |   |      |        | 13     |   |   |       | 6     |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Minority equity in net income                               |                         |        | 95     |   |      |        | 14     |   |   |       | 9     |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Equity income, net of dividends received                    |                         |        | (30    | ) |      |        | (8     | ) |   |       | (3    | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Gain on sale of real estate and investments                 |                         |        | (191   | ) |      |        | (55    | ) |   |       | (432  | )
|                                                        
|                                                        
|                                                        
|                                                        
|Changes in working capital:                              |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Accounts receivable                                         |                         |        | 21     |   |      |        | (36    | ) |   |       | (43   | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Inventories                                                 |                         |        | (17    | ) |      |        | (4     | ) |   |       | (6    | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Accounts payable                                            |                         |        | 37     |   |      |        | (2     | ) |   |       | 10    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Accrued expenses                                            |                         |        | (65    | ) |      |        | (641   | ) |   |       | 632   |  
|                                                        
|                                                        
|                                                        
|                                                        
|Accrued and deferred income taxes                        |                                                             |                         | 8      |        |   |      | (50    | )      |   |   | (130  | )    
|                                                        
|                                                        
|                                                        
|                                                        
|Other, net                                               |                                                             |                         | (93    | )      |   |      | 86     |        |   |   | (1    | )    
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                         | Cash from continuing operations                             |                         |        | 571    |   |      |        | 43     |   |   |       | 8     |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Cash used for discontinued operations                       |                         |        | (114   | ) |      |        | (296   | ) |   |       | (704  | )
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                         | Cash from (used for) operating activities                   |                         |        | 457    |   |      |        | (253   | ) |   |       | (696  | )
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|Investing Activities                                     |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                        
|                                                        
|                                                        
|                                                        
|Additions to plant, property and equipment               |                                                             |                         | (521   | )      |   |      | (427   | )      |   |   | (233  | )    
|                                                        
|                                                        
|                                                        
|                                                        
|Proceeds from asset sales                                |                                                             |                         | 3,853  |        |   |      | 2,854  |        |   |   | 1,641 |      
|                                                        
|                                                        
|                                                        
|                                                        
|Collection of notes receivable, net                      |                                                             |                         | 78     |        |   |      | 156    |        |   |   | 217   |      
|                                                        
|                                                        
|                                                        
|                                                        
|Acquisitions, net of acquired cash                       |                                                             |                         | (111   | )      |   |      | (60    | )      |   |   | (287  | )    
|                                                        
|                                                        
|                                                        
|                                                        
|Investments                                              |                                                             |                         | (107   | )      |   |      |       |        |   |   |      |      
|                                                        
|                                                        
|                                                        
|                                                        
|Employee benefit trust                                   |                                                             |                         | 3      |        |   |      | 143    |        |   |   | (166  | )    
|                                                        
|                                                        
|                                                        
|                                                        
|Other, net                                               |                                                             |                         | (23    | )      |   |      | (326   | )      |   |   | (40   | )    
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                         | Cash from investing activities                              |                         |        | 3,172  |   |      |        | 2,340  |   |   |       | 1,132 |  
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|Financing Activities                                     |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                        
|                                                        
|                                                        
|                                                        
|Short-term borrowings, net                               |                                                             |                         | (620   | )      |   |      | 487    |        |   |   | (155  | )    
|                                                        
|                                                        
|                                                        
|                                                        
|Long-term debt issued                                    |                                                             |                         | 681    |        |   |      | 4,143  |        |   |   | 665   |      
|                                                        
|                                                        
|                                                        
|                                                        
|Long-term debt repaid                                    |                                                             |                         | (3,165 | )      |   |      | (2,785 | )      |   |   | (965  | )    
|                                                        
|                                                        
|                                                        
|                                                        
|Settlement of forward equity contracts                   |                                                             |                         | (16    | )      |   |      | (125   | )      |   |   |      |      
|                                                        
|                                                        
|                                                        
|                                                        
|Dividends paid                                           |                                                             |                         | (116   | )      |   |      | (3,357 | )      |   |   |      |      
|                                                        
|                                                        
|                                                        
|                                                        
|Share repurchases                                        |                                                             |                         | (64    | )      |   |      | (371   | )      |   |   |      |      
|                                                        
|                                                        
|                                                        
|                                                        
|Other, net                                               |                                                             |                         | (35    | )      |   |      | (48    | )      |   |   | 30    |      
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                         | Cash used for financing activities                          |                         |        | (3,335 | ) |      |        | (2,056 | ) |   |       | (425  | )
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|Exchange rate effect on cash and cash equivalents        |                                                             |                         | (15    | )      |   |      |       |        |   |   | (3    | )    
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|Increase in cash and cash equivalents                    |                                                             |                         | 279    |        |   |      | 31     |        |   |   | 8     |      
|                                                        
|                                                        
|                                                        
|                                                        
|Cash and cash equivalents  beginning of period          |                                                             |                         | 157    |        |   |      | 126    |        |   |   | 118   |      
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|Cash and cash equivalents  end of period                |                                                             | $                       | 436    |        |   | $    | 157    |        |   | $ | 126   |      
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|Supplemental Disclosures of Cash Flow Information        |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                        
|                                                        
|                                                        
|                                                        
|Cash paid during the period for:                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Interest                                                    |                         | $      | 651    |   |      | $      | 445    |   |   | $     | 11    |  
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      
|                                                         | Income taxes, net of refunds                                |                         | $      | 132    |   |      | $      | 63     |   |   | $     | 227   |  
|                                                         |                                                             |                         |        |        |   |      |        |        |   |   |       |      

The accompanying notes to financial statements are an integral
part of the above statements.

F-7



---



STARWOOD HOTELS & RESORTS

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |       |       | 
|--------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ----- | ------ | ----- | - | ----- | ----- | ----- | 
|                                                                      |                                                                                                                                                                                 |                           
|                                                                      |                                                                                                                                                                                 | December 31,              
|                                                                      |                                                                                                                                                                                 |                           
|                                                                      |                                                                                                                                                                                 | 1999                       |       | 1998  
|                                                                      |                                                                                                                                                                                 |                            |       |       
|ASSETS                                                               
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Current assets:                                                       |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cash and cash equivalents                                                                                                                                                       |                            | $     | 1      |       |   | $     | 12    |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accounts receivable, net                                                                                                                                                        |                            |       | 2      |       |   |       | 24    |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Receivable, Corporation                                                                                                                                                         |                            |       | 34     |       |   |       | 42    |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Prepaid expenses and other                                                                                                                                                      |                            |       | 5      |       |   |       | 3     |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                      |                                                                                                                                                                                 | Total current assets       |       |        | 42    |   |       |       | 81    | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Investments, Corporation                                              |                                                                                                                                                                                 |                            | 848   |        |       |   | 1,057 |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Investments                                                           |                                                                                                                                                                                 |                            | 47    |        |       |   | 86    |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Plant, property and equipment, net                                    |                                                                                                                                                                                 |                            | 4,293 |        |       |   | 4,429 |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Long-term receivables, net, Corporation                               |                                                                                                                                                                                 |                            | 1,666 |        |       |   | 2,583 |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Goodwill and intangible assets, net                                   |                                                                                                                                                                                 |                            | 246   |        |       |   | 258   |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Other assets                                                          |                                                                                                                                                                                 |                            | 16    |        |       |   | 152   |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                      |                                                                                                                                                                                 | $                          | 7,158 |        |       | $ | 8,646 |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|LIABILITIES AND STOCKHOLDERS EQUITY                                 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Current liabilities:                                                  |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accounts payable                                                                                                                                                                |                            | $     | 4      |       |   | $     | 6     |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accrued expenses                                                                                                                                                                |                            |       | 74     |       |   |       | 68    |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Short-term borrowings and current maturities of long-term debt                                                                                                                  |                            |       | 105    |       |   |       | 1     |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                      |                                                                                                                                                                                 | Total current liabilities  |       |        | 183   |   |       |       | 75    | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Long-term debt                                                        |                                                                                                                                                                                 |                            | 496   |        |       |   | 737   |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                      |                                                                                                                                                                                 |                            | 679   |        |       |   | 812   |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|Minority interest                                                     |                                                                                                                                                                                 |                            | 32    |        |       |   | 39    |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|Equity put options and forward equity contracts                       |                                                                                                                                                                                 |                            |      |        |       |   | 23    |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|Class B exchangeable preferred shares, at redemption value
	of $38.50 |                                                                                                                                                                                 |                            | 136   |        |       |   | 149   |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|Commitments and contingencies                                         |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Stockholders equity:                                                 |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Class A exchangeable preferred shares; $0.01 par value;
	authorized 30,000,000 shares; outstanding 3,669,546 and 4,373,457
	 shares at December 31, 1999 and 1998, respectively |                            |       |       |       |   |       |      |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Trust common shares of beneficial interest; $0.01 par value;
	authorized 1,200,000,000 shares; outstanding 175,574,135 shares
	at December 31, 1998                             |                            |       |       |       |   |       | 2     |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Class A shares of beneficial interest; $0.01 par value;
	authorized 5,000 shares; outstanding 100 shares at December 
	 31, 1999                                                |                            |       |       |       |   |       |      |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Trust Class B shares of beneficial interest; $0.01 par
	value; authorized 1,000,000,000 shares; outstanding 189,271,522
	shares at December 31, 1999                            |                            |       | 2      |       |   |       |      |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Additional paid-in capital                                                                                                                                                      |                            |       | 7,612  |       |   |       | 7,557 |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Retained earnings (accumulated deficit)                                                                                                                                         |                            |       | (1,303 | )     |   |       | 64    |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                      |                                                                                                                                                                                 | Total stockholders equity |       |        | 6,311 |   |       |       | 7,623 | 
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      
|                                                                      |                                                                                                                                                                                 | $                          | 7,158 |        |       | $ | 8,646 |      
|                                                                      |                                                                                                                                                                                 |                            |       |        |       |   |       |      

The accompanying notes to financial statements are an integral
part of the above statements.

F-8



---



STARWOOD HOTELS & RESORTS

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions)


|                                                      |  |                   |      |                      |  |   |     |  
|----------------------------------------------------- |  | ----------------- | ---- | -------------------- |  | - | --- | -
|                                                      |  |                   |      | Period from         
|                                                      |  | Year Ended        |      | February 23, 1998   
|                                                      |  | December 31, 1999 |      | to December 31, 1998
|                                                      |  |                   |      |                     
|Revenues                                              |  |                   |      |                      |  |   |     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Unconsolidated joint ventures and other               |  | $                 | 7    |                      |  | $ | 10  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Rent and interest, Corporation                        |  |                   | 787  |                      |  |   | 590 |  
|                                                      |  |                   |      |                      |  |   |     |  
|                                                      |  |                   | 794  |                      |  |   | 600 |  
|                                                      |  |                   |      |                      |  |   |     |  
|Costs and Expenses                                    |  |                   |      |                      |  |   |     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Selling, general and administrative                   |  |                   | 5    |                      |  |   | 22  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Depreciation and amortization                         |  |                   | 178  |                      |  |   | 131 |  
|                                                      |  |                   |      |                      |  |   |     |  
|                                                      |  |                   | 183  |                      |  |   | 153 |  
|                                                      |  |                   |      |                      |  |   |     |  
|                                                      |  |                   | 611  |                      |  |   | 447 |  
|                                                     
|                                                     
|                                                     
|                                                     
|Interest expense, net of interest income of $2 and $6 |  |                   | (47  | )                    |  |   | (24 | )
|                                                     
|                                                     
|                                                     
|                                                     
|Loss on sale of real estate and investments           |  |                   | (137 | )                    |  |   |    |  
|                                                     
|                                                     
|                                                     
|                                                     
|Income tax expense                                    |  |                   | (2   | )                    |  |   | (1  | )
|                                                     
|                                                     
|                                                     
|                                                     
|Minority equity in net income                         |  |                   | (2   | )                    |  |   | (10 | )
|                                                      |  |                   |      |                      |  |   |     |  
|Net income                                            |  | $                 | 423  |                      |  | $ | 412 |  
|                                                      |  |                   |      |                      |  |   |     |  

The accompanying notes to financial statements are an integral
part of the above statements.

F-9



---



STARWOOD HOTELS & RESORTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


|                                                  |                                             |                   |      |                      |   |   |      |      |  
|------------------------------------------------- | ------------------------------------------- | ----------------- | ---- | -------------------- | - | - | ---- | ---- | -
|                                                  |                                             |                   |      | Period from         
|                                                  |                                             | Year Ended        |      | February 23, 1998   
|                                                  |                                             | December 31, 1999 |      | to December 31, 1998
|                                                  |                                             |                   |      |                     
|Operating Activities                              |                                             |                   |      |                      |   |   |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|Net income                                        |                                             | $                 | 423  |                      |   | $ | 412  |     
|                                                 
|                                                 
|                                                 
|                                                 
|Adjustments to net income:                        |                                             |                   |      |                      |   |   |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Depreciation and amortization               |                   |      | 178                  |   |   |      | 131  |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Minority equity in net income               |                   |      | 2                    |   |   |      | 10   |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Equity income, net of dividends received    |                   |      | (2                   | ) |   |      | 2    |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Loss on sale of real estate and investments |                   |      | 137                  |   |   |      |     |  
|                                                 
|                                                 
|                                                 
|                                                 
|Changes in working capital:                       |                                             |                   |      |                      |   |   |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Accounts receivable                         |                   |      | 5                    |   |   |      | (8   | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Accounts payable                            |                   |      | (2                   | ) |   |      | 1    |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Accrued expenses                            |                   |      | 33                   |   |   |      | (17  | )
|                                                 
|                                                 
|                                                 
|                                                 
|Other, net                                        |                                             |                   | (2   | )                    |   |   | 72   |     
|                                                  |                                             |                   |      |                      |   |   |      |     
|                                                  | Cash from operating activities              |                   |      | 772                  |   |   |      | 603  |  
|                                                  |                                             |                   |      |                      |   |   |      |     
|Investing Activities                              |                                             |                   |      |                      |   |   |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|Additions to plant, property and equipment        |                                             |                   | (271 | )                    |   |   | (177 | )   
|                                                 
|                                                 
|                                                 
|                                                 
|Proceeds from sale of real estate and investments |                                             |                   | 126  |                      |   |   | 282  |     
|                                                 
|                                                 
|                                                 
|                                                 
|Acquisitions, net of acquired cash                |                                             |                   |     |                      |   |   | (13  | )   
|                                                 
|                                                 
|                                                 
|                                                 
|Investments                                       |                                             |                   | (6   | )                    |   |   |     |     
|                                                 
|                                                 
|                                                 
|                                                 
|Collections on notes receivable                   |                                             |                   | 56   |                      |   |   |     |     
|                                                 
|                                                 
|                                                 
|                                                 
|Notes receivable, Corporation                     |                                             |                   | 60   |                      |   |   | 488  |     
|                                                 
|                                                 
|                                                 
|                                                 
|Other, net                                        |                                             |                   | (1   | )                    |   |   | (325 | )   
|                                                  |                                             |                   |      |                      |   |   |      |     
|                                                  | Cash (used for) from investing activities   |                   |      | (36                  | ) |   |      | 255  |  
|                                                  |                                             |                   |      |                      |   |   |      |     
|Financing Activities                              |                                             |                   |      |                      |   |   |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|Short-term debt, net                              |                                             |                   |     |                      |   |   | 1    |     
|                                                 
|                                                 
|                                                 
|                                                 
|Long-term debt issued                             |                                             |                   | 291  |                      |   |   | 319  |     
|                                                 
|                                                 
|                                                 
|                                                 
|Long-term debt repaid                             |                                             |                   | (428 | )                    |   |   | (546 | )   
|                                                 
|                                                 
|                                                 
|                                                 
|Settlement of forward equity contracts            |                                             |                   |     |                      |   |   | (88  | )   
|                                                 
|                                                 
|                                                 
|                                                 
|Dividends paid                                    |                                             |                   | (116 | )                    |   |   | (278 | )   
|                                                 
|                                                 
|                                                 
|                                                 
|Dividends paid to Corporation                     |                                             |                   | (470 | )                    |   |   |     |     
|                                                 
|                                                 
|                                                 
|                                                 
|Share repurchases                                 |                                             |                   | (12  | )                    |   |   | (260 | )   
|                                                 
|                                                 
|                                                 
|                                                 
|Other, net                                        |                                             |                   | (12  | )                    |   |   | 6    |     
|                                                  |                                             |                   |      |                      |   |   |      |     
|                                                  | Cash used for financing activities          |                   |      | (747                 | ) |   |      | (846 | )
|                                                  |                                             |                   |      |                      |   |   |      |     
|Increase (decrease) in cash and cash equivalents  |                                             |                   | (11  | )                    |   |   | 12   |     
|                                                 
|                                                 
|                                                 
|                                                 
|Cash and cash equivalents  beginning of period   |                                             |                   | 12   |                      |   |   |     |     
|                                                  |                                             |                   |      |                      |   |   |      |     
|Cash and cash equivalents  end of period         |                                             | $                 | 1    |                      |   | $ | 12   |     
|                                                  |                                             |                   |      |                      |   |   |      |     
|Supplemental Disclosures of Cash Flow Information |                                             |                   |      |                      |   |   |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|Cash paid during the period for:                  |                                             |                   |      |                      |   |   |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Interest                                    |                   | $    | 36                   |   |   | $    | 21   |  
|                                                  |                                             |                   |      |                      |   |   |      |     
|                                                  | Income taxes                                |                   | $    | 2                    |   |   | $    | 1    |  
|                                                  |                                             |                   |      |                      |   |   |      |     

The accompanying notes to financial statements are an integral
part of the above statements.

F-10



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS

Note 1.  Basis of Presentation

The accompanying consolidated balance sheets as of
December 31, 1999 and 1998 and the consolidated statements
of operations, comprehensive income and cash flows for the year
ended December 31, 1999 represent (i) Starwood Hotels
& Resorts Worldwide, Inc. (the Corporation) and
its subsidiaries, including ITT Corporation and its subsidiaries
(ITT) and Starwood Hotels & Resorts and its
subsidiaries (the Trust and, together with the
Corporation, Starwood or the Company),
and (ii) the Trust. Because the Companys acquisition
of ITT (the ITT Merger) was treated as a reverse
purchase for financial accounting purposes, the statements of
operations, comprehensive income, equity and cash flows for the
year ended December 31, 1998 include the accounts of the
Company and the Trust for the period from the closing of the ITT
Merger on February 23, 1998 through December 31, 1998
and the accounts of ITT for the year ended December 31,
1998. Additionally, the statements of operations, comprehensive
income, equity and cash flows for the year ended
December 31, 1997 represent the results of ITT.

The Trust was formed in 1969 and elected to be taxed as a real
estate investment trust (REIT) under the Internal
Revenue Code (the Code). In 1980, the Trust formed
the Corporation and made a distribution to the Trusts
shareholders of one share of common stock, par value $0.01 per
share, of the Corporation (a Corporation Share) for
each common share of beneficial interest, par value $0.01 per
share, of the Trust (a Trust Share). Until
January 6, 1999, the Corporation Shares and Trust Shares
were paired on a one-for-one basis and, pursuant to an agreement
between the Corporation and the Trust, could be held or
transferred only in units (Paired Shares) consisting
of one Corporation Share and one Trust Share.

At December 31, 1998, the combined Corporation and Trust
entity was a paired share REIT under the
grandfathering provisions of the Code. During 1998, Congress
enacted tax legislation that has the effect of eliminating this
grandfathering for certain interests in real property acquired
after March 26, 1998. In response to this legislation, a
reorganization of the Corporation and the Trust (the
Reorganization) was proposed by the Company and was
approved by the Corporation and Trust shareholders on
January 6, 1999. As a result of the Reorganization, the
Trust became a subsidiary of the Corporation, which indirectly
holds all outstanding shares of the new Class A shares of
beneficial interest in the Trust (Class A
Shares). Each outstanding Trust Share was converted into
one share of the new non-voting Class B shares of beneficial
 interest in the Trust (a Class B Share). The
Corporation Shares and the Class B Shares trade together on
a one-for-one basis, and pursuant to an agreement between the
Corporation and the Trust, may be transferred only in units
(Shares) consisting of one Corporation Share and one
Class B Share. The Reorganization was accounted for as a
reorganization of two companies under common control. As such,
there was no revaluation of the assets and liabilities of the
combining companies. Unless otherwise stated herein, all
information with respect to Shares refers to Shares since
January 6, 1999 and to Paired Shares for periods before
January 6, 1999.

During the first quarter of 1999, the Company recorded pretax
charges of $15 million for costs directly attributable to the
Reorganization, such as legal, accounting and investment banking
fees. As a result of the Reorganization, the Company also
recorded a one-time charge of $936 million to establish a
deferred tax liability relating to the difference between the
book and tax basis in the assets of the Trust.

The Company is one of the largest hotel companies in the world
and the Trust is one of the largest REITs in the United States.
The Companys principal business is hotels and leisure,
which is comprised of a worldwide hospitality network of more
than 700 full-service hotels as well as vacation ownership
resorts primarily serving two markets: luxury and upscale. The
Companys hotel operations are represented in nearly every
major world market.

The Corporation, through its subsidiaries, is the general partner
 of, and held, as of December 31, 1999, an aggregate 91.7%
partnership interest in, SLC Operating Limited Partnership (the
Operating Partnership). The Trust, through its
subsidiaries, is the general partner of, and held an aggregate
97.2% partnership interest

F-11



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

in, SLT Realty Limited Partnership (the Realty
Partnership and, together with the Operating Partnership,
the Partnerships) as of December 31, 1999. The
Realty Partnership principally owns, directly or indirectly, fee,
 ground lease and mortgage loan interests in hotel properties.
The units of the Partnerships (LP Units) held by the
limited partners of the respective Partnerships are exchangeable
on a one-for-one basis for Shares. At December 31, 1999,
there were approximately 9.9 million LP Units outstanding
(including 4.3 million LP Units held by the Corporation). For all
 periods presented, the LP Units are assumed to have been
converted to Shares for purposes of calculating basic and diluted
 weighted average Shares outstanding.

Note 2.  Significant Accounting Policies

Cash and Cash Equivalents.The Company considers
all highly liquid investments purchased with an original maturity
 of three months or less to be cash equivalents.

Inventories.Inventories are comprised principally
of vacation ownership interests (VOIs) and hotel
operating supplies. VOI inventory is carried at cost, which is
lower than fair value less cost to sell. Operating supplies are
generally valued at the lower of cost (first-in, first-out) or
market, and potential losses from obsolete and slow-moving
inventories are provided for in the current period.

Investments.Investments in partnerships and joint
ventures are accounted for using the equity method of accounting
when the Company has a 20% to 50% ownership interest or exercises
 significant influence over the venture. If the Companys
interest exceeds 50% and the Company exercises control over the
venture, the results of the partnership or joint venture are
consolidated herein. All other investments are generally
accounted for under the cost method.

Under the equity method of accounting, profits and losses are
allocated in accordance with the partnership or joint venture
agreements. The Companys proportionate share of income or
losses before interest expense, depreciation and amortization,
and extraordinary items is included in other revenues in the
accompanying consolidated statements of operations. The
Companys proportionate share of interest expense and
depreciation and amortization of such ventures is included in
interest expense and depreciation and amortization, respectively,
 in the accompanying consolidated statements of operations.

Plant, Property and Equipment.Plant, property and
equipment, including capitalized interest of $8 million, $14
million and $7 million in 1999, 1998 and 1997, respectively,
applicable to major project expenditures, are recorded at cost.
Depreciation is provided on a straight-line basis over the
estimated useful economic lives of 15 to 40 years for
buildings and improvements; 3 to 10 years for furniture, fixtures
 and equipment; and the lesser of the leasehold term or
40 years for leasehold improvements. Gains or losses on the
sale or retirement of assets are included in income when the
assets are sold provided there is reasonable assurance of the
collectibility of the sales price and any future activities to be
 performed by the Company relating to the hotel assets sold are
insignificant.

The Company evaluates the carrying value of each of the
Companys assets for impairment. For assets not held for
sale, the expected undiscounted future cash flows of the assets
are compared to the net book value of the assets. If the expected
 undiscounted future cash flows are less than the net book value
of the assets, the excess of the net book value over the
estimated fair value is charged to current earnings. When assets
are identified by management as held for sale, the Company
discontinues depreciating the assets and estimates the fair value
 of such assets. If, in managements opinion, the fair value
 of the assets which have been identified for sale is less than
the net book value of the assets, a loss reserve is established.
Fair value is determined based upon discounted cash flows of the
assets at rates deemed reasonable for the type of property and
prevailing market conditions, appraisals and, if appropriate,
current estimated net sales proceeds from pending offers.

Long-Term Receivables.Long-term receivables
consist primarily of secured loans to VOI owners, owners of
managed hotels and unconsolidated joint ventures and are included
 in other assets in the

F-12



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

accompanying consolidated balance sheets. The Company
periodically sells notes receivable originated by Vistana, Inc.
(Vistana) in connection with the sale of VOIs. For
adjustable rate loans, fair value approximates carrying value due
 to the variable nature of the interest rates. For fixed rate
loans, fair value is determined based upon discounted cash flows
from the note at rates deemed reasonable for the type of note and
 prevailing market conditions, appraisals and, if appropriate,
current estimated net sales proceeds from pending offers to buy
the underlying properties. The carrying value approximates fair
value due to the interest rates being in line with market rates.

Management considers a loan to be impaired when it is probable
that the Company will be unable to collect all amounts due
according to the contractual terms of the loan. When a loan is
considered to be impaired, the amount of the impairment is
measured based on the present value of expected future cash flows
 discounted at the notes effective interest rate.
Impairment losses are charged to current earnings. Generally,
cash receipts are first applied to reduce accrued and unpaid
interest and then to reduce principal.

Goodwill and Intangible Assets.Goodwill and
intangible assets arose in connection with acquisitions,
including the acquisition of management contracts, and are
amortized using the straight-line method over 2 to 40 years.
 Accumulated amortization was $154 million and $85 million at
December 31, 1999 and 1998, respectively. The Company
continually reviews the carrying value of goodwill and intangible
 assets to assess recoverability from future operations using
undiscounted cash flows. Impairments would be recognized in
operating results if a permanent diminution in value is deemed to
 have occurred.

Derivative Financial Instruments.The Company
enters into interest rate swap agreements to manage interest rate
 exposure. The differential to be paid or received under these
agreements is accrued consistent with the terms of the agreements
 and is recognized in interest expense over the term of the
related debt using a method that approximates the effective
interest method (the accrual accounting method). The related
amounts payable to or receivable from counterparties are included
 in other liabilities or assets. The fair value of the swap
agreements and changes in the fair value as a result of changes
in market interest rates are not recognized in the financial
statements.

The Company enters into foreign currency forward contracts and
foreign currency swaps as a means of hedging exposure to foreign
currency fluctuations. Foreign currency forward contracts and
foreign currency swaps are accounted for in accordance with
Statement of Financial Accounting Standards (SFAS)
No. 52, Foreign Currency Translation. Changes in the value of the
 derivative instruments designated as hedges of foreign currency
denominated assets and liabilities are classified in the same
manner as the classification of the changes in the underlying
assets and liabilities.

The Company does not enter into these derivative financial
instruments for speculative purposes and closely monitors the
financial stability and credit standing of its counterparties.
When a derivative financial instrument is deemed to no longer
effectively correlate with its underlying assets or liabilities,
it is the Companys policy to mark to market these
derivatives.

Foreign Currency Translation.Balance sheet
accounts are translated at the exchange rates in effect at each
year-end and income and expense accounts are translated at the
average rates of exchange prevailing during the year. The
national currencies of foreign operations are generally the
functional currencies. Gains and losses from foreign currency
translation and the effect of exchange rate changes on
intercompany transactions of a long-term investment nature are
generally included as a separate component of stockholders
equity in accordance with SFAS No. 52. Gains and losses from
 foreign currency transactions are reported currently in costs
and expenses and were insignificant for all periods presented.

Income Tax.Under the asset and liability method of
 accounting for income taxes, deferred tax assets and liabilities
 are recognized for the estimated future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets, including net operating loss
 carryforwards, and

F-13



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates in effect
for the year in which those temporary differences are expected to
 be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in earnings in
 the period when the new rate is enacted.

The Trust has elected to be treated as a REIT under the
provisions of the Code beginning with the 1995 calendar year. As
a result, the Trust will not be subject to federal income tax on
its taxable income at corporate rates provided it distributes
annually 100% of its taxable income to its shareholders and
complies with certain other requirements.

Earnings Per Share.The following reconciliation of
 basic earnings per Share to diluted earnings per Share for
income (loss) from continuing operations assumes the conversion
of LP Units to Shares (in millions, except per Share data):

|                                         |                        |                         |      |        |  |       |     |          |  |        |       |       |  |          |     |        |  |       |     |   |  |   |      |  |  |   |      |   |  |  |     |   |  |   |       |   | 
|---------------------------------------- | ---------------------- | ----------------------- | ---- | ------ |  | ----- | --- | -------- |  | ------ | ----- | ----- |  | -------- | --- | ------ |  | ----- | --- | - |  | - | ---- |  |  | - | ---- | - |  |  | --- | - |  | - | ----- | - | 
|                                         |                        |                        
|                                         |                        | Year Ended December 31,
|                                         |                        |                        
|                                         |                        |                         |      |        |  |      
|                                         |                        | 1999                    |      | 1998   |  | 1997 
|                                         |                        |                         |      |        |  |      
|                                         |                        |                         |      | Per    |  |       |     | Per      |  |        |       | Per  
|                                         |                        | Earnings                |      | Shares |  | Share |     | Earnings |  | Shares |       | Share |  | Earnings |     | Shares |  | Share
|                                         |                        |                         |      |        |  |       |     |          |  |        |       |       |  |          |     |        |  |      
|Income (loss) from continuing operations |                        | $                       | (638 | )      |  |       |     |          |  |        |       |       |  | $        | 220 |        |  |       |     |   |  |   |      |  |  | $ | (233 | ) |  |  |     |   |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|Dividends on Class A and Class B EPS     |                        |                         | (5   | )      |  |       |     |          |  |        |       |       |  |          | (17 | )      |  |       |     |   |  |   |      |  |  |   |     |   |  |  |     |   |  |   |       |  
|                                         |                        |                         |      |        |  |       |     |          |  |        |       |       |  |          |     |        |  |       |     |   |  |   |      |  |  |   |      |   |  |  |     |   |  |   |       |  
|Basic earnings (loss)                    |                        |                         | (643 | )      |  |       | 189 |          |  | $      | (3.41 | )     |  |          | 203 |        |  |       | 192 |   |  | $ | 1.06 |  |  |   | (233 | ) |  |  | 126 |   |  | $ | (1.85 | )
|                                        
|                                        
|                                        
|                                        
|Effect of dilutive securities:           |                        |                         |      |        |  |       |     |          |  |        |       |       |  |          |     |        |  |       |     |   |  |   |      |  |  |   |      |   |  |  |     |   |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|                                         | Employee stock options |                         |      |       |  |       |     |         |  |        |       |       |  |          |     |       |  |       |     | 2 |  |   |      |  |  |   |      |  |  |  |     |  |  |   |       |   | 
|                                         |                        |                         |      |        |  |       |     |          |  |        |       |       |  |          |     |        |  |       |     |   |  |   |      |  |  |   |      |   |  |  |     |   |  |   |       |  
|Diluted earnings (loss)                  |                        | $                       | (643 | )      |  |       | 189 |          |  | $      | (3.41 | )     |  | $        | 203 |        |  |       | 194 |   |  | $ | 1.05 |  |  | $ | (233 | ) |  |  | 126 |   |  | $ | (1.85 | )
|                                         |                        |                         |      |        |  |       |     |          |  |        |       |       |  |          |     |        |  |       |     |   |  |   |      |  |  |   |      |   |  |  |     |   |  |   |       |  

Earnings per Share for the year ended December 31, 1997, as
previously reported by ITT, has been restated to give effect to
the reverse purchase accounting for the ITT Merger and to conform
 to the presentation required by SFAS No. 128, Earnings Per
Share.

Employee stock options totaling approximately 1 million and
4 million Shares were not included in the computation of
diluted earnings per Share for the years ended December 31,
1999 and 1997, respectively, as the effects were antidilutive.
Class A Exchangeable Preferred Shares (Class A
EPS) and Class B Exchangeable Preferred Shares
(Class B EPS) of the Trust totaling
approximately 8 million Shares were not included in the
computation of diluted earnings per Share for the years ended
December 31, 1999 and 1998 as the effects were antidilutive.
 Additionally, equity put options totaling approximately
1 million Shares were not included in the computation of
diluted earnings per Share for the year ended December 31,
1998 as the effects were antidilutive. There were no Class A
 EPS, Class B EPS, equity put options or forward equity
contracts outstanding in 1997.

Revenue Recognition.Generally, revenues are
recognized when the services have been rendered. The following is
 a description of the composition of revenues for the Company:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Owned, Leased and Consolidated Joint Ventures 
	Represents revenue primarily derived from hotel and leisure
	operations, including the rental of rooms and food and beverage
	sales, from a worldwide network of owned, leased or consolidated
	joint venture hotels and resorts operated primarily under the
	Companys proprietary brand names including Sheraton,
	Westin, St. Regis, The Luxury Collection, Four Points and W.
|
| |  | Management and Franchise Fees  Represents fees earned
	on hotels managed worldwide, usually under long-term contracts
	with the hotel owner, and franchise fees received in connection
	with the franchise of the Companys Sheraton, Westin and
	Four Points brand names. Management fees are                                                                                                                                    

F-14



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)



| |   |                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | generally based on a combination of a percentage of gross
	revenues and an incentive fee, and franchise fees are generally
	based on a percentage of hotel room revenues.                                                          
|
| |  | Other  Represents primarily the Companys
	interest in unconsolidated joint ventures and the sale and
	financing of VOIs. VOI sales are included in revenue when minimum
	 down payment requirements (at least 10%) have been met.

Frequent Guest Program.The Company accrues for the
 cost of redeeming points awarded to members of the frequent
guest program based on the discounted expected costs of
redemption. The liability for this program was $125 million
at December 31, 1999 and $89 million at
December 31, 1998. At December 31, 1999 and 1998,
$103 million and $74 million, respectively, are
included in other long-term liabilities in the accompanying
consolidated balance sheets with the remainder included in
accrued expenses.

Use of Estimates.The preparation of financial
statements in conformity with accounting principles generally
accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Reclassifications.Certain reclassifications have
been made to the prior years financial statements to
conform to the current year presentation.

Start-up Costs.Effective January 1, 1997, ITT
 changed its method of accounting for start-up costs on major
projects to expense these costs as incurred. Prior to 1997, the
Company capitalized these costs and amortized them over a
three-year period. ITTs 1997 results include a charge of
$17 million before income taxes of $6 million as the
cumulative effect of this accounting change.

Impact of Recently Issued Accounting Standards.In
June 1998, SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, was issued. This statement
establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its
fair value. The statement also requires that changes in the fair
value of the derivative be recognized currently in earnings
unless specific hedge accounting criteria are met. If specific
hedge accounting criteria are met, changes in the fair value of
derivatives will either be offset against the change in the fair
value of the hedged assets, liabilities, or firm commitments
through earnings, or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective
portion of a derivatives change in fair value will be
immediately recognized in earnings. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
 June 15, 2000. Management has not yet quantified the impact
 of adopting SFAS No. 133 on the Companys financial
statements.

Note 3.  Acquisitions

Acquisition of Vistana.On October 1, 1999,
the Company completed the acquisition of Vistana, whereby Vistana
 merged with and into a subsidiary of the Corporation and thereby
 became a wholly owned subsidiary of the Corporation.
Vistanas principal operations include the acquisition,
development and operation of vacation ownership resorts;
marketing and selling VOIs in the resorts; and providing
financing to customers who purchase such interests. The Company
accounted for the acquisition of Vistana as a purchase in
accordance with Accounting Principles Board (APB)
Opinion No. 16. As such, the carrying values of the assets
acquired (including net cash of approximately $35 million)
and liabilities assumed were recorded at fair market value,
resulting in goodwill of approximately $244 million. The
purchase price for this acquisition has been allocated, on a
preliminary basis, to the assets acquired and liabilities assumed
 based upon estimated fair values as of the acquisition date and
is subject to adjustment when additional information regarding
asset and

F-15



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

liability valuations is finalized. The results of Vistanas
operations have been included in the accompanying financial
statements since the acquisition date. The Company financed the
acquisition of Vistana with cash of approximately
$110 million, the assumption of approximately
$280 million of debt and the issuance of approximately
10.1 million Shares.

ITT and Westin Mergers.On January 2, 1998,
Starwood acquired Westin Hotels & Resorts Worldwide,
Inc. and certain of its affiliates (Westin) for
approximately $1.0 billion (the Westin Merger).
On February 23, 1998, pursuant to an Amended and Restated
Agreement and Plan of Merger dated as of November 12, 1997,
the Company acquired ITT. The aggregate value of the ITT
acquisition in cash, Shares and assumed debt was approximately
$14.6 billion.

The Company accounted for the ITT Merger as a reverse purchase in
 accordance with APB Opinion No. 16. Although the Company
issued Shares to ITT stockholders and survived the ITT Merger,
the Corporation and the Trust (inclusive of Westin) are
considered the acquired companies for accounting purposes since
the prior ITT stockholders held a majority of the outstanding
Shares immediately after the ITT Merger was consummated. As such,
 the carrying value of the assets and liabilities of the
Corporation and Trust (inclusive of Westin) was recorded at fair
market value, resulting in goodwill and identified intangibles of
 approximately $2.5 billion.

Because the ITT Merger was treated as a reverse purchase for
financial accounting purposes, the statements of operations,
comprehensive income and cash flows for the year ended
December 31, 1998 include the accounts of the Corporation
and the Trust (inclusive of Westin) for the period from the
closing of the ITT Merger on February 23, 1998 through
December 31, 1998 and the accounts of ITT for the entire
year ending December 31, 1998. Historical stockholders
 equity of the Company prior to the ITT Merger has been
retroactively restated for the equivalent number of shares
received in the ITT Merger after giving effect to the difference
in par value between Starwoods and ITTs stock. Unless
 otherwise indicated, all references herein to the number of
Shares and per Share amounts have been restated to reflect the
impact of the reverse acquisition at the conversion factor of
1.543 Shares for each ITT share acquired.

Unaudited Pro Forma Results.The following
unaudited pro forma information reflects the ITT Merger, the
Westin Merger and certain asset sales as if they occurred at the
beginning of each period presented and does not purport to
present what actual results would have been had such
transactions, in fact, occurred at the beginning of each period
presented, or to project results for any future period (in
millions, except per Share data):

|                                                           |  |                         |       |      |  |   |       | 
|---------------------------------------------------------- |  | ----------------------- | ----- | ---- |  | - | ----- | 
|                                                           |  |                        
|                                                           |  | Year Ended December 31,
|                                                           |  |                        
|                                                           |  | 1999                    |       | 1998
|                                                           |  |                         |       |     
|Revenues                                                   |  | $                       | 3,862 |      |  | $ | 3,586 | 
|                                                          
|                                                          
|                                                          
|                                                          
|Income (loss) from continuing operations                   |  | $                       | (550  | )    |  | $ | 164   | 
|                                                          
|                                                          
|                                                          
|                                                          
|Net income (loss)                                          |  | $                       | (653  | )    |  | $ | 1,246 | 
|                                                          
|                                                          
|                                                          
|                                                          
|Basic income (loss) from continuing operations per Share   |  | $                       | (2.94 | )    |  | $ | 0.76  | 
|                                                          
|                                                          
|                                                          
|                                                          
|Diluted income (loss) from continuing operations per Share |  | $                       | (2.94 | )    |  | $ | 0.75  | 

Note 4.  Dispositions

In September and October of 1999, the Company sold its 52.8%
stake in Lampsa, SA, a Greek company that owns the Grande
Bretagne Hotel in Athens, Greece. The Company owned its interest
in Lampsa, SA through its then 70.3% ownership of Ciga S.p.A.
(Ciga). The Company received gross proceeds (before
minority interest) of approximately $287 million as a result
 of this sale and recorded a pretax gain (before minority
interest) of $276 million.

F-16



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

The Company disposed of four hotels, the International Golf Club
and certain other assets in 1999 for approximately
$167 million in net cash proceeds. The Company recognized a
net pretax loss on these sales of $32 million in 1999.

The Company disposed of eleven properties in 1998. There was no
gain or loss recognized in connection with these dispositions as
the fair market value of the assets approximated the net book
value at the time of the disposition.

In June 1997, ITT sold a 38.5% ownership interest in Madison
Square Garden, L.P. (MSG) to Cablevision Systems
Corporation (Cablevision) for approximately
$500 million and recorded a pretax gain of approximately
$200 million. ITT also had two put options each allowing ITT
 to require Cablevision or MSG to purchase one-half of ITTs
 then continuing interest in MSG for $75 million. In
addition, ITT contributed to MSG an ITT-owned aircraft which MSG
had used for the New York Knickerbockers basketball team and the
New York Rangers hockey team. In consideration of the aircraft
contribution, Cablevision agreed to increase the exercise price
of each of ITTs put options by $19 million. The Company
exercised one put option in April 1998 for total consideration of
 approximately $94 million and the remaining put option in
April 1999 for total consideration of approximately
$87 million, resulting in a pretax gain of $31 million
and $42 million, respectively.

During 1997, ITT sold its interest in the capital stock of
Alcatel Alsthom. Total proceeds from these sales were
approximately $830 million.

Note 5.  Discontinued Operations

Gaming.On April 27, 1999, the Company and
certain of its subsidiaries entered into a definitive agreement
to sell its gaming operations, excluding the Desert Inn
Resort & Casino in Las Vegas, Nevada (the Desert
Inn), for cash proceeds of approximately $3.0 billion
to Park Place Entertainment Corporation (PPE). On
May 18, 1999, the Company entered into an agreement to sell
the Desert Inn for cash proceeds of approximately
$275 million to Sun International Hotels Limited
(Sun). See Note 24 for the status of the Desert
Inn sale. These sales constitute the disposition of
Starwoods gaming operations. On December 30, 1999, the
 sale of Caesars World, Inc. (Caesars) to PPE was
completed. The Company received approximately $3.0 billion
in proceeds which was used to pay off $2.5 billion of
increasing rate notes and to reduce its bank revolver by
approximately $500 million.

The accompanying consolidated financial statements have been
restated to reflect the results of operations and net assets of
Starwoods gaming operations as a discontinued operation.
This restatement includes the allocation of long-term debt of
$165 million, $2.1 billion and $1.2 billion and
the related interest expense of $163 million,
$161 million and $89 million, for the years ended
December 31, 1999, 1998 and 1997, respectively, to the
discontinued operations. These allocations were based upon the
ratio of net gaming segment assets to the Companys total
capitalization. During the first quarter of 1999, the Company
provided for estimated after-tax losses on the disposal of the
discontinued operations of $180 million ($158 million
pretax), which included anticipated operating results of
approximately $50 million prior to the disposal. In the
fourth quarter of 1999, the Company provided for additional
losses on the sale of its gaming operations to PPE in the amount
of $55 million (including tax of $9 million), primarily
 due to the delay in the closing of the sale, lower than
estimated operating profits prior to the sale and certain
adjustments to the sale price made at closing. Additionally, the
Company provided for additional losses on the disposal of the
Desert Inn of

F-17



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

$9 million (net of a $5 million tax benefit), primarily
 as a result of additional anticipated operating losses prior to
the sale. Summary financial information of the discontinued
gaming operations is as follows (in millions):

|                                                        |  |              |      |      |  |   |        |  
|------------------------------------------------------- |  | ------------ | ---- | ---- |  | - | ------ | -
|                                                        |  |             
|                                                        |  | December 31,
|                                                        |  |             
|                                                        |  | 1999         |      | 1998
|                                                        |  |              |      |     
|Balance Sheet Data                                      |  |              |      |      |  |   |        |  
|                                                       
|                                                       
|                                                       
|                                                       
|Total assets                                            |  | $            | 269  |      |  | $ | 3,751  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Total liabilities                                       |  |              |     |      |  |   | (368   | )
|                                                       
|                                                       
|                                                       
|                                                       
|Debt allocated or attributed to discontinued operations |  |              | (165 | )    |  |   | (2,316 | )
|                                                        |  |              |      |      |  |   |        |  
|Net assets of discontinued operations                   |  | $            | 104  |      |  | $ | 1,067  |  
|                                                        |  |              |      |      |  |   |        |  

|                                               |  |                         |       |      |  |      |       |   |  |   |       |  
|---------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                               |  |                        
|                                               |  | Year Ended December 31,
|                                               |  |                        
|                                               |  | 1999                    |       | 1998 |  | 1997
|                                               |  |                         |       |      |  |     
|Income Statement Data                          |  |                         |       |      |  |      |       |   |  |   |       |  
|                                              
|                                              
|                                              
|                                              
|Revenues                                       |  | $                       | 1,541 |      |  | $    | 1,377 |   |  | $ | 1,212 |  
|                                              
|                                              
|                                              
|                                              
|Restructuring and other special charges        |  | $                       |      |      |  | $    | (55   | ) |  | $ | (51   | )
|                                              
|                                              
|                                              
|                                              
|Operating income                               |  | $                       | 154   |      |  | $    | 64    |   |  | $ | 62    |  
|                                              
|                                              
|                                              
|                                              
|Interest expense, including allocated interest |  | $                       | (174  | )    |  | $    | (166  | ) |  | $ | (78   | )
|                                              
|                                              
|                                              
|                                              
|Miscellaneous expense, net                     |  | $                       |      |      |  | $    |      |   |  | $ | (16   | )
|                                              
|                                              
|                                              
|                                              
|Income tax benefit (expense)                   |  | $                       | (11   | )    |  | $    | 19    |   |  | $ | (5    | )
|                                              
|                                              
|                                              
|                                              
|Minority equity in net loss                    |  | $                       | 4     |      |  | $    | 11    |   |  | $ |      |  
|                                              
|                                              
|                                              
|                                              
|Loss from discontinued operations              |  | $                       | (27   | )    |  | $    | (72   | ) |  | $ | (37   | )

ITT Educational Services, Inc. In June 1998, the
Company sold approximately 13.0 million shares of ITT Educational
 Services, Inc. (Educational Services) in a public
offering for net proceeds of approximately $304 million. The
Company recorded a gain of $253 million before income taxes of
$93 million. Subsequent to this sale, the Company was a minority
holder in Educational Services and, as such, accounted for its
remaining interest under the equity method by recording its
proportionate share of net losses totaling $1 million for
the period from June 1, 1998 to December 31, 1998. At
December 31, 1998, the assets and liabilities of Educational
 Services are included in net assets of discontinued operations
in the accompanying financial statements. Summary financial
information of Educational Services is as follows (in millions):

|                                      |  |              |    | 
|------------------------------------- |  | ------------ | -- | 
|                                      |  | December 31,
|                                      |  | 1998        
|                                      |  |             
|Balance Sheet Data                    |  |              |    | 
|                                     
|                                     
|                                     
|                                     
|Total assets                          |  | $            | 36 | 
|                                     
|                                     
|                                     
|                                     
|Total liabilities                     |  |              |   | 
|                                      |  |              |    | 
|Net assets of discontinued operations |  | $            | 36 | 
|                                      |  |              |    | 

F-18



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

|                                    |  |              |     |              |  |   |     |  
|----------------------------------- |  | ------------ | --- | ------------ |  | - | --- | -
|                                    |  | Five Months  |     | Year Ended  
|                                    |  | Ended        |     | December 31,
|                                    |  | May 31, 1998 |     | 1997        
|                                    |  |              |     |             
|Income Statement Data               |  |              |     |              |  |   |     |  
|                                   
|                                   
|                                   
|                                   
|Revenues                            |  | $            | 114 |              |  | $ | 262 |  
|                                   
|                                   
|                                   
|                                   
|Operating income                    |  | $            | 12  |              |  | $ | 27  |  
|                                   
|                                   
|                                   
|                                   
|Interest income                     |  | $            | 2   |              |  | $ | 5   |  
|                                   
|                                   
|                                   
|                                   
|Miscellaneous expense, net          |  | $            |    |              |  | $ |    |  
|                                   
|                                   
|                                   
|                                   
|Income tax expense                  |  | $            | (6  | )            |  | $ | (13 | )
|                                   
|                                   
|                                   
|                                   
|Minority equity in net income       |  | $            | (1  | )            |  | $ | (3  | )
|                                   
|                                   
|                                   
|                                   
|Income from discontinued operations |  | $            | 7   |              |  | $ | 16  |  

In February 1999, the Company completed the sale of its
remaining interest in Educational Services, selling 8.0 million
shares of common stock of Educational Services in an underwritten
 public offering at a price per share of $34.00 and 1.5 million
shares of common stock at $32.73 per share directly to
Educational Services. Starwood received aggregate net proceeds of
 approximately $310 million from these transactions, which were
used to repay a portion of the Companys outstanding debt.
The Company recognized a gain of $272 million, before income
taxes of $99 million, on the sale.

ITT World Directories.In February 1998, the
Company disposed of ITT World Directories (WD), the
subsidiary through which ITT conducted its telephone directories
publishing business, to VNU International B.V., a leading
international publishing and information company based in the
Netherlands, for gross consideration of $2.1 billion. The Company
 recorded a gain of $1.0 billion, net of income taxes of $514
million, on the disposition. Interest expense and debt related to
 the disposition of WD was allocated to discontinued operations.
Summary financial information of WD is as follows (in millions):

|                                               |  |                    |     |              |  |   |      |  
|---------------------------------------------- |  | ------------------ | --- | ------------ |  | - | ---- | -
|                                               |  | Period from        |     | Year Ended  
|                                               |  | January 1, 1998 to |     | December 31,
|                                               |  | February 19, 1998  |     | 1997        
|                                               |  |                    |     |             
|Income Statement Data                          |  |                    |     |              |  |   |      |  
|                                              
|                                              
|                                              
|                                              
|Revenues                                       |  | $                  | 8   |              |  | $ | 586  |  
|                                              
|                                              
|                                              
|                                              
|Operating income (loss)                        |  | $                  | (8  | )            |  | $ | 192  |  
|                                              
|                                              
|                                              
|                                              
|Interest expense, including allocated interest |  | $                  | (14 | )            |  | $ | (130 | )
|                                              
|                                              
|                                              
|                                              
|Miscellaneous expense, net                     |  | $                  |    |              |  | $ | (7   | )
|                                              
|                                              
|                                              
|                                              
|Income tax (expense) benefit                   |  | $                  | 7   |              |  | $ | (25  | )
|                                              
|                                              
|                                              
|                                              
|Minority equity in net (income) loss           |  | $                  | 1   |              |  | $ | (21  | )
|                                              
|                                              
|                                              
|                                              
|Income (loss) from discontinued operations     |  | $                  | (14 | )            |  | $ | 9    |  

Note 6.  Extraordinary Item

The Company used the proceeds from the sale of Caesars to pay off
 $2.5 billion of increasing rate notes in December 1999. This
early extinguishment of debt required exit fees of $38 million
and the write-off of $10 million of deferred loan fees associated
 with this debt. This $48 million (pretax) charge was recorded in
 December 1999 as an extraordinary loss on the early
extinguishment of debt.

In August 1999, Caesars redeemed its senior subordinated
notes for an aggregate payment of $152 million, recognizing an
extraordinary pretax loss of $3 million.

During 1997, ITT announced the tender offer for $546 million of
debt securities of a subsidiary company. The tender offer was
financed through short-term bank facilities. The tender offer
resulted in ITT paying a

F-19



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

tender premium of $42 million after tax ($78 million pretax)
which was recorded in 1997 as an extraordinary loss on the early
retirement of debt.

Note 7.  Restructuring and Other Special Charges

At December 31, 1999, the Company has remaining accruals
related to restructuring and other special charges, described
below, of $121 million, $34 million of which is included in other
 long-term liabilities in the accompanying consolidated 1999
balance sheet. These accruals consist of $75 million for certain
litigation costs and $46 million primarily related to remaining
lease commitments which expire through 2006 and certain employee
benefits scheduled to be utilized in the first quarter of 2000.

1999 Restructuring and Other Special Charges (Credits).During 1999, the Company recorded restructuring charges
of $5 million (pretax) attributed to the rationalization of one
of its technology centers. In addition, the Company recorded
other special charges of $13 million attributed to severance
benefits for the former President and Chief Operating Officer of
the Corporation and $75 million attributed to an accrual for
certain litigation costs primarily related to an unfavorable
judgement in a matter involving the former Sheraton in
Washington, D.C. (see Note 21).

ITT Merger-Related Charges (Credits).In connection
 with the ITT Merger, the Company recorded restructuring and
other special charges totaling $172 million (pretax) in 1998 for
(i) ITT Merger-related costs and (ii) write-down of
certain assets. During 1999, the Company reversed $8 million of
these charges as the ITT Merger costs were less than originally
anticipated.

In addition, the Company recorded a non-recurring charge to
selling, general and administrative expense of approximately $30
million in 1998 primarily associated with the vesting, during the
 quarter, of certain restricted stock granted earlier in the year
 to the new President and Chief Executive Officer of the
Corporation.

During 1997, ITT recorded the following special charges as a
result of the ITT Merger: (i) conversion of the accounting
for ITTs stock option plan to variable accounting due to
limited stock appreciation rights subject to exercise and related
 charges for tax reimbursements to employees of $404 million, and
 (ii) other costs including legal fees, investment banking
fees and asset write-offs totaling $152 million which are
included in miscellaneous expense, net, in the accompanying 1997
consolidated statement of operations.

During 1999 and 1998, the Company reversed approximately $50
million and $23 million, respectively, in accruals related to the
 resolution of certain employment related contingencies.

Other ITT Restructuring and Other Special Charges
(Credits). During 1997, ITT recorded pretax charges
totaling $236 million to restructure and rationalize operations
at its World Headquarters and the headquarters of its field
operations. Of the total pretax charge, approximately $196
million represented severance and other related employee
termination costs associated with the elimination of nearly 370
positions worldwide. The balance of the restructuring charge ($40
 million pretax) related primarily to asset write-offs, lease
commitments and termination penalties. During 1999, the Company
reversed $32 million of these charges as the costs were less than
 anticipated.

F-20



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 8.  Investments

Investments consisted of the following (in millions):

|                                                                |  |              |     |      |  |   |     | 
|--------------------------------------------------------------- |  | ------------ | --- | ---- |  | - | --- | 
|                                                                |  |             
|                                                                |  | December 31,
|                                                                |  |             
|                                                                |  | 1999         |     | 1998
|                                                                |  |              |     |     
|Equity in and advances to hotel partnerships and joint ventures |  | $            | 328 |      |  | $ | 318 | 
|                                                               
|                                                               
|                                                               
|                                                               
|Investment in MSG held for sale                                 |  |              |    |      |  |   | 43  | 
|                                                               
|                                                               
|                                                               
|                                                               
|Other investments                                               |  |              | 114 |      |  |   | 18  | 
|                                                                |  |              |     |      |  |   |     | 
|                                                                |  | $            | 442 |      |  | $ | 379 | 
|                                                                |  |              |     |      |  |   |     | 

Equity in earnings of unconsolidated subsidiaries accounted for
on the equity basis were $32 million, $20 million and $7 million
in 1999, 1998 and 1997, respectively.

The fair market value of investments is based on the market
prices for the last day of the period if the investment trades on
 quoted exchanges. For non-traded investments, fair value is
estimated based on the underlying value of the investment. The
carrying value of other investments approximates fair value based
 on market prices and the value of the underlying collateral.

Note 9.  Plant, Property and Equipment

Plant, property and equipment consisted of the following (in
millions):

|                                               |  |              |        |      |  |   |       |  
|---------------------------------------------- |  | ------------ | ------ | ---- |  | - | ----- | -
|                                               |  |             
|                                               |  | December 31,
|                                               |  |             
|                                               |  | 1999         |        | 1998
|                                               |  |              |        |     
|Land and improvements                          |  | $            | 1,416  |      |  | $ | 1,269 |  
|                                              
|                                              
|                                              
|                                              
|Buildings and improvements                     |  |              | 6,066  |      |  |   | 6,068 |  
|                                              
|                                              
|                                              
|                                              
|Furniture, fixtures and equipment              |  |              | 1,345  |      |  |   | 1,249 |  
|                                              
|                                              
|                                              
|                                              
|Construction work in process                   |  |              | 83     |      |  |   | 190   |  
|                                               |  |              |        |      |  |   |       |  
|                                               |  |              | 8,910  |      |  |   | 8,776 |  
|                                              
|                                              
|                                              
|                                              
|Less accumulated depreciation and amortization |  |              | (1,133 | )    |  |   | (899  | )
|                                               |  |              |        |      |  |   |       |  
|                                               |  | $            | 7,777  |      |  | $ | 7,877 |  
|                                               |  |              |        |      |  |   |       |  

In December 1999, the Company identified 14 hotels as non-core
assets and classified them as held for sale. Based on the
estimated net proceeds from the disposition of these hotels, the
Company recorded a $95 million (pretax) charge to write down the
hotels to net realizable value. The write-down is included in net
 gain on sale of real estate and investments in the accompanying
1999 statement of operations. Assets held for sale totaled $183
million and $20 million at December 31, 1999 and 1998,
respectively, and are included in plant, property and equipment
in the accompanying balance sheets.

Note 10.  Other Assets

Other assets include long-term receivables of $317 million and
$277 million at December 31, 1999 and 1998, respectively,
which are net of allowance for doubtful accounts of $43 million
and $31 million, respectively. These long-term receivables
exclude current maturities of $48 million and $42 million,
respectively, which are included in accounts receivable. Total
unsecured and secured long-term receivables totaled $136 million
and $272 million, respectively, as of December 31, 1999 and
$149 million and $201 million, respectively, as of
December 31, 1998.

F-21



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 11.  Accrued Expenses

Accrued expenses include accrued restructuring and other special
charges of $87 million and $155 million; accrued expenses related
 to the gaming disposition of $100 million and $0; salaries,
wages and benefits of $157 million and $123 million; frequency
program and other marketing accruals of $64 million and $36
million; and accrued interest of $54 million and $48 million as
of December 31, 1999 and 1998, respectively. The remaining
balance of $348 million and $346 million as of December 31,
1999 and 1998, respectively, represents other accrued expenses
including, but not limited to, legal costs and insurance.

Note 12.  Income Taxes

Income tax data from continuing operations of the Company is as
follows (in millions):

|                                   |                 |      |       |      |  |      |      |      |   |   |      |      |  
|---------------------------------- | --------------- | ---- | ----- | ---- |  | ---- | ---- | ---- | - | - | ---- | ---- | -
|                                   |                 | 1999 |       | 1998 |  | 1997
|                                   |                 |      |       |      |  |     
|Pretax income (loss)               |                 |      |       |      |  |      |      |      |   |   |      |     
|                                  
|                                  
|                                  
|                                  
|                                   | U.S.            |      | $     | 277  |  |      | $    | 35   |   |   | $    | (206 | )
|                                  
|                                  
|                                  
|                                  
|                                   | Foreign         |      |       | 256  |  |      |      | 110  |   |   |      | 136  |  
|                                   |                 |      |       |      |  |      |      |      |   |   |      |     
|                                   |                 | $    | 533   |      |  | $    | 145  |      |   | $ | (70  | )   
|                                   |                 |      |       |      |  |      |      |      |   |   |      |     
|Provision (benefit) for income tax |                 |      |       |      |  |      |      |      |   |   |      |     
|                                  
|                                  
|                                  
|                                  
|Current:                           |                 |      |       |      |  |      |      |      |   |   |      |     
|                                  
|                                  
|                                  
|                                  
|                                   | U.S. federal    |      | $     | 65   |  |      | $    | 34   |   |   | $    | 235  |  
|                                  
|                                  
|                                  
|                                  
|                                   | State and local |      |       | 13   |  |      |      | 6    |   |   |      | 14   |  
|                                  
|                                  
|                                  
|                                  
|                                   | Foreign         |      |       | 95   |  |      |      | 43   |   |   |      | 44   |  
|                                   |                 |      |       |      |  |      |      |      |   |   |      |     
|                                   |                 |      | 173   |      |  |      | 83   |      |   |   | 293  |     
|                                   |                 |      |       |      |  |      |      |      |   |   |      |     
|Deferred:                          |                 |      |       |      |  |      |      |      |   |   |      |     
|                                  
|                                  
|                                  
|                                  
|                                   | U.S. federal    |      |       | 718  |  |      |      | (189 | ) |   |      | (167 | )
|                                  
|                                  
|                                  
|                                  
|                                   | State and local |      |       | 180  |  |      |      |     |   |   |      |     |  
|                                  
|                                  
|                                  
|                                  
|                                   | Foreign         |      |       | 5    |  |      |      | 17   |   |   |      | 28   |  
|                                   |                 |      |       |      |  |      |      |      |   |   |      |     
|                                   |                 |      | 903   |      |  |      | (172 | )    |   |   | (139 | )   
|                                   |                 |      |       |      |  |      |      |      |   |   |      |     
|                                   |                 | $    | 1,076 |      |  | $    | (89  | )    |   | $ | 154  |     
|                                   |                 |      |       |      |  |      |      |      |   |   |      |     

No provision was made for U.S. taxes payable on 1999
undistributed foreign earnings amounting to approximately $59
million since these amounts are permanently reinvested.

F-22



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Deferred income taxes represent the tax effect of the differences
 between the book and tax bases of assets and liabilities.
Deferred tax assets (liabilities) include the following (in
millions):

|                                                    |  |              |        |      |  |   |      |  
|--------------------------------------------------- |  | ------------ | ------ | ---- |  | - | ---- | -
|                                                    |  |             
|                                                    |  | December 31,
|                                                    |  |             
|                                                    |  | 1999         |        | 1998
|                                                    |  |              |        |     
|Plant, property and equipment                       |  | $            | (757   | )    |  | $ | (205 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Intangibles                                         |  |              | (342   | )    |  |   |     |  
|                                                   
|                                                   
|                                                   
|                                                   
|Allowances for doubtful accounts and other reserves |  |              | 121    |      |  |   | 40   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Employee benefits                                   |  |              | 29     |      |  |   | 43   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Deferred gain                                       |  |              | (524   | )    |  |   | (517 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Net operating loss and tax credit carryforwards     |  |              | 161    |      |  |   | 211  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Deferred income                                     |  |              | (87    | )    |  |   |     |  
|                                                   
|                                                   
|                                                   
|                                                   
|Transaction costs                                   |  |              | 23     |      |  |   | 18   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Other                                               |  |              | (11    | )    |  |   | (10  | )
|                                                    |  |              |        |      |  |   |      |  
|                                                    |  |              | (1,387 | )    |  |   | (420 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Less valuation allowance                            |  |              | (83    | )    |  |   | (109 | )
|                                                    |  |              |        |      |  |   |      |  
|Deferred income taxes                               |  | $            | (1,470 | )    |  | $ | (529 | )
|                                                    |  |              |        |      |  |   |      |  

At December 31, 1999, the Company has net operating loss and
 tax credit carryforwards of approximately $396 million and
$22 million, respectively, for federal income tax purposes.
Substantially all operating loss carryforwards, which are
expected to provide future tax benefits, expire in 2018.

A reconciliation of the tax provision of the Company at the U.S.
statutory rate to the provision for income tax as reported is as
follows (in millions):

|                                               |  |      |       |      |  |      |      |   |  |   |     |  
|---------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ---- | - |  | - | --- | -
|                                               |  | 1999 |       | 1998 |  | 1997
|                                               |  |      |       |      |  |     
|Tax provision (benefit) at U.S. statutory rate |  | $    | 187   |      |  | $    | 51   |   |  | $ | (25 | )
|                                              
|                                              
|                                              
|                                              
|U.S. state and local income taxes              |  |      | 8     |      |  |      | 6    |   |  |   | 23  |  
|                                              
|                                              
|                                              
|                                              
|Exempt Trust income                            |  |      | (41   | )    |  |      | (147 | ) |  |   |    |  
|                                              
|                                              
|                                              
|                                              
|Tax on repatriation of foreign earnings        |  |      | 16    |      |  |      | (5   | ) |  |   | 21  |  
|                                              
|                                              
|                                              
|                                              
|Foreign tax rate differential                  |  |      | (5    | )    |  |      | 8    |   |  |   | (7  | )
|                                              
|                                              
|                                              
|                                              
|Non-deductible goodwill                        |  |      | 14    |      |  |      | 19   |   |  |   |    |  
|                                              
|                                              
|                                              
|                                              
|Reorganization                                 |  |      | 936   |      |  |      |     |   |  |   |    |  
|                                              
|                                              
|                                              
|                                              
|Transaction costs                              |  |      | (58   | )    |  |      | (21  | ) |  |   | 89  |  
|                                              
|                                              
|                                              
|                                              
|Deferred asset valuation allowance             |  |      | 5     |      |  |      |     |   |  |   | 64  |  
|                                              
|                                              
|                                              
|                                              
|Other                                          |  |      | 14    |      |  |      |     |   |  |   | (11 | )
|                                               |  |      |       |      |  |      |      |   |  |   |     |  
|Provision (benefit) for income tax             |  | $    | 1,076 |      |  | $    | (89  | ) |  | $ | 154 |  
|                                               |  |      |       |      |  |      |      |   |  |   |     |  

F-23



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 13.  Debt

Debt and short-term borrowings consisted of the following (in
millions):

|                                                                                                                                                                 |                                                                                                         |              |       |       |  |   |        |       | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ------------ | ----- | ----- |  | - | ------ | ----- | 
|                                                                                                                                                                 |                                                                                                         |             
|                                                                                                                                                                 |                                                                                                         | December 31,
|                                                                                                                                                                 |                                                                                                         |             
|                                                                                                                                                                 |                                                                                                         | 1999         |       | 1998 
|                                                                                                                                                                 |                                                                                                         |              |       |      
|Senior Credit Facility:                                                                                                                                          |                                                                                                         |              |       |       |  |   |        |      
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                 | One-year term loan, interest at LIBOR+1.00%, paid in full in
	January 1999                              |              | $     |      |  |   | $      | 542   | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                 | Five-year term loan, interest at LIBOR+1.00% (6.82% at
	December 31, 1999), maturing through 2003       |              |       | 1,000 |  |   |        | 1,000 | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                 | Revolving credit facility, interest at LIBOR+1.00% (6.82% at
	December 31, 1999), maturing through 2003 |              |       | 336   |  |   |        | 814   | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Senior Secured Notes Facility:                                                                                                                                   |                                                                                                         |              |       |       |  |   |        |      
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                 | Tranche I Loans, interest at LIBOR+3.75%, paid off in
	December 1999                                    |              |       |      |  |   |        | 2,500 | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                 | Tranche II Loans, interest at LIBOR+2.75% (8.57% at
	December 31, 1999), maturing through 2003          |              |       | 1,000 |  |   |        | 1,000 | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|ITT public debt, interest rates ranging from 6.25% to 7.75%,
	maturing through 2025                                                                              |                                                                                                         |              | 1,995 |       |  |   | 1,995  |      
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Mortgages and other, interest rates ranging from 4.5% to 9.2%,
	approximately $172 million of the December 31, 1999 balance
	was paid off subsequent to year-end |                                                                                                         |              | 1,465 |       |  |   | 954    |      
|                                                                                                                                                                 |                                                                                                         |              |       |       |  |   |        |      
|                                                                                                                                                                 |                                                                                                         |              | 5,796 |       |  |   | 8,805  |      
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Less indebtedness classified in discontinued operations                                                                                                          |                                                                                                         |              | (165  | )     |  |   | (2,316 | )    
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Less current maturities                                                                                                                                          |                                                                                                         |              | (988  | )     |  |   | (687   | )    
|                                                                                                                                                                 |                                                                                                         |              |       |       |  |   |        |      
|Long-term debt                                                                                                                                                   |                                                                                                         | $            | 4,643 |       |  | $ | 5,802  |      
|                                                                                                                                                                 |                                                                                                         |              |       |       |  |   |        |      

Aggregate debt maturities for each of the years ending
December 31 are as follows (in millions):

|           |  |   |       | 
|---------- |  | - | ----- | 
|          
|          
|          
|          
|2000       |  | $ | 988   | 
|          
|          
|          
|          
|2001       |  |   | 312   | 
|          
|          
|          
|          
|2002       |  |   | 310   | 
|          
|          
|          
|          
|2003       |  |   | 2,285 | 
|          
|          
|          
|          
|2004       |  |   | 41    | 
|          
|          
|          
|          
|Thereafter |  |   | 1,860 | 
|           |  |   |       | 
|           |  | $ | 5,796 | 
|           |  |   |       | 

On February 23, 1998, the Company obtained two credit
facilities ($5.6 billion in total) with Lehman Commercial
Paper Inc., Bankers Trust Company and The Chase Manhattan Bank to
 fund the cash portion of the ITT Merger consideration, to
refinance a portion of the Companys existing indebtedness
(including indebtedness outstanding under a $2.2 billion
credit facility entered into in connection with the Westin
Merger) and to provide funds for general corporate purposes.
These facilities were comprised of a $3.1 billion senior
credit facility (the Senior Credit Facility) and a
$2.5 billion, five-year secured increasing rate notes
facility (Tranche I Loans) which was paid off in
 December 1999 in connection with the sale of Caesars.

The Senior Credit Facility has three tranches: a
$1.0 billion, one-year term loan; a $1.0 billion,
five-year term loan; and a $1.1 billion, five-year revolving
 credit facility. The Company, the Trust and certain of their
respective direct and indirect subsidiaries may be designated as
borrowers or co-borrowers under all or a portion of the Senior
Credit Facility. The interest rate for the Senior Credit Facility
 was one-, two- or three-month LIBOR, at the Companys
option, plus a margin of 100 basis points at December 31,
1999. The margin is determined pursuant to a pricing
grid with rates based on the Companys leverage
and/or senior

F-24



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

unsecured debt rating. Repayment of amounts borrowed under the
Senior Credit Facility is guaranteed by the Trust, the Company
and substantially all their respective significant subsidiaries
(including the Partnerships) other than foreign subsidiaries and
joint venture entities (the Guarantor Subsidiaries),
to the extent such entities are not borrowers or co-borrowers,
and is secured by a pledge of all the capital stock, partnership
interests and other equity interests of the Guarantor
Subsidiaries.

In September 1998, the Company entered into a
$1 billion, five-year term borrowing facility
(Tranche II). Tranche II bears interest at
one-, two-or three-month LIBOR plus 275 basis points at
December 31, 1999. The Company is the borrower under
Tranche II; the Trust and all Guarantor Subsidiaries are
guarantors of Tranche II.

In January 1999, the Company completed a $542 million
long-term financing (the Mortgage Loan), secured by
mortgages on a portfolio of 11 hotels. The Mortgage Loan
bears interest at a blended rate of 6.98%. The Mortgage Loan is
due in February 2009 and the proceeds from the Mortgage Loan
 were used to pay down the one-year term loan under the Senior
Credit Facility.

The Company maintains lines of credit under which bank loans and
other short-term debt are drawn. In addition, smaller credit
lines are maintained by the Companys foreign subsidiaries.
The Company had approximately $816 million of available
borrowing capacity under the revolving credit agreements as of
December 31, 1999.

The Company is subject to certain restrictive debt covenants
under its short-term borrowing and long-term debt obligations
including defined financial covenants, escrow account funding
requirements for capital purchases and tax payments, limitations
on capital expenditures and on the Companys right to incur
further debt and restrictions on transactions with affiliates and
 related persons. The Company was in compliance with all of the
short-term borrowing and long-term debt obligation covenants at
December 31, 1999.

The weighted average interest rate for short-term borrowings was
6.47% and 5.87% at December 31, 1999 and 1998, respectively,
 and their fair values approximated carrying value given their
short-term nature. This average is composed of interest rates on
both U.S. dollar and non-U.S. dollar denominated indebtedness.

For adjustable rate debt, fair value approximates carrying value
due to the variable nature of the interest rates. For fixed rate
debt, fair value is determined based upon discounted cash flows
for the debt at rates deemed reasonable for the type of debt and
prevailing market conditions and, if appropriate, the length to
maturity for the debt. The estimated fair value of long-term debt
 at December 31, 1999 and 1998 was $5.6 billion and
$8.7 billion, respectively, and was determined based on
quoted market prices and/or discounted cash flows using the
Companys incremental borrowing rates for similar
arrangements.

Note 14.  Employee Benefit Plans

Pension and Postretirement Benefit Plans.The
Company and its subsidiaries sponsor numerous pension plans,
including the ITT Corporation Salaried Retirement Plan and
the ITT Sheraton Corporation Pension Plan for Hourly Employees
(the ITT Plans) and the Westin Supplemental
Executive Retirement Plan. The ITT Plans are funded, except
in some countries outside the U.S. where funding is not required.
 The ITT Plans assets are comprised primarily of fixed
income investments. The Westin Supplemental Executive Retirement
Plan is a non-contributory, non-qualified plan that provides
benefits for certain executives. The plan is unfunded apart from
general assets of the Company.

The Company also sponsors a postretirement benefit plan. The
Westin retiree medical plan was merged with the ITT plan
effective April 1, 1999, and was fully reflected in the
December 31, 1999 obligations. The plan provides health care
 and life insurance benefits for certain eligible retired
employees. The Company has prefunded a portion of the health care
 and life insurance obligations through trust funds where such

F-25



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

prefunding can be accomplished on a tax effective basis. The
Company also funds the health plan on a pay-as-you-go basis.

Effective February 23, 1999, the defined benefits were
eliminated under the ITT Plans. The Westin Hotel Company
Supplemental Executive Retirement Plan was closed to future
participation on October 1, 1998, and all future accruals of
 defined benefits were eliminated effective February 23,
1999. Curtailment accounting was done at September 30, 1998,
 based on beginning of year estimates for all plans except the
ITT Corporation Salaried Retirement Plan, which was remeasured as
 of September 30, 1998.

The postretirement medical and life plans were also frozen as of
February 23, 1999, with certain protections for
grandfathered groups. Gains and losses associated
with these changes are expected to be relatively small.

The following table sets forth the benefit obligation, fair value
 of plan assets, and the funded status of the Companys
pension and other benefit plans, amounts recognized in the
Companys consolidated balance sheets at December 31,
1999 and 1998, and the principal weighted average assumptions
inherent in their determination (amounts are in millions):

|                                               |                                  |                  |     |                  |   |                |     |      |   |      |    |      |   |   |     |      |   |   |    |    |   |   |    |    |  
|---------------------------------------------- | -------------------------------- | ---------------- | --- | ---------------- | - | -------------- | --- | ---- | - | ---- | -- | ---- | - | - | --- | ---- | - | - | -- | -- | - | - | -- | -- | -
|                                               |                                  |                  |     |                  |   |                |     |      |   |     
|                                               |                                  |                  |     | Foreign          |   |               
|                                               |                                  | Pension Benefits |     | Pension Benefits |   | Other Benefits
|                                               |                                  |                  |     |                  |   |               
|                                               |                                  | 1999             |     | 1998             |   | 1999           |     | 1998 |   | 1999 |    | 1998
|                                               |                                  |                  |     |                  |   |                |     |      |   |      |    |     
|Change in Benefit Obligation                   |                                  |                  |     |                  |   |                |     |      |   |      |    |      |   |   |     |      |   |   |    |    |   |   |    |   
|                                              
|                                              
|                                              
|                                              
|Benefit obligation at beginning of year        |                                  | $                | 271 |                  |   | $              | 260 |      |   | $    | 80 |      |   | $ | 152 |      |   | $ | 36 |    |   | $ | 27 |   
|                                              
|                                              
|                                              
|                                              
|                                               | Service cost                     |                  |     | 3                |   |                |     | 15   |   |      |    | 1    |   |   |     | 6    |   |   |    |   |   |   |    | 1  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Interest cost                    |                  |     | 17               |   |                |     | 18   |   |      |    | 3    |   |   |     | 5    |   |   |    | 2  |   |   |    | 2  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Actuarial (gain) loss            |                  |     | (34              | ) |                |     | 45   |   |      |    | (4   | ) |   |     | 4    |   |   |    | (5 | ) |   |    | 8  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Acquisitions                     |                  |     |                 |   |                |     |     |   |      |    | 7    |   |   |     |     |   |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Divestitures                     |                  |     |                 |   |                |     | (1   | ) |      |    | (30  | ) |   |     | (72  | ) |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Curtailments                     |                  |     |                 |   |                |     | (64  | ) |      |    |     |   |   |     | (1   | ) |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Settlements                      |                  |     |                 |   |                |     |     |   |      |    |     |   |   |     | (2   | ) |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Effect of foreign exchange rates |                  |     |                 |   |                |     |     |   |      |    | (1   | ) |   |     | 1    |   |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Special termination benefits     |                  |     |                 |   |                |     | 6    |   |      |    |     |   |   |     |     |   |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Benefits paid                    |                  |     | (17              | ) |                |     | (8   | ) |      |    | (3   | ) |   |     | (13  | ) |   |    | (2 | ) |   |    | (2 | )
|                                               |                                  |                  |     |                  |   |                |     |      |   |      |    |      |   |   |     |      |   |   |    |    |   |   |    |   
|Benefit obligation at end of year              |                                  | $                | 240 |                  |   | $              | 271 |      |   | $    | 53 |      |   | $ | 80  |      |   | $ | 31 |    |   | $ | 36 |   
|                                               |                                  |                  |     |                  |   |                |     |      |   |      |    |      |   |   |     |      |   |   |    |    |   |   |    |   
|Change in Plan Assets                          |                                  |                  |     |                  |   |                |     |      |   |      |    |      |   |   |     |      |   |   |    |    |   |   |    |   
|                                              
|                                              
|                                              
|                                              
|Fair value of plan assets at beginning of year |                                  | $                | 240 |                  |   | $              | 227 |      |   | $    | 47 |      |   | $ | 152 |      |   | $ | 20 |    |   | $ | 19 |   
|                                              
|                                              
|                                              
|                                              
|                                               | Actual return on plan assets     |                  |     | 18               |   |                |     | 12   |   |      |    | 12   |   |   |     | 4    |   |   |    | 2  |   |   |    | 1  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Employer contribution            |                  |     | 1                |   |                |     | 12   |   |      |    |     |   |   |     | 11   |   |   |    | 2  |   |   |    | 2  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Acquisitions                     |                  |     |                 |   |                |     |     |   |      |    | 8    |   |   |     |     |   |   |    |   |   |   |    |    |  
|                                              
|                                              
|                                              
|                                              
|                                               | Divestitures                     |                  |     |                 |   |                |     | (3   | ) |      |    |     |   |   |     | (107 | ) |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Settlements                      |                  |     |                 |   |                |     |     |   |      |    |     |   |   |     | (2   | ) |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Effect of foreign exchange rates |                  |     |                 |   |                |     |     |   |      |    | (1   | ) |   |     | 2    |   |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Benefits paid                    |                  |     | (17              | ) |                |     | (8   | ) |      |    | (3   | ) |   |     | (13  | ) |   |    | (2 | ) |   |    | (2 | )
|                                               |                                  |                  |     |                  |   |                |     |      |   |      |    |      |   |   |     |      |   |   |    |    |   |   |    |   
|Fair value of plan assets at end of year       |                                  | $                | 242 |                  |   | $              | 240 |      |   | $    | 63 |      |   | $ | 47  |      |   | $ | 22 |    |   | $ | 20 |   
|                                               |                                  |                  |     |                  |   |                |     |      |   |      |    |      |   |   |     |      |   |   |    |    |   |   |    |   

F-26



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

|                                                                  |                                        |                  |      |                  |   |                |      |      |   |      |      |      |   |   |      |     |   |   |      |     |   |   |      |     |  
|----------------------------------------------------------------- | -------------------------------------- | ---------------- | ---- | ---------------- | - | -------------- | ---- | ---- | - | ---- | ---- | ---- | - | - | ---- | --- | - | - | ---- | --- | - | - | ---- | --- | -
|                                                                  |                                        |                  |      |                  |   |                |      |      |   |     
|                                                                  |                                        |                  |      | Foreign          |   |               
|                                                                  |                                        | Pension Benefits |      | Pension Benefits |   | Other Benefits
|                                                                  |                                        |                  |      |                  |   |               
|                                                                  |                                        | 1999             |      | 1998             |   | 1999           |      | 1998 |   | 1999 |      | 1998
|                                                                  |                                        |                  |      |                  |   |                |      |      |   |      |      |     
|Funded status                                                     |                                        | $                | 1    |                  |   | $              | (31  | )    |   | $    | 10   |      |   | $ | (33  | )   |   | $ | (9   | )   |   | $ | (16  | )  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Unrecognized net actuarial (gain) loss |                  |      | (42              | ) |                |      | (12  | ) |      |      | (6   | ) |   |      | 8   |   |   |      | (6  | ) |   |      | (1  | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Unrecognized prior service cost        |                  |      |                 |   |                |      |     |   |      |      |     |   |   |      | 2   |   |   |      | (1  | ) |   |      | (2  | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Unrecognized net transition obligation |                  |      |                 |   |                |      |     |   |      |      |     |   |   |      | (1  | ) |   |      |    |   |   |      |    |  
|                                                                  |                                        |                  |      |                  |   |                |      |      |   |      |      |      |   |   |      |     |   |   |      |     |   |   |      |    
|Accrued benefit cost                                              |                                        | $                | (41  | )                |   | $              | (43  | )    |   | $    | 4    |      |   | $ | (24  | )   |   | $ | (16  | )   |   | $ | (19  | )  
|                                                                  |                                        |                  |      |                  |   |                |      |      |   |      |      |      |   |   |      |     |   |   |      |     |   |   |      |    
|Amounts recognized in the consolidated balance sheets consist of: |                                        |                  |      |                  |   |                |      |      |   |      |      |      |   |   |      |     |   |   |      |     |   |   |      |    
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Prepaid benefit cost                   |                  | $    | 3                |   |                | $    | 3    |   |      | $    | 7    |   |   | $    | 6   |   |   | $    |    |   |   | $    |    |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Accrued benefit cost                   |                  |      | (44              | ) |                |      | (46  | ) |      |      | (3   | ) |   |      | (30 | ) |   |      | (16 | ) |   |      | (19 | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Additional minimum liability           |                  |      |                 |   |                |      | (1   | ) |      |      |     |   |   |      |    |   |   |      |    |   |   |      |    |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Accumulated other comprehensive income |                  |      |                 |   |                |      | 1    |   |      |      |     |   |   |      |    |   |   |      |    |   |   |      |    |  
|                                                                  |                                        |                  |      |                  |   |                |      |      |   |      |      |      |   |   |      |     |   |   |      |     |   |   |      |    
|Net amount recognized at end of year                              |                                        | $                | (41  | )                |   | $              | (43  | )    |   | $    | 4    |      |   | $ | (24  | )   |   | $ | (16  | )   |   | $ | (19  | )  
|                                                                  |                                        |                  |      |                  |   |                |      |      |   |      |      |      |   |   |      |     |   |   |      |     |   |   |      |    
|Weighted Average Assumptions as of December  31,                  |                                        |                  |      |                  |   |                |      |      |   |      |      |      |   |   |      |     |   |   |      |     |   |   |      |    
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Discount rate                                                     |                                        |                  | 7.25 | %                |   |                | 6.50 | %    |   |      | 6.02 | %    |   |   | 5.88 | %   |   |   | 7.25 | %   |   |   | 6.50 | %  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Expected return on plan assets                                    |                                        |                  | 7.00 | %                |   |                | 9.75 | %    |   |      | 7.00 | %    |   |   | 7.00 | %   |   |   | 7.00 | %   |   |   | 9.75 | %  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Rate of compensation increase                                     |                                        |                  | N/A  |                  |   |                | 5.00 | %    |   |      | 4.52 | %    |   |   | 3.20 | %   |   |   | N/A  |     |   |   | 4.50 | %  

For measurement purposes, a 6.10% annual rate of increase in the
per capita cost of covered health care benefits was assumed for
1999. The rate was assumed to decrease gradually to 5.00% in 2002
 and remain at that level thereafter.

|                                        |                                             |                  |     |                  |  |                |     |      |   |      |     |      |  |      |    |      |  |      |    |    |   |   |     |    |   |   |    |    |   |   |    |   |  |   |    |    |  
|--------------------------------------- | ------------------------------------------- | ---------------- | --- | ---------------- |  | -------------- | --- | ---- | - | ---- | --- | ---- |  | ---- | -- | ---- |  | ---- | -- | -- | - | - | --- | -- | - | - | -- | -- | - | - | -- | - |  | - | -- | -- | -
|                                        |                                             |                  |     |                  |  |                |     |      |   |      |     |      |  |     
|                                        |                                             |                  |     | Foreign          |  |               
|                                        |                                             | Pension Benefits |     | Pension Benefits |  | Other Benefits
|                                        |                                             |                  |     |                  |  |               
|                                        |                                             | 1999             |     | 1998             |  | 1997           |     | 1999 |   | 1998 |     | 1997 |  | 1999 |    | 1998 |  | 1997
|                                        |                                             |                  |     |                  |  |                |     |      |   |      |     |      |  |      |    |      |  |     
|Components of Net Periodic Benefit Cost |                                             |                  |     |                  |  |                |     |      |   |      |     |      |  |      |    |      |  |      |    |    |   |   |     |    |   |   |    |    |   |   |    |   |  |   |    |   
|                                       
|                                       
|                                       
|                                       
|Service cost                            |                                             | $                | 3   |                  |  | $              | 15  |      |   | $    | 15  |      |  | $    | 1  |      |  | $    | 6  |    |   | $ | 11  |    |   | $ |   |    |   | $ | 1  |   |  | $ | 1  |   
|                                       
|                                       
|                                       
|                                       
|Interest cost                           |                                             |                  | 17  |                  |  |                | 18  |      |   |      | 18  |      |  |      | 3  |      |  |      | 5  |    |   |   | 9   |    |   |   | 2  |    |   |   | 2  |   |  |   | 2  |   
|                                       
|                                       
|                                       
|                                       
|Expected return on plan assets          |                                             |                  | (20 | )                |  |                | (18 | )    |   |      | (16 | )    |  |      | (3 | )    |  |      | (5 | )  |   |   | (11 | )  |   |   | (2 | )  |   |   | (2 | ) |  |   | (2 | ) 
|                                       
|                                       
|                                       
|                                       
|Amortization of:                        |                                             |                  |     |                  |  |                |     |      |   |      |     |      |  |      |    |      |  |      |    |    |   |   |     |    |   |   |    |    |   |   |    |   |  |   |    |   
|                                       
|                                       
|                                       
|                                       
|                                        | Prior service cost                          |                  |     |                 |  |                |     | 1    |   |      |     | 2    |  |      |    |     |  |      |    |   |   |   |     |   |   |   |    | (1 | ) |   |    |  |  |   |    |   |  
|                                       
|                                       
|                                       
|                                       
|                                        | Actuarial (gain) loss                       |                  |     |                 |  |                |     | 1    |   |      |     |     |  |      |    |     |  |      |    |   |   |   |     |   |   |   |    |   |   |   |    |  |  |   |    | (1 | )
|                                        |                                             |                  |     |                  |  |                |     |      |   |      |     |      |  |      |    |      |  |      |    |    |   |   |     |    |   |   |    |    |   |   |    |   |  |   |    |   
|SFAS 87 cost/ SFAS 106 cost             |                                             |                  |    |                  |  |                | 17  |      |   |      | 19  |      |  |      | 1  |      |  |      | 6  |    |   |   | 9   |    |   |   | (1 | )  |   |   | 1  |   |  |   |   |   
|                                        |                                             |                  |     |                  |  |                |     |      |   |      |     |      |  |      |    |      |  |      |    |    |   |   |     |    |   |   |    |    |   |   |    |   |  |   |    |   
|SFAS 88 charges:                        |                                             |                  |     |                  |  |                |     |      |   |      |     |      |  |      |    |      |  |      |    |    |   |   |     |    |   |   |    |    |   |   |    |   |  |   |    |   
|                                       
|                                       
|                                       
|                                       
|                                        | Special termination benefit charge (credit) |                  |     |                 |  |                |     | (1   | ) |      |     |     |  |      |    |     |  |      |    |   |   |   |     |   |   |   |    |   |   |   |    |  |  |   |    |   |  
|                                       
|                                       
|                                       
|                                       
|                                        | Curtailment charge (credit)                 |                  |     |                 |  |                |     | 4    |   |      |     |     |  |      |    |     |  |      |    | (1 | ) |   |     |   |   |   |    |   |   |   |    |  |  |   |    | (3 | )
|                                       
|                                       
|                                       
|                                       
|                                        | Settlement charge (credit)                  |                  |     |                 |  |                |     |     |   |      |     |     |  |      |    |     |  |      |    | 5  |   |   |     | (3 | ) |   |    |   |   |   |    |  |  |   |    | 1  |  
|                                        |                                             |                  |     |                  |  |                |     |      |   |      |     |      |  |      |    |      |  |      |    |    |   |   |     |    |   |   |    |    |   |   |    |   |  |   |    |   
|Net periodic benefit cost               |                                             | $                |    |                  |  | $              | 20  |      |   | $    | 19  |      |  | $    | 1  |      |  | $    | 10 |    |   | $ | 6   |    |   | $ | (1 | )  |   | $ | 1  |   |  | $ | (2 | ) 
|                                        |                                             |                  |     |                  |  |                |     |      |   |      |     |      |  |      |    |      |  |      |    |    |   |   |     |    |   |   |    |    |   |   |    |   |  |   |    |   

F-27



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

|                                                |                           |                  |   |                  |  |      |   |      |  |  |   |   |  |  |   |    | 
|----------------------------------------------- | ------------------------- | ---------------- | - | ---------------- |  | ---- | - | ---- |  |  | - | - |  |  | - | -- | 
|                                                |                           |                  |   |                  |  |     
|                                                |                           |                  |   | Foreign         
|                                                |                           | Pension Benefits |   | Pension Benefits
|                                                |                           |                  |   |                 
|                                                |                           | 1999             |   | 1998             |  | 1999 |   | 1998
|                                                |                           |                  |   |                  |  |      |   |     
|Plans with ABO exceeding assets at end of year: |                           |                  |   |                  |  |      |   |      |  |  |   |   |  |  |   |   
|                                               
|                                               
|                                               
|                                               
|                                                | ABO                       |                  | $ | 12               |  |      | $ | 15   |  |  | $ | 3 |  |  | $ | 29 | 
|                                               
|                                               
|                                               
|                                               
|                                                | PBO                       |                  | $ |                 |  |      | $ |     |  |  | $ | 3 |  |  | $ | 32 | 
|                                               
|                                               
|                                               
|                                               
|                                                | Fair value of plan assets |                  | $ |                 |  |      | $ |     |  |  | $ | 2 |  |  | $ |   | 

Assumed health care cost trend rates can have a significant
effect on the amounts reported for the health care plans. A
one-percentage-point change in assumed health care cost trend
rates would not have a material effect on the total of service
and interest cost components or on the postretirement benefit
obligation.

Defined Contribution Plans.The Company sponsors
numerous 401(k) plans, which are voluntary defined
contribution plans allowing participation by domestic employees
that meet certain age and service requirements. Each participant
may contribute on a pretax basis between 1% and 18% of his or her
 compensation to the plans. The plans also contain additional
provisions for matching and/ or profit sharing contributions,
both of which are based on a portion of a participants
eligible compensation. The amount of expense for matching and
profit sharing contributions totaled $19 million in 1999, $15
million in 1998 and $10 million in 1997.

Note 15.  Leases and Rentals

At December 31, 1999, the Trust owned equity interests in
100 hotels, of which 90 properties were owned and 10 were held
pursuant to long-term leases.

All of the Trusts hotels are leased to the Corporation as
of December 31, 1999. The leases between the Trust and the
Corporation are generally long-term and provide for annual base,
or minimum rents, plus contingent, or percentage rents based on
the gross revenues of the properties and are accounted for as
operating leases. The leases are triple-net in that
the lessee is generally responsible for paying all operating
expenses of the properties, including maintenance, insurance and
real property taxes. The lessee is also generally responsible for
 any payments required pursuant to underlying ground leases. The
Corporation is committed under its leases with the Trust to pay
the rents payable with respect to ground leases. Total rental
expense incurred by the Corporation under such leases was
approximately $485 million for the year ended December 31,
1999, of which approximately $131 million related to percentage
rent.

The Corporations minimum future rents at December 31,
1999 payable under non-cancelable operating leases with the Trust
 and with others for the years ended December 31 are as
follows (in millions):

|      |  |      |     |      |  |      |    |      |  |      |    |            |  |   |    |  |  |   |    |  |  |   |     | 
|----- |  | ---- | --- | ---- |  | ---- | -- | ---- |  | ---- | -- | ---------- |  | - | -- |  |  | - | -- |  |  | - | --- | 
|      |  | 2000 |     | 2001 |  | 2002 |    | 2003 |  | 2004 |    | Thereafter
|      |  |      |     |      |  |      |    |      |  |      |    |           
|Trust |  | $    | 188 |      |  | $    | 27 |      |  | $    | 15 |            |  | $ | 10 |  |  | $ | 10 |  |  | $ | 42  | 
|     
|     
|     
|     
|Other |  |      | 38  |      |  |      | 38 |      |  |      | 31 |            |  |   | 29 |  |  |   | 29 |  |  |   | 279 | 
|      |  |      |     |      |  |      |    |      |  |      |    |            |  |   |    |  |  |   |    |  |  |   |     | 
|Total |  | $    | 226 |      |  | $    | 65 |      |  | $    | 46 |            |  | $ | 39 |  |  | $ | 39 |  |  | $ | 321 | 
|      |  |      |     |      |  |      |    |      |  |      |    |            |  |   |    |  |  |   |    |  |  |   |     | 

The Corporation and the hotels lease certain equipment and
facilities for the hotels operations under various lease
agreements. The leases extend for varying periods through 2038
and generally are for a fixed amount each month. Future minimum
lease payments under the non-cancelable operating leases are
included in the other minimum future rents above.

Rent expense under other non-cancelable operating leases was $41
million, $37 million and $31 million in 1999, 1998 and 1997,
respectively.

F-28



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

The Trusts rents receivable from the Corporation relating
to leased hotel properties at December 31, 1999 and 1998 was
 $34 million and $20 million, respectively.

The Corporation is committed under its leases with the Trust to
pay rents payable with respect to ground leases, which expire in
2004 through 2045, including renewal options. The ground leases
generally provide for a minimum rent plus a percentage of gross
revenues of the properties in excess of the minimum rent. Future
minimum lease payments under the ground leases for the years
ending December 31, 2000 through December 31, 2004 are
approximately $7 million each year and $94 million in
aggregate thereafter. Rent expense, inclusive of percentage
rents, incurred by the Corporation, as the operator under the
ground leases, was approximately $13 million in 1999.

Note 16.  Equity Put Options

As a part of its Share repurchase program (see Note 17), the
 Company sold equity put options during 1998 for $1.8 million,
which entitled the holder, at the expiration date, to sell one
million Shares to the Company at contractually specified prices.

During 1999, the Company repurchased 500,000 Shares for $16
million under a portion of the equity put option contracts. In
the first quarter of 1999, all of the remaining equity put option
 contracts had expired.

In November 1999, the Company granted an executive the
option to cause the Company to purchase from the executive
566,166 Shares for a purchase price of $34.25 per Share. This
option is exercisable in the fourth quarter of 2000. The Company
recorded the fair market value of options granted as compensation
 expense.

Note 17.  Stockholders Equity

Share Repurchases.In 1998, the Board of Directors
of the Company approved the repurchase of up to $1 billion
of Shares under a Share repurchase program (the Share
Repurchase Program). Pursuant to the Share Repurchase
Program, Starwood has repurchased 13.3 million Shares (including
500,000 Shares of equity put option contracts) in the open market
 for an aggregate cost of $451 million. Additionally, the Company
 repurchased 6.8 million Shares for an aggregate cost of $385
million as settlement of the forward equity transactions
described below.

Forward Equity Transactions.Pursuant to a Purchase
 Agreement dated October 10, 1997, the Company sold to UBS
Limited (UBS Ltd.) 2.185 million Shares (UBS
Shares) at a cash price of $57.25 per Share, and paid to
Warburg Dillon Read LLC (formerly UBS Securities LLC), an
affiliate of UBS Ltd., a placement fee equal to 2.5% of the gross
 proceeds to the Company from such sale of Shares. Concurrently
therewith, the Company entered into an agreement that provided
for a settlement payment to be made, in the form of Shares or
cash, by the Company to an affiliate of Union Bank of
Switzerland, London Branch, or by that affiliate to the Company,
based on the market price of the Shares over a specified
unwind period, as compared to a forward
price. The Company settled its obligations under this
agreement in September 1998 by repurchasing the UBS Shares
for approximately $130 million in cash. As a result of this
settlement, the Company has no further obligations under this
agreement and Shares were reduced by approximately 2.185 million.

On February 24, 1998, the Company sold an aggregate of 4.641
 million Shares to Merrill Lynch International, NMS Services,
Inc., Lehman Brothers Inc. and certain affiliates for a cash
purchase price per Share of $52.798, which price reflected a 2%
discount from the last reported sale price of the Shares on the
date of the purchase. Concurrently with these sales, the Company
entered into three separate agreements with these purchasers and/
 or certain of their affiliates pursuant to which each of these
purchasers or their respective affiliates agreed to sell, as
directed by the Company in an underwritten fixed price offering
or other

F-29



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

specified methods, a sufficient number of the Shares to achieve
net sales proceeds equal to the aggregate market value of the
Shares purchased in February 1998, plus a forward accretion
component, minus an adjustment for dividends paid on the
purchased Shares. Additional Shares were required to be delivered
 by the Company as security in the event the market prices of the
 Shares dropped below certain specified levels. In
October 1998, the Company settled its obligations under
these agreements by repurchasing all of the Shares issued to
these purchasers for an aggregate of approximately $255 million
in cash. As a result of this settlement, the Company has no
further obligations under these agreements and Shares outstanding
 were reduced by approximately 7.379 million (4.641 million
original Shares issued and 2.738 million Shares previously issued
 as security).

Exchangeable Preferred Shares.During 1998, 6.3
million shares of Class A EPS and 5.5 million shares of
Class B EPS were issued by the Trust in connection with the
Westin Merger. Class A EPS have a par value of $0.01 per
share and are convertible on a one-for-one basis (subject to
certain adjustments) to Shares. Class B EPS have a
liquidation preference of $38.50 per share and provide the
holders with the right, from and after the fifth anniversary of
the closing date of the Westin Merger, to require the Trust to
redeem such shares at a price of $38.50. Shares of Class B
EPS are convertible on a one-for-one basis (subject to certain
adjustments) to Class A EPS. During 1999, the Trust
consented to the conversion of approximately 320,000 shares of
Class B EPS by certain stockholders into an equal number of
shares of Class A EPS. Additionally, the Trust consented to
the exchange of approximately 1.0 million shares of Class A
EPS into an equal number of Shares. Additionally, approximately
8,900 Class B EPS were canceled in satisfaction of certain
employee tax withholding liabilities which were paid by the
Company. At December 31, 1999, the Trust had 150 million
preferred shares authorized and 3.7 million and 3.5 million of
Class A EPS and Class B EPS outstanding, respectively.

Note 18.  Stock Incentive Plans

The Trust and the Corporation each adopted Incentive and
Non-Qualified Share Option Plans in 1986 which provided for the
purchase of up to an aggregate of 175,000 Shares by Trustees,
Directors, officers and employees pursuant to option grants. At
December 31, 1999, the Company had options outstanding to
purchase approximately 3,000 Shares at exercise prices ranging
from $11.00 to $14.50 per Share under these plans. Such options,
which have exercise prices equal to the Shares fair market
value on the date of grant, vest over three years.

During 1995, the Trust and the Corporation each adopted a 1995
Share Option Plan (together, as amended, the 1995
LTIP), which provided for the purchase of Shares by
Trustees, Directors, officers, employees, consultants and
advisors, pursuant to option grants.

The 1995 LTIP provided for the grant of Shares that are subject
to performance measures or restriction periods and performance
awards in tandem with certain Share options to be paid in cash
subject to performance measures. The 1995 LTIP also provided for
the automatic annual grant of Share options, as defined, to
Trustees and Directors for options to purchase 4,500 Shares and
provided for the annual fee of Trustees and Directors to be paid
in Shares, subject to each Trustees and Directors
option to receive up to half in cash and to defer receipt of such
 annual fee until after terminating service with the Company.

In May 1999, the Company adopted the 1999 Long-Term
Incentive Compensation Plan (1999 LTIP) which
supersedes the 1995 LTIP and provides for the purchase of Shares
by Directors, officers, employees, consultants and advisors,
pursuant to option grants. Although no additional awards will be
granted under the 1995 LTIP, the 1995 LTIP will continue to
govern awards that have been granted and remain outstanding under
 the 1995 LTIP. The aggregate number of Shares subject to
non-qualified or incentive stock options, performance shares,
restricted stock or any combination of the foregoing which are
available to be granted under the 1999 LTIP at December 31,
1999 was approximately 24.1 million.

F-30



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

As of the date of the ITT Merger (February 23, 1998), each
ITT stock option (ITT Stock Option) and related stock
 appreciation right that was outstanding immediately prior to
February 23, 1998, pursuant to ITTs stock option plans
 in effect on the date of the original merger agreement (November
 1997), was assumed by the Company and became and represent a
fully exercisable option to purchase the number of Shares
(Substitute Option) determined by applying the
conversion factor of 1.543 to the ITT Stock Options outstanding
immediately prior to February 23, 1998 and to the exercise
price immediately prior to February 23, 1998. As of
February 23, 1998, each Substitute Option became subject to
the same terms and conditions as were applicable immediately
prior to that date under the related ITT Stock Option under which
 it was granted, including those providing for the accelerated
exercisability and other special rights arising under certain
circumstances. The ITT Merger triggered an accelerated
exercisability event and, as such, entitled each holder to
receive an amount equal to the excess of $85 over the exercise
price of the related ITT Stock Option.

The Company applied APB Opinion No. 25, Accounting for Stock
 Issued to Employees, and related interpretations; accordingly,
compensation cost was not recognized for grants of stock options
at market price. In November 1997, due to the election of
the holder of each ITT Stock Option to receive either cash,
Shares or a combination, variable accounting required an expense
to be recognized for the difference between the option price and
the formula market price totaling $342 million.

Had compensation cost for grants been determined based on the
fair value at the grant dates consistent with SFAS No. 123,
Accounting for Stock-Based Compensation, the Companys net
income would have been reduced by $76 million ($0.40 per Share)
and $86 million ($0.46 per Share) in 1999 and 1998, respectively.
 Net income would not have been affected in 1997 as a result of
the application of the variable accounting, as noted above. The
fair value of each option grant used in the 1999 and 1998 pro
forma amounts was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted
average assumptions used for grants in 1999 and 1998,
respectively: dividend yield of 2.9% and 2.6%, expected
volatility of 41.9% and 47.6%, risk-free interest rates of 6.3%
and 4.5% and an expected life of three years for all options.

F-31



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

The following table summarizes stock option activity for the
Company, including stock options granted to the gaming operation
employees, as of and for the years ended December 31:

|                                 |  |         |             |                  |  |   |       | 
|-------------------------------- |  | ------- | ----------- | ---------------- |  | - | ----- | 
|                                 |  |         |             | Weighted Average
|                                 |  |         |             | Exercise        
|                                 |  | Options |             | Price Per Share 
|                                 |  |         |             |                 
|Outstanding at December 31, 1996 |  |         | 11,748,061  |                  |  | $ | 26.85 | 
|                                
|                                
|                                
|                                
|Granted                          |  |         | 3,248,478   |                  |  |   | 37.50 | 
|                                
|                                
|                                
|                                
|Exercised                        |  |         | (1,347,453  | )                |  |   | 26.71 | 
|                                
|                                
|                                
|                                
|Forfeited                        |  |         | (380,109    | )                |  |   | 33.01 | 
|                                 |  |         |             |                  |  |   |       | 
|Outstanding at December 31, 1997 |  |         | 13,268,977  |                  |  |   | 29.29 | 
|                                
|                                
|                                
|                                
|Granted(a)                       |  |         | 19,783,847  |                  |  |   | 43.18 | 
|                                
|                                
|                                
|                                
|Exercised(b)                     |  |         | (12,536,071 | )                |  |   | 28.45 | 
|                                
|                                
|                                
|                                
|Forfeited                        |  |         | (2,393,977  | )                |  |   | 44.61 | 
|                                 |  |         |             |                  |  |   |       | 
|Outstanding at December 31, 1998 |  |         | 18,122,776  |                  |  |   | 43.80 | 
|                                
|                                
|                                
|                                
|Granted                          |  |         | 9,155,246   |                  |  |   | 23.76 | 
|                                
|                                
|                                
|                                
|Exercised                        |  |         | (346,575    | )                |  |   | 22.46 | 
|                                
|                                
|                                
|                                
|Forfeited                        |  |         | (6,009,005  | )                |  |   | 50.41 | 
|                                 |  |         |             |                  |  |   |       | 
|Outstanding at December 31, 1999 |  |         | 20,922,442  |                  |  | $ | 34.26 | 
|                                 |  |         |             |                  |  |   |       | 
|Exercisable at December 31, 1998 |  |         | 6,963,014   |                  |  | $ | 32.51 | 
|                                 |  |         |             |                  |  |   |       | 
|Exercisable at December 31, 1999 |  |         | 10,443,940  |                  |  | $ | 35.36 | 
|                                 |  |         |             |                  |  |   |       | 




|    |                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents Company options of 17,055,147
	outstanding at February 23, 1998 (the ITT Merger date) and
	shares granted by the Company during 1998.                               
|   
|(b) | Represents options exercised during 1998,
	including the ITT Stock Options which were exercised upon the
	occurrence of the accelerated exercisability event (the ITT
	Merger).

The following table summarizes information about outstanding
stock options at December 31, 1999:

|                |  |                     |            |                     |  |                  |      |             |  |                  |       |  |  |  |            |  |  |   |       | 
|--------------- |  | ------------------- | ---------- | ------------------- |  | ---------------- | ---- | ----------- |  | ---------------- | ----- |  |  |  | ---------- |  |  | - | ----- | 
|                |  |                     |            |                    
|                |  | Options Outstanding |            | Options Exercisable
|                |  |                     |            |                    
|                |  |                     |            | Weighted Average    |  |                  |      |            
|                |  |                     |            | Remaining           |  | Weighted Average |      |             |  | Weighted Average
|Range of        |  | Number              |            | Contractual Life    |  | Exercise         |      | Number      |  | Exercise        
|Exercise Prices |  | Outstanding         |            | in Years            |  | Price/Share      |      | Exercisable |  | Price/Share     
|                |  |                     |            |                     |  |                  |      |             |  |                 
|$11.00  $20.31 |  |                     | 2,215,739  |                     |  |                  | 6.84 |             |  | $                | 16.37 |  |  |  | 1,792,364  |  |  | $ | 15.42 | 
|$20.62  $23.92 |  |                     | 3,167,492  |                     |  |                  | 7.09 |             |  |                  | 23.12 |  |  |  | 2,213,825  |  |  |   | 23.41 | 
|$24.00  $24.00 |  |                     | 5,499,771  |                     |  |                  | 9.07 |             |  |                  | 24.00 |  |  |  | 560,300    |  |  |   | 24.00 | 
|$24.25  $42.31 |  |                     | 3,215,615  |                     |  |                  | 7.74 |             |  |                  | 36.41 |  |  |  | 1,849,804  |  |  |   | 34.83 | 
|$42.32  $49.19 |  |                     | 2,175,368  |                     |  |                  | 8.30 |             |  |                  | 48.78 |  |  |  | 1,113,091  |  |  |   | 48.39 | 
|$50.23  $53.94 |  |                     | 1,055,852  |                     |  |                  | 6.79 |             |  |                  | 52.62 |  |  |  | 682,981    |  |  |   | 52.77 | 
|$54.63  $54.63 |  |                     | 2,500,000  |                     |  |                  | 8.13 |             |  |                  | 54.63 |  |  |  | 1,666,667  |  |  |   | 54.63 | 
|$54.85  $55.81 |  |                     | 1,092,605  |                     |  |                  | 8.03 |             |  |                  | 54.88 |  |  |  | 564,908    |  |  |   | 54.91 | 
|                |  |                     |            |                     |  |                  |      |             |  |                  |       |  |  |  |            |  |  |   |       | 
|                |  |                     | 20,922,442 |                     |  |                  | 7.97 |             |  | $                | 34.26 |  |  |  | 10,443,940 |  |  | $ | 35.36 | 
|                |  |                     |            |                     |  |                  |      |             |  |                  |       |  |  |  |            |  |  |   |       | 

During 1999, the Company granted restricted stock awards for
222,284 Shares. Total restricted stock awards outstanding as of
December 31, 1999 totaled 240,284 Shares, and approximately
1,250 Shares were vested. The remaining restricted stock awards
vest at varying rates over four years from the award grant date.

F-32



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Compensation expense of approximately $0.6 million and $16
million was recorded during 1999 and 1998, respectively, related
to restricted stock awards.

Note 19.  Derivative Financial Instruments

The Company enters into interest rate swap agreements to manage
interest rate fluctuations on its variable rate debt. The Company
 currently has six outstanding interest rate swap agreements
under which the Company pays a fixed rate and receives variable
rates of interest. Additionally, the Company had nine short-term
interest rate swap agreements in place at December 31, 1999
to protect against potential high LIBOR rates due to Year 2000
concerns, all of the short-term Year 2000 swaps have since
expired. The aggregate notional amount of these forward interest
rate swaps was approximately $3.2 billion (including
$2.2 billion with an original maturity of less than one
year) and the estimated unrealized gain on these interest rate
swaps was approximately $32 million at December 31,
1999. The unrealized gain represents the amount the Company would
 receive upon the termination of the swap agreements based on
current interest rates.

The Company enters into forward foreign exchange contracts to
hedge the foreign currency exposure associated with the
Companys foreign currency denominated assets and
liabilities. The Company currently has two forward foreign
exchange contracts outstanding with a dollar equivalent of the
contractual amounts of these hedges at December 31, 1999 of
approximately $46 million. These contracts mature in
June 2000.

During 1998, the Company delayed a long-term debt offering due to
 market conditions and the Reorganization. As a result, certain
of the Companys forward interest rate swaps with a notional
 amount of $500 million no longer correlated with this
anticipated indebtedness. In accordance with the Companys
accounting policies, these forward interest rate swaps were
marked to market by the Company and, as such, the Company
recognized a loss of $40 million during 1998, which is
included in interest expense. These contracts were terminated by
the Company in 1998.

Note 20.  Related Party Transactions

Starwood Capital. Starwood Capital Group, L.L.C.
(Starwood Capital) has granted to Starwood an
exclusive, non-transferable, royalty-free license to use the
Starwood name and trademarks in connection with the
hotel and hospitality services business worldwide, and to use the
 Starwood name in its corporate name worldwide, in
perpetuity.

Starwood Capital and Starwood agreed that, subject to approval by
 the independent Trustees or Directors, as appropriate, until
December 31, 1998, Starwood would reimburse Starwood Capital
 for its out-of-pocket expenses and internal costs (including
allocation of overhead) for services provided to Starwood, other
than internal costs of Starwood Capital for services of senior
management of Starwood Capital. During 1998, Starwood reimbursed
Starwood Capital approximately $391,000 for out-of-pocket
expenses and approximately $253,000 for internal costs in
accordance with this agreement. This agreement was terminated in
1998.

In 1998, Starwood Capitals engagement to act as financial
advisor to Starwood in connection with the ITT Merger was not
subject to the above reimbursement limitation. For its services
as a financial advisor, Starwood Capital was paid
$15.5 million in cash and 131,388 Shares were issued.

Starwood Capital and its affiliates hold a 25% interest in a golf
 course management company that currently manages one golf course
 that is associated with a Westin hotel, and until March 1999,
Starwood Capital held a 20% non-controlling equity interest in a
company which operates the timeshare component of The Regina
Resorts in Los Cabos, Cancun and Puerto Vallarta, Mexico.
Individuals affiliated with Starwood Capital, including
individuals who are Trustees of the Trust and Directors of the
Corporation, and certain

F-33



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

other affiliates of Starwood Capital hold a 100% interest in the
company that owns The Westin Innisbrook Resort and the Sheraton
Tamarron Resort, which are both managed by the Company. The
management agreement for the Westin Innisbrook Resort provides
for certain advances in the form of a loan to affiliates of
Starwood Capital if stipulated levels of financial performance
are not maintained. The Company believes that any such payment
will not be material.

In February 1999, the Company purchased in the open market from
unaffiliated third parties debt securities of an affiliated party
 for $23 million.

In February 1998, a subsidiary of the Corporation leased a
Gulfstream III Aircraft from an affiliate of Starwood
Capital. The term of the lease is one year and automatically
renews for one-year terms thereafter unless either party
terminates the lease upon 90 days written notice. The
rent for the aircraft, which was set at approximately 90% of fair
 market value (based on two competitive bids from unrelated third
 parties), is (i) a monthly payment of 1.25% of the
lessors total costs relating to the aircraft (approximately
 $123,000 at the beginning of the lease) which shall be increased
 accordingly for additional costs incurred by the lessor plus
(ii) $300 for each hour that the aircraft is in use.

Realty Partnership and Operating Partnership. In
November 1998, the Operating Partnership and other affiliates
distributed certain partnership interests in Moorland Hotel LP
(Moorland) to the Corporation in exchange for the
redemption of 576,995 LP Units in the Operating
Partnership held by the Corporation. Subsequently, the
Corporation owned 100% of the net assets of Moorland and paid off
 the mortgage note payable in the amount of $37 million from
 Moorland to the Realty Partnership with proceeds from an
intercompany loan from the Trust. The real and personal property
of Moorland was then contributed to the Realty Partnership by the
 Corporation in exchange for 1,810,951 LP Units in the
Realty Partnership to conform to the ownership structure of the
Companys other domestically owned hotels, excluding
properties acquired in the ITT Merger. A three-year lease for the
 Moorland property, which provides for a monthly base rent of
$333,000 and annual percentage rent payments, was entered into by
 the Trust and the Corporation.

In December 1998, the Operating Partnership distributed its 100%
interest in Midland Holding (Midland) to the
Corporation in redemption of 3,733,630 LP Units in the
Operating Partnership held by the Corporation. Subsequently, the
Corporation owned 100% of the net assets of Midland and paid off
the mortgage note payable in the amount of $22 million from
Midland to the Realty Partnership with proceeds from an
intercompany loan from the Trust. The real and personal property
of Midland was then contributed to the Realty Partnership by the
Corporation in exchange for 2,479,214 LP Units in the
Realty Partnership to conform to the ownership structure of the
Companys other domestically owned hotels, excluding
properties acquired in the ITT Merger. A three-year lease for the
 Midland hotel, which provides for a monthly base rent of
$400,000 and annual percentage rent payments, was entered into by
 the Realty Partnership and the Corporation.

Employee and Officer Loans. In connection with
specific employees and officers relocation to
Starwood headquarters in 1999 and 1998, Starwood made
non-interest bearing loans to certain individuals. The original
loan amounts totaled approximately $14 million and the
amount outstanding at December 31, 1999 was approximately
$12 million. These loans are due five years from the date of
 issuance or, generally, upon the individuals termination.

Note 21.  Commitments and Contingencies

Litigation. ITT Sheraton Corporation
(Sheraton), a subsidiary of the Company, is a
defendant in certain litigation relating to Sheratons
management of a hotel. The case is titled 2660 Woodley Road
Joint Venture v. ITT Sheraton Corporation, Civil
Action No. 97-450-JJF (U.S.D.C., D. Del.). In
December 1999, following trial, the jury returned a verdict
finding that Sheraton had violated its contractual obligations to
 the

F-34



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

hotel owner and awarded contractual damages totaling
$11 million. The jury also found for plaintiff on certain
common law and other claims and awarded compensatory and other
damages of $2 million and punitive damages of $38 million.
The jury found for Sheraton and rejected plaintiffs
additional claims that Sheraton

F-34.1



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

had violated the Racketeer Influenced and Corrupt Organizations
Act, and that Sheraton had engaged in fraud. Sheraton believes
that the jurys determination against it on liability issues
 was erroneous as a matter of law, and that the damage awards
were excessive and not supported by the evidence. Sheraton will
seek to have the verdict set aside in the trial court and, if
necessary, appeal to the United States Court of Appeals. There
can be no assurance that Sheraton will be successful in having
the verdict set aside or overturned or reduced on appeal, or that
 other owners of properties managed by Sheraton will not seek to
assert similar claims.

The Company is involved in various other legal matters that have
arisen in the normal course of business, some of which include
claims for substantial sums. Reserves have been established when
the outcome is probable and can be reasonably estimated and total
 $75 million at December 31, 1999. While the ultimate
results of claims and litigation cannot be determined, the
Company does not expect that the resolution of all legal matters
will have a material adverse effect on its consolidated results
of operations, financial position or cash flow.

Environmental Matters. The Company is subject to
certain requirements and potential liabilities under various
federal, state and local environmental laws, ordinances and
regulations. Such laws often impose liability without regard to
whether the current or previous owner or operator knew of, or was
 responsible for, the presence of such hazardous or toxic
substances. Although the Company has incurred and expects to
incur remediation and other environmental costs during the
ordinary course of operations, management anticipates that such
costs will not have a material adverse effect on the operations
or financial condition of the Company.

Captive Insurance Company. Through its captive
insurance company, which was acquired in connection with the
Westin Merger, the Company provides insurance coverage for
workers compensation and general liability claims arising
at hotel properties owned or managed by the Company through
policies written directly and through assumed reinsurance
arrangements. Estimated insurance claims payable represent
outstanding claims and those estimated to have been incurred but
not reported based upon historical loss experience. Actual costs
may vary from estimates based on trends of losses for filed
claims and claims estimated to be incurred but not yet filed.

Estimated insurance claims payable at December 31, 1999 was
$30 million. At December 31, 1999, standby letters of
credit amounting to $14 million had been issued to provide
collateral for the estimated claims. The letters of credit are
guaranteed by the predecessor owner of Westin and Bankers Trust
Company.

Guaranteed Loans and Commitments. The Company
issues guarantees to lenders and other third parties in
connection with financing transactions and other obligations.
These guarantees were limited, in the aggregate, to approximately
 $81 million at December 31, 1999, including guarantees
involving major customers, with expected funding of zero.
Additionally, the Company manages certain hotels for others under
 agreements that provide for payments or loans to the hotel
owners if stipulated levels of financial performance are not
maintained. Management believes that the likelihood is remote
that material payments will be required under these agreements.

ITT Industries. In 1995, the former ITT
Corporation, renamed ITT Industries, Inc. (ITT
Industries), distributed to its stockholders all of the
outstanding shares of common stock of ITT, then a wholly owned
subsidiary of ITT Industries (the Distribution). In
connection with this Distribution, ITT, which was then named ITT
Destinations, Inc., changed its name to ITT Corporation.

For purposes of governing certain of the ongoing relationships
between the Company and ITT Industries after the Distribution and
 spin-off of ITT and to provide for an orderly transition, the
Company and ITT Industries have entered into various agreements
including a spin-off agreement, Employee Benefits Services and
Liability Agreement, Tax Allocation Agreement and Intellectual
Property Transfer and License Agreements. The Company may be
liable to or due reimbursement from ITT Industries relating to
the resolution of certain pre-spin-off matters under these
agreements.

F-35



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 22.  Business Segment and Geographical
Information

The Company has one operating segment, hotels and leisure. The
hotels and leisure segment represents a worldwide network of
owned, leased and consolidated joint venture hotels, VOIs and
resorts operated primarily under the Companys proprietary
brand names including Sheraton, Westin, St. Regis, The
Luxury Collection, Four Points, W and hotels and resorts
generated or flagged under these brand names in exchange for
management and franchise fees. Also included are earnings from
the Companys interest in unconsolidated joint ventures.

The performance of the hotels and leisure segment is evaluated
primarily on operating profit before corporate selling, general
and administrative expense, interest, gains on the sale of real
estate, investments and restructuring and other special charges.
The Company does not allocate these items to the segment.

The following table presents revenues, operating profit, assets
and capital expenditures for the Companys reportable
segment (in millions):

|                       |                         |      |        |        |  |      |        |        |  |   |       |       | 
|---------------------- | ----------------------- | ---- | ------ | ------ |  | ---- | ------ | ------ |  | - | ----- | ----- | 
|                       |                         | 1999 |        | 1998   |  | 1997
|                       |                         |      |        |        |  |     
|Revenues               |                         | $    | 3,862  |        |  | $    | 3,325  |        |  | $ | 1,762 |      
|                       |                         |      |        |        |  |      |        |        |  |   |       |      
|Operating profit(a)(b) |                         | $    | 893    |        |  | $    | 734    |        |  | $ | 359   |      
|                       |                         |      |        |        |  |      |        |        |  |   |       |      
|Assets:                |                         |      |        |        |  |      |        |        |  |   |       |      
|                      
|                      
|                      
|                      
|                       | Hotels                  |      | $      | 12,557 |  |      | $      | 11,827 |  |   | $     | 4,136 | 
|                      
|                      
|                      
|                      
|                       | Corporate               |      |        | 262    |  |      |        | 487    |  |   |       | 775   | 
|                      
|                      
|                      
|                      
|                       | Discontinued operations |      |        | 104    |  |      |        | 1,103  |  |   |       | 1,879 | 
|                       |                         |      |        |        |  |      |        |        |  |   |       |      
|                       |                         | $    | 12,923 |        |  | $    | 13,417 |        |  | $ | 6,790 |      
|                       |                         |      |        |        |  |      |        |        |  |   |       |      
|Capital expenditures:  |                         |      |        |        |  |      |        |        |  |   |       |      
|                      
|                      
|                      
|                      
|                       | Hotels                  |      | $      | 521    |  |      | $      | 427    |  |   | $     | 233   | 
|                       |                         |      |        |        |  |      |        |        |  |   |       |      




|    |                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Hotels operating profit has been reduced by the
	minority-owned portion of consolidated joint ventures totaling
	$37  million, $42 million and $19 million in 1999,
	 1998 and 1997, respectively.
|   
|(b) | The following costs are not allocated to Hotels in
	 evaluating operating profit (in millions):                                                                                                   

|                                              |  |      |    |      |  |      |     |  |  |   |     | 
|--------------------------------------------- |  | ---- | -- | ---- |  | ---- | --- |  |  | - | --- | 
|                                              |  | 1999 |    | 1998 |  | 1997
|                                              |  |      |    |      |  |     
|Corporate selling, general and administrative |  | $    | 77 |      |  | $    | 90  |  |  | $ | 68  | 
|                                             
|                                             
|                                             
|                                             
|Restructuring and other special charges       |  | $    | 3  |      |  | $    | 149 |  |  | $ | 640 | 

|                        |  |               |       |                   |  |      |       |      |  |      |       |      |  |   |       |  |  |   |       |  |  |   |       | 
|----------------------- |  | ------------- | ----- | ----------------- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                        |  |               |       |                  
|                        |  | Revenues      |       | Long-Lived Assets
|                        |  |               |       |                  
|                        |  | 1999          |       | 1998              |  | 1997 |       | 1999 |  | 1998 |       | 1997
|                        |  |               |       |                   |  |      |       |      |  |      |       |     
|                        |  |              
|                        |  | (In millions)
|                       
|                       
|                       
|                       
|United States           |  | $             | 2,723 |                   |  | $    | 2,207 |      |  | $    | 803   |      |  | $ | 6,319 |  |  | $ | 6,242 |  |  | $ | 1,548 | 
|                       
|                       
|                       
|                       
|Italy                   |  |               | 335   |                   |  |      | 325   |      |  |      | 302   |      |  |   | 594   |  |  |   | 655   |  |  |   | 610   | 
|                       
|                       
|                       
|                       
|All other international |  |               | 804   |                   |  |      | 793   |      |  |      | 657   |      |  |   | 1,306 |  |  |   | 1,359 |  |  |   | 1,256 | 
|                        |  |               |       |                   |  |      |       |      |  |      |       |      |  |   |       |  |  |   |       |  |  |   |       | 
|Total                   |  | $             | 3,862 |                   |  | $    | 3,325 |      |  | $    | 1,762 |      |  | $ | 8,219 |  |  | $ | 8,256 |  |  | $ | 3,414 | 
|                        |  |               |       |                   |  |      |       |      |  |      |       |      |  |   |       |  |  |   |       |  |  |   |       | 

With the exception of Italy, there were no other individual
international countries which comprised over 10% of the total
revenues and long-lived assets of the Company as of
December 31, 1999, 1998 or 1997.

F-36



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 23.  Quarterly Results (Unaudited)

The following unaudited quarterly results for 1998 have been
restated from amounts previously reported by the Company for the
change in accounting policy related to non-owned managed hotel
revenues and for the presentation of the gaming operations as
discontinued operations (see Note 1).

|                                         |                                          |                                      |      |         |   |              |     |             |  |      |     |       |   |   |       |       |   |   |       |       |  
|---------------------------------------- | ---------------------------------------- | ------------------------------------ | ---- | ------- | - | ------------ | --- | ----------- |  | ---- | --- | ----- | - | - | ----- | ----- | - | - | ----- | ----- | -
|                                         |                                          |                                      |      |        
|                                         |                                          | Three Months Ended                   |      |        
|                                         |                                          |                                      |      |        
|                                         |                                          | March 31                             |      | June 30 |   | September 30 |     | December 31 |  | Year
|                                         |                                          |                                      |      |         |   |              |     |             |  |     
|                                         |                                          |                                     
|                                         |                                          | (In millions, except per Share data)
|                                        
|                                        
|                                        
|                                        
|1999                                     |                                          |                                      |      |         |   |              |     |             |  |      |     |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|Revenues                                 |                                          | $                                    | 851  |         |   | $            | 968 |             |  | $    | 956 |       |   | $ | 1,087 |       |   | $ | 3,862 |      
|                                        
|                                        
|                                        
|                                        
|Costs and expenses                       |                                          | $                                    | 708  |         |   | $            | 695 |             |  | $    | 741 |       |   | $ | 868   |       |   | $ | 3,012 |      
|                                        
|                                        
|                                        
|                                        
|Income (loss) from continuing operations |                                          | $                                    | (925 | )       |   | $            | 142 |             |  | $    | 44  |       |   | $ | 101   |       |   | $ | (638  | )    
|                                        
|                                        
|                                        
|                                        
|Discontinued operations                  |                                          | $                                    | (7   | )       |   | $            |    |             |  | $    |    |       |   | $ | (64   | )     |   | $ | (71   | )    
|                                        
|                                        
|                                        
|                                        
|Extraordinary item                       |                                          | $                                    |     |         |   | $            |    |             |  | $    | (2  | )     |   | $ | (30   | )     |   | $ | (32   | )    
|                                        
|                                        
|                                        
|                                        
|Net income (loss)                        |                                          | $                                    | (932 | )       |   | $            | 142 |             |  | $    | 42  |       |   | $ | 7     |       |   | $ | (741  | )    
|                                        
|                                        
|                                        
|                                        
|Earnings per Share:                      |                                          |                                      |      |         |   |              |     |             |  |      |     |       |   |   |       |       |   |   |       |      
|Basic                                   |                                          |                                      |      |         |   |              |     |             |  |      |     |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|                                         | Income (loss) from continuing operations |                                      | $    | (4.86   | ) |              | $   | 0.76        |  |      | $   | 0.23  |   |   | $     | 0.51  |   |   | $     | (3.41 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Discontinued operations                  |                                      | $    | (0.04   | ) |              | $   |            |  |      | $   |      |   |   | $     | (0.33 | ) |   | $     | (0.38 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Extraordinary item                       |                                      | $    |        |   |              | $   |            |  |      | $   | (0.01 | ) |   | $     | (0.15 | ) |   | $     | (0.17 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Net income (loss)                        |                                      | $    | (4.90   | ) |              | $   | 0.76        |  |      | $   | 0.22  |   |   | $     | 0.03  |   |   | $     | (3.96 | )
|Diluted                                 |                                          |                                      |      |         |   |              |     |             |  |      |     |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|                                         | Income (loss) from continuing operations |                                      | $    | (4.86   | ) |              | $   | 0.73        |  |      | $   | 0.23  |   |   | $     | 0.50  |   |   | $     | (3.41 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Discontinued operations                  |                                      | $    | (0.04   | ) |              | $   |            |  |      | $   |      |   |   | $     | (0.32 | ) |   | $     | (0.38 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Extraordinary item                       |                                      | $    |        |   |              | $   |            |  |      | $   | (0.01 | ) |   | $     | (0.15 | ) |   | $     | (0.17 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Net income (loss)                        |                                      | $    | (4.90   | ) |              | $   | 0.73        |  |      | $   | 0.22  |   |   | $     | 0.03  |   |   | $     | (3.96 | )
|                                        
|                                        
|                                        
|                                        
|1998                                     |                                          |                                      |      |         |   |              |     |             |  |      |     |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|Revenues                                 |                                          | $                                    | 563  |         |   | $            | 947 |             |  | $    | 884 |       |   | $ | 931   |       |   | $ | 3,325 |      
|                                        
|                                        
|                                        
|                                        
|Costs and expenses                       |                                          | $                                    | 471  |         |   | $            | 759 |             |  | $    | 902 |       |   | $ | 656   |       |   | $ | 2,788 |      
|                                        
|                                        
|                                        
|                                        
|Income (loss) from continuing operations |                                          | $                                    | 42   |         |   | $            | 82  |             |  | $    | (79 | )     |   | $ | 175   |       |   | $ | 220   |      
|                                        
|                                        
|                                        
|                                        
|Discontinued operations                  |                                          | $                                    | 954  |         |   | $            | 154 |             |  | $    | (2  | )     |   | $ | (24   | )     |   | $ | 1,082 |      
|                                        
|                                        
|                                        
|                                        
|Net income (loss)                        |                                          | $                                    | 996  |         |   | $            | 236 |             |  | $    | (81 | )     |   | $ | 151   |       |   | $ | 1,302 |      
|                                        
|                                        
|                                        
|                                        
|Earnings per Share:                      |                                          |                                      |      |         |   |              |     |             |  |      |     |       |   |   |       |       |   |   |       |      
|Basic                                   |                                          |                                      |      |         |   |              |     |             |  |      |     |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|                                         | Income (loss) from continuing operations |                                      | $    | 0.19    |   |              | $   | 0.38        |  |      | $   | (0.42 | ) |   | $     | 0.92  |   |   | $     | 1.06  |  
|                                        
|                                        
|                                        
|                                        
|                                         | Discontinued operations                  |                                      | $    | 5.06    |   |              | $   | 0.77        |  |      | $   | (0.01 | ) |   | $     | (0.13 | ) |   | $     | 5.64  |  
|                                        
|                                        
|                                        
|                                        
|                                         | Net income (loss)                        |                                      | $    | 5.25    |   |              | $   | 1.15        |  |      | $   | (0.43 | ) |   | $     | 0.79  |   |   | $     | 6.70  |  
|Diluted                                 |                                          |                                      |      |         |   |              |     |             |  |      |     |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|                                         | Income (loss) from continuing operations |                                      | $    | 0.19    |   |              | $   | 0.38        |  |      | $   | (0.42 | ) |   | $     | 0.87  |   |   | $     | 1.05  |  
|                                        
|                                        
|                                        
|                                        
|                                         | Discontinued operations                  |                                      | $    | 4.98    |   |              | $   | 0.72        |  |      | $   | (0.01 | ) |   | $     | (0.12 | ) |   | $     | 5.58  |  
|                                        
|                                        
|                                        
|                                        
|                                         | Net income (loss)                        |                                      | $    | 5.17    |   |              | $   | 1.10        |  |      | $   | (0.43 | ) |   | $     | 0.75  |   |   | $     | 6.63  |  

F-37



---



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 24.  Subsequent Events

In February 2000, the Company completed the tender offer to
purchase the outstanding shares of Ciga not previously owned by
Starwood. Following completion of the tender, Starwood now owns
approximately 99% of the ordinary shares and approximately 86% of
 the savings shares. The aggregate purchase price of the
incremental shares was approximately $290 million.

In March 2000, the Company and Sun announced the termination
 of their agreement to sell the Desert Inn. In the event that
Starwood sells the property for in excess of the purchase price
originally agreed by Sun ($275 million), then Sun will share 50%
of such excess. If the property is sold for less than the
purchase price originally agreed by Sun, then Sun will pay to
Starwood 50% of such deficit, up to a maximum of $15 million.
Under the formal plan to dispose of the gaming segment adopted by
 the Company in 1999, the Company will continue to market the
Desert Inn for sale by year-end 2000. Accordingly, the Company
has included the results of the Desert Inn in discontinued
operations in the accompanying financial statements.

F-38



---



SCHEDULE II

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

AND STARWOOD HOTELS & RESORTS


VALUATION AND QUALIFYING ACCOUNTS


(In millions)


|                                                             |                                         |            |    |                        |  |               |    |           |     |              |   |     |   |   |     |      |   |   |    |     | 
|------------------------------------------------------------ | --------------------------------------- | ---------- | -- | ---------------------- |  | ------------- | -- | --------- | --- | ------------ | - | --- | - | - | --- | ---- | - | - | -- | --- | 
|                                                             |                                         |            |    |                        |  |              
|                                                             |                                         |            |    | Additions (Deductions) |  |              
|                                                             |                                         |            |    |                        |  |              
|                                                             |                                         |            |    |                        |  | Charged       |    |           |     |             
|                                                             |                                         | Balance    |    | Charged                |  | to/from Other |    | Payments/ |     | Balance     
|                                                             |                                         | January 1, |    | to Expenses            |  | Accounts(a)   |    | Other     |     | December 31,
|                                                             |                                         |            |    |                        |  |               |    |           |     |             
|1999                                                         |                                         |            |    |                        |  |               |    |           |     |              |   |     |   |   |     |      |   |   |    |    
|                                                            
|                                                            
|                                                            
|                                                            
|Trade receivables  allowance for doubtful accounts          |                                         | $          | 55 |                        |  | $             | 5  |           |     | $            |  |     |   | $ | 2   |      |   | $ | 62 |    
|                                                            
|                                                            
|                                                            
|                                                            
|Notes receivable  allowance for doubtful accounts           |                                         | $          | 31 |                        |  | $             | 4  |           |     | $            |  |     |   | $ | 8   |      |   | $ | 43 |    
|                                                            
|                                                            
|                                                            
|                                                            
|Reserves included in accrued and other liabilities:          |                                         |            |    |                        |  |               |    |           |     |              |   |     |   |   |     |      |   |   |    |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Restructuring and other special charges |            | $  | 202                    |  |               | $  | 3         | (c) |              | $ | (15 | ) |   | $   | (69  | ) |   | $  | 121 | 
|                                                            
|                                                            
|                                                            
|                                                            
|1998                                                         |                                         |            |    |                        |  |               |    |           |     |              |   |     |   |   |     |      |   |   |    |    
|                                                            
|                                                            
|                                                            
|                                                            
|Trade receivables  allowance for doubtful accounts          |                                         | $          | 45 |                        |  | $             | 13 |           |     | $            | 7 |     |   | $ | (10 | )    |   | $ | 55 |    
|                                                            
|                                                            
|                                                            
|                                                            
|Notes receivable  allowance for doubtful accounts           |                                         | $          | 55 |                        |  | $             |   |           |     | $            |  |     |   | $ | (24 | )    |   | $ | 31 |    
|                                                            
|                                                            
|                                                            
|                                                            
|Reserves included in accrued expenses and other liabilities: |                                         |            |    |                        |  |               |    |           |     |              |   |     |   |   |     |      |   |   |    |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Restructuring and other special charges |            | $  | 730                    |  |               | $  | 149       |     |              | $ | (79 | ) |   | $   | (598 | ) |   | $  | 202 | 
|                                                            
|                                                            
|                                                            
|                                                            
|1997                                                         |                                         |            |    |                        |  |               |    |           |     |              |   |     |   |   |     |      |   |   |    |    
|                                                            
|                                                            
|                                                            
|                                                            
|Trade receivables  allowance for doubtful accounts          |                                         | $          | 42 |                        |  | $             | 6  |           |     | $            |  |     |   | $ | (3  | )    |   | $ | 45 |    
|                                                            
|                                                            
|                                                            
|                                                            
|Notes receivable  allowance for doubtful accounts           |                                         | $          | 50 |                        |  | $             |   |           |     | $            |  |     |   | $ | 5   |      |   | $ | 55 |    
|                                                            
|                                                            
|                                                            
|                                                            
|Reserves included in accrued expenses and other liabilities: |                                         |            |    |                        |  |               |    |           |     |              |   |     |   |   |     |      |   |   |    |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Restructuring and other special charges |            | $  | 39                     |  |               | $  | 792       | (b) |              | $ | (39 | ) |   | $   | (62  | ) |   | $  | 730 | 




|    |                                 
|--- | --------------------------------
|(a) | Charged to/ from other accounts:

|                                     |  |                     |   |                 |  |   |     |  
|------------------------------------ |  | ------------------- | - | --------------- |  | - | --- | -
|                                     |  | Trade Receivables  |   | Restructuring  
|                                     |  | Allowance for       |   | and Other      
|                                     |  | Doubtful Accounts   |   | Special Charges
|                                     |  |                     |   |                
|1999                                 |  |                     |   |                 |  |   |     |  
|                                    
|                                    
|                                    
|                                    
|Other assets                         |  | $                   |  |                 |  | $ | (3  | )
|                                    
|                                    
|                                    
|                                    
|Other liabilities                    |  |                     |  |                 |  |   | (12 | )
|                                     |  |                     |   |                 |  |   |     |  
|Total charged to/from other accounts |  | $                   |  |                 |  | $ | (15 | )
|                                     |  |                     |   |                 |  |   |     |  
|1998                                 |  |                     |   |                 |  |   |     |  
|                                    
|                                    
|                                    
|                                    
|Notes receivable                     |  | $                   |  |                 |  | $ | (20 | )
|                                    
|                                    
|                                    
|                                    
|Investments                          |  |                     |  |                 |  |   | (27 | )
|                                    
|                                    
|                                    
|                                    
|Other assets                         |  |                     |  |                 |  |   | (15 | )
|                                    
|                                    
|                                    
|                                    
|Other long-term liabilities          |  |                     |  |                 |  |   | (17 | )
|                                    
|                                    
|                                    
|                                    
|Acquired assets                      |  |                     | 7 |                 |  |   |    |  
|                                     |  |                     |   |                 |  |   |     |  
|Total charged to/from other accounts |  | $                   | 7 |                 |  | $ | (79 | )
|                                     |  |                     |   |                 |  |   |     |  
|1997                                 |  |                     |   |                 |  |   |     |  
|                                    
|                                    
|                                    
|                                    
|Plant, property and equipment        |  | $                   |  |                 |  | $ | (7  | )
|                                    
|                                    
|                                    
|                                    
|Other assets                         |  |                     |  |                 |  |   | (32 | )
|                                     |  |                     |   |                 |  |   |     |  
|Total charged to/from other accounts |  | $                   |  |                 |  | $ | (39 | )
|                                     |  |                     |   |                 |  |   |     |  



|    |                                         
|--- | ----------------------------------------
|(b) | Restructuring and other special charges:

|                                           |  |   |     |  |  |  |  | 
|------------------------------------------ |  | - | --- |  |  |  |  | 
|                                          
|                                          
|                                          
|                                          
|Provision charged to costs and expenses    |  | $ | 640 |  |  |  |  | 
|                                          
|                                          
|                                          
|                                          
|Provision charged to miscellaneous expense |  |   | 152 |  |  |  |  | 
|                                           |  |   |     |  |  |  |  | 
|                                           |  | $ | 792 |  |  |  |  | 
|                                           |  |   |     |  |  |  |  | 



|    |                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------
|(c) | Includes reversals of prior years
	restructuring and other special charges reserves of $90 million.

S-1



---



SCHEDULE III

STARWOOD HOTELS & RESORTS

REAL ESTATE AND ACCUMULATED DEPRECIATION


December 31, 1999


(In millions)


|                                        |  |      |              |       |  |                 |    |                  |  |                 |      |              |  |              |      |              |  |   |   |  |  |   |      |      |  |   |      |  |  |   |      |  
|--------------------------------------- |  | ---- | ------------ | ----- |  | --------------- | -- | ---------------- |  | --------------- | ---- | ------------ |  | ------------ | ---- | ------------ |  | - | - |  |  | - | ---- | ---- |  | - | ---- |  |  | - | ---- | -
|                                        |  |      |              |       |  |                 |    |                  |  |                 |      |              |  |             
|                                        |  |      |              |       |  |                 |    |                  |  |                 |      |              |  | Gross Amount
|                                        |  |      |              |       |  |                 |    |                  |  |                 |      |              |  | Book Value  
|                                        |  |      |              |       |  |                 |    |                  |  | at December 31,
|                                        |  |      |              |       |  | Initial         |    | Costs Subsequent |  | 1999           
|                                        |  |      |              |       |  | Cost to Company |    | to Acquisition   |  |                
|                                        |  |      |              |       |  |                 |    |                  |  |                 |      | (a)(b)      
|                                        |  |      |              |       |  |                 |    | Building and     |  |                 |      | Building and |  | (a)          |      | Building and
|Description                             |  | City |              | State |  | Land            |    | Improvements     |  | Land            |      | Improvements |  | Land         |      | Improvements
|                                        |  |      |              |       |  |                 |    |                  |  |                 |      |              |  |              |      |             
|Hotel Assets:                           |  |      |              |       |  |                 |    |                  |  |                 |      |              |  |              |      |              |  |   |   |  |  |   |      |      |  |   |      |  |  |   |      |  
|                                       
|                                       
|                                       
|                                       
|Tremont Hotel                           |  |      | Chicago      |       |  |                 | IL |                  |  | $               | 3.2  |              |  | $            | 17.2 |              |  | $ |  |  |  | $ | 1.1  |      |  | $ | 3.2  |  |  | $ | 18.3 |  
|                                       
|                                       
|                                       
|                                       
|Plaza Hotel & Conference Center         |  |      | Tucson       |       |  |                 | AZ |                  |  |                 |     |              |  |              | 5.0  |              |  |   |  |  |  |   | (1.1 | )(c) |  |   |     |  |  |   | 3.9  |  
|                                       
|                                       
|                                       
|                                       
|Best Western Airport Inn                |  |      | Albuquerque  |       |  |                 | NM |                  |  |                 |     |              |  |              | 10.3 |              |  |   |  |  |  |   | (8.2 | )(c) |  |   |     |  |  |   | 2.1  |  
|                                       
|                                       
|                                       
|                                       
|Four Points Hotel Portland Downtown     |  |      | Portland     |       |  |                 | OR |                  |  |                 | 1.8  |              |  |              | 21.7 |              |  |   |  |  |  |   | 0.2  |      |  |   | 1.8  |  |  |   | 21.9 |  
|                                       
|                                       
|                                       
|                                       
|Days Inn City Center                    |  |      | Portland     |       |  |                 | OR |                  |  |                 | 2.2  |              |  |              | 18.0 |              |  |   |  |  |  |   | 0.6  |      |  |   | 2.2  |  |  |   | 18.6 |  
|                                       
|                                       
|                                       
|                                       
|Days Inn Town Center                    |  |      | Seattle      |       |  |                 | WA |                  |  |                 |     |              |  |              | 1.7  |              |  |   |  |  |  |   | 0.3  |      |  |   |     |  |  |   | 2.0  |  
|                                       
|                                       
|                                       
|                                       
|Sixth Avenue Inn                        |  |      | Seattle      |       |  |                 | WA |                  |  |                 |     |              |  |              | 2.7  |              |  |   |  |  |  |   | 1.8  |      |  |   |     |  |  |   | 4.5  |  
|                                       
|                                       
|                                       
|                                       
|Edmond Meany Hotel                      |  |      | Seattle      |       |  |                 | WA |                  |  |                 | 2.0  |              |  |              | 16.4 |              |  |   |  |  |  |   | (6.2 | )(c) |  |   | 2.0  |  |  |   | 10.2 |  
|                                       
|                                       
|                                       
|                                       
|San Diego Marriott Suites               |  |      | San Diego    |       |  |                 | CA |                  |  |                 | 2.2  |              |  |              | 42.5 |              |  |   |  |  |  |   | 0.4  |      |  |   | 2.2  |  |  |   | 42.9 |  
|                                       
|                                       
|                                       
|                                       
|Raphael Hotel                           |  |      | Chicago      |       |  |                 | IL |                  |  |                 | 3.0  |              |  |              | 18.2 |              |  |   |  |  |  |   | 0.7  |      |  |   | 3.0  |  |  |   | 18.9 |  
|                                       
|                                       
|                                       
|                                       
|The Westin Southfield  Detroit         |  |      | Southfield   |       |  |                 | MI |                  |  |                 | 1.7  |              |  |              | 52.0 |              |  |   |  |  |  |   | 0.4  |      |  |   | 1.7  |  |  |   | 52.4 |  
|                                       
|                                       
|                                       
|                                       
|Sheraton Indianapolis North Hotel       |  |      | Indianapolis |       |  |                 | IN |                  |  |                 | 7.2  |              |  |              | 43.7 |              |  |   |  |  |  |   | 2.3  |      |  |   | 7.2  |  |  |   | 46.0 |  
|                                       
|                                       
|                                       
|                                       
|Sheraton Gainesville Hotel              |  |      | Gainesville  |       |  |                 | FL |                  |  |                 | 2.5  |              |  |              | 8.1  |              |  |   |  |  |  |   | 2.2  |      |  |   | 2.5  |  |  |   | 10.3 |  
|                                       
|                                       
|                                       
|                                       
|Marriott Forrestal Village Hotel        |  |      | Princeton    |       |  |                 | NJ |                  |  |                 | 3.2  |              |  |              | 31.6 |              |  |   |  |  |  |   | 1.1  |      |  |   | 3.2  |  |  |   | 32.7 |  
|                                       
|                                       
|                                       
|                                       
|W Los Angeles  Westwood                |  |      | Los Angeles  |       |  |                 | CA |                  |  |                 | 5.3  |              |  |              | 22.1 |              |  |   |  |  |  |   | 7.7  |      |  |   | 5.3  |  |  |   | 29.8 |  
|                                       
|                                       
|                                       
|                                       
|Deerfield Beach Hilton                  |  |      | Deerfield    |       |  |                 | FL |                  |  |                 | 1.5  |              |  |              | 17.8 |              |  |   |  |  |  |   | (3.7 | )(c) |  |   | 1.5  |  |  |   | 14.1 |  
|                                       
|                                       
|                                       
|                                       
|Sheraton Denver Tech Center Hotel       |  |      | Englewood    |       |  |                 | CO |                  |  |                 | 2.3  |              |  |              | 26.6 |              |  |   |  |  |  |   | 0.3  |      |  |   | 2.3  |  |  |   | 26.9 |  
|                                       
|                                       
|                                       
|                                       
|Days Inn Lake Shore Drive               |  |      | Chicago      |       |  |                 | IL |                  |  |                 | 11.3 |              |  |              | 41.6 |              |  |   |  |  |  |   | 0.2  |      |  |   | 11.3 |  |  |   | 41.8 |  
|                                       
|                                       
|                                       
|                                       
|Sheraton Milwaukee Brookfield Hotel     |  |      | Brookfield   |       |  |                 | WI |                  |  |                 | 2.7  |              |  |              | 27.8 |              |  |   |  |  |  |   | 4.2  |      |  |   | 2.7  |  |  |   | 32.0 |  
|                                       
|                                       
|                                       
|                                       
|W New York  the tuscany                |  |      | New York     |       |  |                 | NY |                  |  |                 | 1.7  |              |  |              | 11.8 |              |  |   |  |  |  |   | 7.4  |      |  |   | 1.7  |  |  |   | 19.2 |  
|                                       
|                                       
|                                       
|                                       
|W New York  the court                  |  |      | New York     |       |  |                 | NY |                  |  |                 | 6.1  |              |  |              | 21.0 |              |  |   |  |  |  |   | 12.5 |      |  |   | 6.1  |  |  |   | 33.5 |  
|                                       
|                                       
|                                       
|                                       
|The Residence Inn  Tysons             |  |      | Vienna       |       |  |                 | VA |                  |  |                 | 1.2  |              |  |              | 17.1 |              |  |   |  |  |  |   | 0.6  |      |  |   | 1.2  |  |  |   | 17.7 |  
|                                       
|                                       
|                                       
|                                       
|Hermitage Hotel                         |  |      | Nashville    |       |  |                 | TN |                  |  |                 | 2.4  |              |  |              | 15.5 |              |  |   |  |  |  |   | 1.4  |      |  |   | 2.4  |  |  |   | 16.9 |  
|                                       
|                                       
|                                       
|                                       
|W New Orleans                           |  |      | New Orleans  |       |  |                 | LA |                  |  |                 | 1.7  |              |  |              | 18.0 |              |  |   |  |  |  |   | 0.5  |      |  |   | 1.7  |  |  |   | 18.5 |  
|                                       
|                                       
|                                       
|                                       
|Capitol Hill Suites                     |  |      | Washington   |       |  |                 | DC |                  |  |                 | 2.0  |              |  |              | 15.4 |              |  |   |  |  |  |   | 0.2  |      |  |   | 2.0  |  |  |   | 15.6 |  
|                                       
|                                       
|                                       
|                                       
|Four Points Hotel Albany                |  |      | Albany       |       |  |                 | GA |                  |  |                 | 2.0  |              |  |              | 5.1  |              |  |   |  |  |  |   | (3.0 | )(c) |  |   | 2.0  |  |  |   | 2.1  |  
|                                       
|                                       
|                                       
|                                       
|Four Points Hotel Rancho Bernardo       |  |      | San Diego    |       |  |                 | CA |                  |  |                 | 2.7  |              |  |              | 20.4 |              |  |   |  |  |  |   | 0.3  |      |  |   | 2.7  |  |  |   | 20.7 |  
|                                       
|                                       
|                                       
|                                       
|Four Points Hotel Wichita               |  |      | Wichita      |       |  |                 | KS |                  |  |                 | 3.4  |              |  |              | 6.4  |              |  |   |  |  |  |   | (6.7 | )(c) |  |   | 3.4  |  |  |   | (0.3 | )
|                                       
|                                       
|                                       
|                                       
|Sheraton Chapel Hill Hotel              |  |      | Chapel Hill  |       |  |                 | NC |                  |  |                 | 2.2  |              |  |              | 15.4 |              |  |   |  |  |  |   | 1.3  |      |  |   | 2.2  |  |  |   | 16.7 |  
|                                       
|                                       
|                                       
|                                       
|Sheraton Colony Square Hotel            |  |      | Atlanta      |       |  |                 | GA |                  |  |                 | 3.4  |              |  |              | 64.3 |              |  |   |  |  |  |   | 0.5  |      |  |   | 3.4  |  |  |   | 64.8 |  
|                                       
|                                       
|                                       
|                                       
|W New York                              |  |      | New York     |       |  |                 | NY |                  |  |                 | 8.5  |              |  |              |     |              |  |   |  |  |  |   |     |      |  |   | 8.5  |  |  |   |     |  
|                                       
|                                       
|                                       
|                                       
|Sheraton Buckhead Hotel Atlanta         |  |      | Atlanta      |       |  |                 | GA |                  |  |                 | 4.7  |              |  |              | 34.6 |              |  |   |  |  |  |   | 3.0  |      |  |   | 4.7  |  |  |   | 37.6 |  
|                                       
|                                       
|                                       
|                                       
|Atlanta Lenox Inn                       |  |      | Atlanta      |       |  |                 | GA |                  |  |                 | 2.3  |              |  |              | 15.4 |              |  |   |  |  |  |   | (5.8 | )(c) |  |   | 2.3  |  |  |   | 9.6  |  
|                                       
|                                       
|                                       
|                                       
|Sheraton College Park Hotel             |  |      | Beltsville   |       |  |                 | MD |                  |  |                 | 2.7  |              |  |              | 17.5 |              |  |   |  |  |  |   | 0.3  |      |  |   | 2.7  |  |  |   | 17.8 |  
|                                       
|                                       
|                                       
|                                       
|The Westin Grande                       |  |      | Washington   |       |  |                 | DC |                  |  |                 | 8.5  |              |  |              | 38.5 |              |  |   |  |  |  |   | 0.2  |      |  |   | 8.5  |  |  |   | 38.7 |  
|                                       
|                                       
|                                       
|                                       
|The Westin Suites, Philadelphia Airport |  |      | Philadelphia |       |  |                 | PA |                  |  |                 | 2.9  |              |  |              | 29.9 |              |  |   |  |  |  |   | 0.4  |      |  |   | 2.9  |  |  |   | 30.3 |  
|                                       
|                                       
|                                       
|                                       
|Sheraton Philadelphia Airport Hotel     |  |      | Philadelphia |       |  |                 | PA |                  |  |                 | 1.9  |              |  |              | 7.1  |              |  |   |  |  |  |   | 1.3  |      |  |   | 1.9  |  |  |   | 8.4  |  
|                                       
|                                       
|                                       
|                                       
|The Midland Hotel                       |  |      | Chicago      |       |  |                 | IL |                  |  |                 | 5.1  |              |  |              | 17.6 |              |  |   |  |  |  |   | 22.8 |      |  |   | 5.1  |  |  |   | 40.4 |  
|                                       
|                                       
|                                       
|                                       
|Sheraton Suites Tampa Airport           |  |      | Tampa        |       |  |                 | FL |                  |  |                 | 2.3  |              |  |              | 30.5 |              |  |   |  |  |  |   | (7.3 | )(c) |  |   | 2.3  |  |  |   | 23.2 |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                        |  |                |     |              |  |          |      |      |  |  |       |  |  |  |    | 
|--------------------------------------- |  | -------------- | --- | ------------ |  | -------- | ---- | ---- |  |  | ----- |  |  |  | -- | 
|                                        |  | Accumulated    |     |              |  |          |      |     
|                                        |  | Depreciation & |     | Year of      |  | Date     |      |     
|Description                             |  | Amortization   |     | Construction |  | Acquired |      | Life
|                                        |  |                |     |              |  |          |      |     
|Hotel Assets:                           |  |                |     |              |  |          |      |      |  |  |       |  |  |  |    | 
|                                       
|                                       
|                                       
|                                       
|Tremont Hotel                           |  | $              | 0.8 |              |  |          | 1974 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Plaza Hotel & Conference Center         |  |                | 0.5 |              |  |          | 1971 |      |  |  | 02/98 |  |  |  | 21 | 
|                                       
|                                       
|                                       
|                                       
|Best Western Airport Inn                |  |                | 0.6 |              |  |          | 1980 |      |  |  | 02/98 |  |  |  | 30 | 
|                                       
|                                       
|                                       
|                                       
|Four Points Hotel Portland Downtown     |  |                | 1.0 |              |  |          | 1964 |      |  |  | 09/86 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Days Inn City Center                    |  |                | 0.8 |              |  |          | 1957 |      |  |  | 09/86 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Days Inn Town Center                    |  |                | 2.0 |              |  |          | 1957 |      |  |  | 09/86 |  |  |  | 10 | 
|                                       
|                                       
|                                       
|                                       
|Sixth Avenue Inn                        |  |                | 4.5 |              |  |          | 1959 |      |  |  | 09/86 |  |  |  | 12 | 
|                                       
|                                       
|                                       
|                                       
|Edmond Meany Hotel                      |  |                | 0.8 |              |  |          | 1932 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|San Diego Marriott Suites               |  |                | 2.0 |              |  |          | 1989 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Raphael Hotel                           |  |                | 0.9 |              |  |          | 1929 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|The Westin Southfield  Detroit         |  |                | 2.4 |              |  |          | 1987 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Sheraton Indianapolis North Hotel       |  |                | 2.1 |              |  |          | 1983 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Sheraton Gainesville Hotel              |  |                | 0.4 |              |  |          | 1974 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Marriott Forrestal Village Hotel        |  |                | 1.6 |              |  |          | 1987 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|W Los Angeles  Westwood                |  |                | 1.2 |              |  |          | 1969 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Deerfield Beach Hilton                  |  |                | 0.8 |              |  |          | 1985 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Sheraton Denver Tech Center Hotel       |  |                | 1.2 |              |  |          | 1986 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Days Inn Lake Shore Drive               |  |                | 1.9 |              |  |          | 1965 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Sheraton Milwaukee Brookfield Hotel     |  |                | 0.9 |              |  |          | 1972 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|W New York  the tuscany                |  |                | 0.8 |              |  |          | 1935 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|W New York  the court                  |  |                | 1.2 |              |  |          | 1927 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|The Residence Inn  Tysons             |  |                | 0.8 |              |  |          | 1984 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Hermitage Hotel                         |  |                | 0.8 |              |  |          | 1910 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|W New Orleans                           |  |                | 0.8 |              |  |          | 1973 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Capitol Hill Suites                     |  |                | 0.7 |              |  |          | 1955 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Four Points Hotel Albany                |  |                | 0.2 |              |  |          | 1989 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Four Points Hotel Rancho Bernardo       |  |                | 0.9 |              |  |          | 1988 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Four Points Hotel Wichita               |  |                | 0.3 |              |  |          | 1974 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Sheraton Chapel Hill Hotel              |  |                | 0.8 |              |  |          | 1981 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Sheraton Colony Square Hotel            |  |                | 3.0 |              |  |          | 1973 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|W New York                              |  |                |    |              |  |          | 1927 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Sheraton Buckhead Hotel Atlanta         |  |                | 1.7 |              |  |          | 1975 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Atlanta Lenox Inn                       |  |                | 0.7 |              |  |          | 1965 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Sheraton College Park Hotel             |  |                | 0.8 |              |  |          | 1987 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|The Westin Grande                       |  |                | 1.8 |              |  |          | 1984 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|The Westin Suites, Philadelphia Airport |  |                | 1.4 |              |  |          | 1985 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Sheraton Philadelphia Airport Hotel     |  |                | 0.4 |              |  |          | 1984 |      |  |  | 02/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|The Midland Hotel                       |  |                | 1.1 |              |  |          | 1934 |      |  |  | 12/98 |  |  |  | 40 | 
|                                       
|                                       
|                                       
|                                       
|Sheraton Suites Tampa Airport           |  |                | 1.4 |              |  |          | 1987 |      |  |  | 02/98 |  |  |  | 40 | 

S-2



---



SCHEDULE III  (Continued)

STARWOOD HOTELS & RESORTS

REAL ESTATE AND ACCUMULATED DEPRECIATION


December 31, 1999


(In millions)


|                                                 |  |      |                   |       |  |                 |    |                  |  |                 |     |              |  |              |      |              |  |  |   |  |  |  |       |      |  |  |     |  |  |  |      | 
|------------------------------------------------ |  | ---- | ----------------- | ----- |  | --------------- | -- | ---------------- |  | --------------- | --- | ------------ |  | ------------ | ---- | ------------ |  |  | - |  |  |  | ----- | ---- |  |  | --- |  |  |  | ---- | 
|                                                 |  |      |                   |       |  |                 |    |                  |  |                 |     |              |  |             
|                                                 |  |      |                   |       |  |                 |    |                  |  |                 |     |              |  | Gross Amount
|                                                 |  |      |                   |       |  |                 |    |                  |  |                 |     |              |  | Book Value  
|                                                 |  |      |                   |       |  |                 |    |                  |  | at December 31,
|                                                 |  |      |                   |       |  | Initial         |    | Costs Subsequent |  | 1999           
|                                                 |  |      |                   |       |  | Cost to Company |    | to Acquisition   |  |                
|                                                 |  |      |                   |       |  |                 |    |                  |  |                 |     | (a)(b)      
|                                                 |  |      |                   |       |  |                 |    | Building and     |  |                 |     | Building and |  | (a)          |      | Building and
|Description                                      |  | City |                   | State |  | Land            |    | Improvements     |  | Land            |     | Improvements |  | Land         |      | Improvements
|                                                 |  |      |                   |       |  |                 |    |                  |  |                 |     |              |  |              |      |             
|Clarion Hotel                                    |  |      | Millbrae          |       |  |                 | CA |                  |  |                 | 7.2 |              |  |              | 46.6 |              |  |  |  |  |  |  | 1.9   |      |  |  | 7.2 |  |  |  | 48.5 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Tucson Hotel & Suites                   |  |      | Tucson            |       |  |                 | AZ |                  |  |                 | 1.8 |              |  |              | 14.3 |              |  |  |  |  |  |  | 0.3   |      |  |  | 1.8 |  |  |  | 14.6 | 
|                                                
|                                                
|                                                
|                                                
|W Atlanta                                        |  |      | Atlanta           |       |  |                 | GA |                  |  |                 | 3.8 |              |  |              | 11.4 |              |  |  |  |  |  |  | 5.9   |      |  |  | 3.8 |  |  |  | 17.3 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Minneapolis Metrodome Hotel             |  |      | Minneapolis       |       |  |                 | MN |                  |  |                 | 1.8 |              |  |              | 26.7 |              |  |  |  |  |  |  | (17.6 | )(c) |  |  | 1.8 |  |  |  | 9.1  | 
|                                                
|                                                
|                                                
|                                                
|The Westin Atlanta North at Perimeter            |  |      | Atlanta           |       |  |                 | GA |                  |  |                 | 5.4 |              |  |              | 45.4 |              |  |  |  |  |  |  | 2.0   |      |  |  | 5.4 |  |  |  | 47.4 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Los Angeles Airport                   |  |      | Los Angeles       |       |  |                 | CA |                  |  |                 | 8.8 |              |  |              | 40.4 |              |  |  |  |  |  |  | 0.6   |      |  |  | 8.8 |  |  |  | 41.0 | 
|                                                
|                                                
|                                                
|                                                
|Doubletree Hotel Minneapolis Airport at the Mall |  |      | Bloomington       |       |  |                 | MN |                  |  |                 | 2.9 |              |  |              | 47.6 |              |  |  |  |  |  |  | 0.4   |      |  |  | 2.9 |  |  |  | 48.0 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Horton Plaza                          |  |      | San Diego         |       |  |                 | CA |                  |  |                 | 6.5 |              |  |              | 88.4 |              |  |  |  |  |  |  | 1.2   |      |  |  | 6.5 |  |  |  | 89.6 | 
|                                                
|                                                
|                                                
|                                                
|The St. Regis Philadelphia                       |  |      | Philadelphia      |       |  |                 | PA |                  |  |                 | 5.2 |              |  |              | 56.5 |              |  |  |  |  |  |  | 1.0   |      |  |  | 5.2 |  |  |  | 57.5 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Ft. Lauderdale Airport Hotel            |  |      | Dania             |       |  |                 | FL |                  |  |                 | 2.9 |              |  |              | 27.1 |              |  |  |  |  |  |  | 1.2   |      |  |  | 2.9 |  |  |  | 28.3 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Waltham  Boston                      |  |      | Waltham           |       |  |                 | MA |                  |  |                 | 5.0 |              |  |              | 63.9 |              |  |  |  |  |  |  | 0.4   |      |  |  | 5.0 |  |  |  | 64.3 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Needham Hotel                           |  |      | Needham           |       |  |                 | MA |                  |  |                 | 3.0 |              |  |              | 40.6 |              |  |  |  |  |  |  | 1.2   |      |  |  | 3.0 |  |  |  | 41.8 | 
|                                                
|                                                
|                                                
|                                                
|Allentown Hilton                                 |  |      | Allentown         |       |  |                 | PA |                  |  |                 | 1.2 |              |  |              | 17.3 |              |  |  |  |  |  |  | (7.6  | )(c) |  |  | 1.2 |  |  |  | 9.7  | 
|                                                
|                                                
|                                                
|                                                
|Arlington Park Hilton                            |  |      | Arlington Heights |       |  |                 | IL |                  |  |                 | 5.5 |              |  |              | 42.3 |              |  |  |  |  |  |  | 2.0   |      |  |  | 5.5 |  |  |  | 44.3 | 
|                                                
|                                                
|                                                
|                                                
|BWI Airport Marriott                             |  |      | Baltimore         |       |  |                 | MD |                  |  |                 | 3.6 |              |  |              | 51.6 |              |  |  |  |  |  |  | 0.3   |      |  |  | 3.6 |  |  |  | 51.9 | 
|                                                
|                                                
|                                                
|                                                
|Hilton Charleston North                          |  |      | Charleston        |       |  |                 | SC |                  |  |                 | 2.6 |              |  |              | 24.1 |              |  |  |  |  |  |  | (4.4  | )(c) |  |  | 2.6 |  |  |  | 19.7 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Edison Hotel Raritan Center             |  |      | Edison            |       |  |                 | NJ |                  |  |                 | 1.7 |              |  |              | 20.2 |              |  |  |  |  |  |  | 0.6   |      |  |  | 1.7 |  |  |  | 20.8 | 
|                                                
|                                                
|                                                
|                                                
|Courtyard by Marriott Crystal City               |  |      | Arlington         |       |  |                 | VA |                  |  |                 | 3.7 |              |  |              | 31.0 |              |  |  |  |  |  |  | 0.2   |      |  |  | 3.7 |  |  |  | 31.2 | 
|                                                
|                                                
|                                                
|                                                
|Novi Hilton                                      |  |      | Novi              |       |  |                 | MI |                  |  |                 | 1.8 |              |  |              | 36.7 |              |  |  |  |  |  |  | (8.4  | )(c) |  |  | 1.8 |  |  |  | 28.3 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Norfolk Waterside Hotel                 |  |      | Norfolk           |       |  |                 | VA |                  |  |                 | 5.2 |              |  |              | 44.9 |              |  |  |  |  |  |  | 1.3   |      |  |  | 5.2 |  |  |  | 46.2 | 
|                                                
|                                                
|                                                
|                                                
|Park Ridge at Valley Forge                       |  |      | King of Prussia   |       |  |                 | PA |                  |  |                 | 3.1 |              |  |              | 39.4 |              |  |  |  |  |  |  | 0.5   |      |  |  | 3.1 |  |  |  | 39.9 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Long Beach                            |  |      | Long Beach        |       |  |                 | CA |                  |  |                 | 4.3 |              |  |              | 48.0 |              |  |  |  |  |  |  | 0.3   |      |  |  | 4.3 |  |  |  | 48.3 | 
|                                                
|                                                
|                                                
|                                                
|Sonoma County Hilton                             |  |      | Santa Rosa        |       |  |                 | CA |                  |  |                 | 1.8 |              |  |              | 15.4 |              |  |  |  |  |  |  | 1.6   |      |  |  | 1.8 |  |  |  | 17.0 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Stamford                              |  |      | Stamford          |       |  |                 | CT |                  |  |                 | 6.2 |              |  |              | 27.2 |              |  |  |  |  |  |  | 12.6  |      |  |  | 6.2 |  |  |  | 39.8 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Inn Lexington                           |  |      | Lexington         |       |  |                 | MA |                  |  |                 | 1.5 |              |  |              | 17.5 |              |  |  |  |  |  |  | (3.8  | )(c) |  |  | 1.5 |  |  |  | 13.7 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Newton Hotel                            |  |      | Newton            |       |  |                 | MA |                  |  |                 |    |              |  |              | 37.7 |              |  |  |  |  |  |  | 1.6   |      |  |  |    |  |  |  | 39.3 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton South Portland Hotel                    |  |      | South Portland    |       |  |                 | ME |                  |  |                 | 2.9 |              |  |              | 20.6 |              |  |  |  |  |  |  | 0.2   |      |  |  | 2.9 |  |  |  | 20.8 | 
|                                                
|                                                
|                                                
|                                                
|Wayfarer Inn                                     |  |      | Bedford           |       |  |                 | NH |                  |  |                 | 2.5 |              |  |              | 10.1 |              |  |  |  |  |  |  | 0.2   |      |  |  | 2.5 |  |  |  | 10.3 | 
|                                                
|                                                
|                                                
|                                                
|Merrimack Hotel                                  |  |      | Merrimack         |       |  |                 | NH |                  |  |                 | 0.7 |              |  |              | 0.3  |              |  |  |  |  |  |  |      |      |  |  | 0.7 |  |  |  | 0.3  | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Inn Providence Airport                  |  |      | Warwick           |       |  |                 | RI |                  |  |                 | 2.7 |              |  |              | 18.2 |              |  |  |  |  |  |  | 0.2   |      |  |  | 2.7 |  |  |  | 18.4 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Stamford Hotel                          |  |      | Stamford          |       |  |                 | CT |                  |  |                 | 5.8 |              |  |              | 43.4 |              |  |  |  |  |  |  | 3.4   |      |  |  | 5.8 |  |  |  | 46.8 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Braintree Hotel                         |  |      | Braintree         |       |  |                 | MA |                  |  |                 | 4.9 |              |  |              | 59.0 |              |  |  |  |  |  |  | 2.2   |      |  |  | 4.9 |  |  |  | 61.2 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Ferncroft Resort                        |  |      | Danvers           |       |  |                 | MA |                  |  |                 | 4.8 |              |  |              | 55.6 |              |  |  |  |  |  |  | 2.5   |      |  |  | 4.8 |  |  |  | 58.1 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Framingham Hotel                        |  |      | Framingham        |       |  |                 | MA |                  |  |                 | 4.8 |              |  |              | 46.6 |              |  |  |  |  |  |  | 2.7   |      |  |  | 4.8 |  |  |  | 49.3 | 
|                                                
|                                                
|                                                
|                                                
|Four Points Hotel Hyannis Cape Cod               |  |      | Hyannis           |       |  |                 | MA |                  |  |                 | 3.4 |              |  |              | 13.1 |              |  |  |  |  |  |  | (4.8  | )(c) |  |  | 3.4 |  |  |  | 8.3  | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Hyannis Resort                          |  |      | Hyannis           |       |  |                 | MA |                  |  |                 | 2.9 |              |  |              | 23.1 |              |  |  |  |  |  |  | 1.0   |      |  |  | 2.9 |  |  |  | 24.1 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Colonial Hotel & Golf Club              |  |      | Wakefield         |       |  |                 | MA |                  |  |                 | 3.6 |              |  |              | 53.6 |              |  |  |  |  |  |  | 1.6   |      |  |  | 3.6 |  |  |  | 55.2 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Nashua Hotel                            |  |      | Nashua            |       |  |                 | NH |                  |  |                 | 4.4 |              |  |              | 23.3 |              |  |  |  |  |  |  | 2.2   |      |  |  | 4.4 |  |  |  | 25.5 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Parsippany Hotel                        |  |      | Parsippany        |       |  |                 | NJ |                  |  |                 | 5.1 |              |  |              | 89.2 |              |  |  |  |  |  |  | 0.3   |      |  |  | 5.1 |  |  |  | 89.5 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                 |  |                |     |              |  |          |      |      |  |  |       |  |  |  |    | 
|------------------------------------------------ |  | -------------- | --- | ------------ |  | -------- | ---- | ---- |  |  | ----- |  |  |  | -- | 
|                                                 |  | Accumulated    |     |              |  |          |      |     
|                                                 |  | Depreciation & |     | Year of      |  | Date     |      |     
|Description                                      |  | Amortization   |     | Construction |  | Acquired |      | Life
|                                                 |  |                |     |              |  |          |      |     
|Clarion Hotel                                    |  |                | 2.2 |              |  |          | 1962 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Tucson Hotel & Suites                   |  |                | 0.7 |              |  |          | 1986 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|W Atlanta                                        |  |                | 0.9 |              |  |          | 1980 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Minneapolis Metrodome Hotel             |  |                | 1.2 |              |  |          | 1980 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Atlanta North at Perimeter            |  |                | 2.1 |              |  |          | 1986 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Los Angeles Airport                   |  |                | 1.9 |              |  |          | 1986 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Doubletree Hotel Minneapolis Airport at the Mall |  |                | 2.2 |              |  |          | 1975 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Horton Plaza                          |  |                | 4.1 |              |  |          | 1987 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|The St. Regis Philadelphia                       |  |                | 2.6 |              |  |          | 1990 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Ft. Lauderdale Airport Hotel            |  |                | 1.3 |              |  |          | 1985 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Waltham  Boston                      |  |                | 2.9 |              |  |          | 1990 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Needham Hotel                           |  |                | 1.9 |              |  |          | 1986 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Allentown Hilton                                 |  |                | 0.8 |              |  |          | 1981 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Arlington Park Hilton                            |  |                | 2.0 |              |  |          | 1968 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|BWI Airport Marriott                             |  |                | 2.4 |              |  |          | 1988 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Hilton Charleston North                          |  |                | 1.1 |              |  |          | 1983 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Edison Hotel Raritan Center             |  |                | 0.9 |              |  |          | 1987 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Courtyard by Marriott Crystal City               |  |                | 1.4 |              |  |          | 1990 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Novi Hilton                                      |  |                | 1.7 |              |  |          | 1976 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Norfolk Waterside Hotel                 |  |                | 2.1 |              |  |          | 1976 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Park Ridge at Valley Forge                       |  |                | 1.8 |              |  |          | 1973 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Long Beach                            |  |                | 2.2 |              |  |          | 1988 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sonoma County Hilton                             |  |                | 0.8 |              |  |          | 1984 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|The Westin Stamford                              |  |                | 1.9 |              |  |          | 1985 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Inn Lexington                           |  |                | 0.8 |              |  |          | 1958 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Newton Hotel                            |  |                | 5.9 |              |  |          | 1968 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton South Portland Hotel                    |  |                | 1.0 |              |  |          | 1973 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Wayfarer Inn                                     |  |                | 0.5 |              |  |          | 1966 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Merrimack Hotel                                  |  |                |    |              |  |          | 1979 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Inn Providence Airport                  |  |                | 0.8 |              |  |          | 1979 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Stamford Hotel                          |  |                | 2.1 |              |  |          | 1984 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Braintree Hotel                         |  |                | 2.8 |              |  |          | 1971 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Ferncroft Resort                        |  |                | 2.6 |              |  |          | 1978 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Framingham Hotel                        |  |                | 2.2 |              |  |          | 1973 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Four Points Hotel Hyannis Cape Cod               |  |                | 0.6 |              |  |          | 1975 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Hyannis Resort                          |  |                | 1.1 |              |  |          | 1967 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Colonial Hotel & Golf Club              |  |                | 2.5 |              |  |          | 1966 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Nashua Hotel                            |  |                | 1.1 |              |  |          | 1980 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                
|                                                
|                                                
|                                                
|Sheraton Parsippany Hotel                        |  |                | 4.1 |              |  |          | 1987 |      |  |  | 02/98 |  |  |  | 40 | 

S-3



---



SCHEDULE III  (Continued)

STARWOOD HOTELS & RESORTS

REAL ESTATE AND ACCUMULATED DEPRECIATION


December 31, 1999


(In millions)


|                                                |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |              |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   |         | 
|----------------------------------------------- |  | ---- | -------------- | ----- |  | --------------- | -- | ---------------- |  | --------------- | ----- | ------------ |  | ------------ | ------- | ------------ |  | - | - |  |  | - | ----- |  |  | - | ----- |  |  | - | ------- | 
|                                                |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |             
|                                                |  |      |                |       |  |                 |    |                  |  |                 |       |              |  | Gross Amount
|                                                |  |      |                |       |  |                 |    |                  |  |                 |       |              |  | Book Value  
|                                                |  |      |                |       |  |                 |    |                  |  | at December 31,
|                                                |  |      |                |       |  | Initial         |    | Costs Subsequent |  | 1999           
|                                                |  |      |                |       |  | Cost to Company |    | to Acquisition   |  |                
|                                                |  |      |                |       |  |                 |    |                  |  |                 |       | (a)(b)      
|                                                |  |      |                |       |  |                 |    | Building and     |  |                 |       | Building and |  | (a)          |         | Building and
|Description                                     |  | City |                | State |  | Land            |    | Improvements     |  | Land            |       | Improvements |  | Land         |         | Improvements
|                                                |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |              |         |             
|Four Points Hotel New Orleans Convention Center |  |      | New Orleans    |       |  |                 | LA |                  |  |                 | 5.7   |              |  |              | 62.7    |              |  |   |  |  |  |   | 0.2   |  |  |   | 5.7   |  |  |   | 62.9    | 
|                                               
|                                               
|                                               
|                                               
|One Washington Circle Hotel                     |  |      | Washington     |       |  |                 | DC |                  |  |                 | 2.0   |              |  |              | 23.6    |              |  |   |  |  |  |   | 0.1   |  |  |   | 2.0   |  |  |   | 23.7    | 
|                                               
|                                               
|                                               
|                                               
|Sheraton Omaha Hotel                            |  |      | Omaha          |       |  |                 | NE |                  |  |                 | 1.9   |              |  |              | 10.9    |              |  |   |  |  |  |   | 0.4   |  |  |   | 1.9   |  |  |   | 11.3    | 
|                                               
|                                               
|                                               
|                                               
|The Westin Mission Hills Resort                 |  |      | Rancho Mirage  |       |  |                 | CA |                  |  |                 | 6.7   |              |  |              | 105.7   |              |  |   |  |  |  |   | 1.2   |  |  |   | 6.7   |  |  |   | 106.9   | 
|                                               
|                                               
|                                               
|                                               
|The St. Regis Aspen                             |  |      | Aspen          |       |  |                 | CO |                  |  |                 | 20.4  |              |  |              | 139.5   |              |  |   |  |  |  |   | 4.2   |  |  |   | 20.4  |  |  |   | 143.7   | 
|                                               
|                                               
|                                               
|                                               
|The St. Regis Houston                           |  |      | Houston        |       |  |                 | TX |                  |  |                 | 6.1   |              |  |              | 41.5    |              |  |   |  |  |  |   | 5.1   |  |  |   | 6.1   |  |  |   | 46.6    | 
|                                               
|                                               
|                                               
|                                               
|The Westin Fairfax                              |  |      | Washington     |       |  |                 | DC |                  |  |                 | 5.7   |              |  |              | 38.8    |              |  |   |  |  |  |   | 0.5   |  |  |   | 5.7   |  |  |   | 39.3    | 
|                                               
|                                               
|                                               
|                                               
|Four Points Hotel Denver Cherry Creek           |  |      | Denver         |       |  |                 | CO |                  |  |                 | 3.7   |              |  |              | 22.4    |              |  |   |  |  |  |   | 0.3   |  |  |   | 3.7   |  |  |   | 22.7    | 
|                                               
|                                               
|                                               
|                                               
|The Westin South Coast Plaza                    |  |      | Costa Mesa     |       |  |                 | CA |                  |  |                 |      |              |  |              | 28.7    |              |  |   |  |  |  |   | 4.1   |  |  |   |      |  |  |   | 32.8    | 
|                                               
|                                               
|                                               
|                                               
|The Westin Indianapolis                         |  |      | Indianapolis   |       |  |                 | IN |                  |  |                 | 12.9  |              |  |              | 73.3    |              |  |   |  |  |  |   | 0.6   |  |  |   | 12.9  |  |  |   | 73.9    | 
|                                               
|                                               
|                                               
|                                               
|The Westin San Francisco Airport                |  |      | Millbrae       |       |  |                 | CA |                  |  |                 | 11.4  |              |  |              | 69.5    |              |  |   |  |  |  |   | 0.3   |  |  |   | 11.4  |  |  |   | 69.8    | 
|                                               
|                                               
|                                               
|                                               
|The Westin Ft. Lauderdale                       |  |      | Ft. Lauderdale |       |  |                 | FL |                  |  |                 | 3.3   |              |  |              | 20.1    |              |  |   |  |  |  |   | 0.5   |  |  |   | 3.3   |  |  |   | 20.6    | 
|                                               
|                                               
|                                               
|                                               
|The Westin Seattle                              |  |      | Seattle        |       |  |                 | WA |                  |  |                 | 21.6  |              |  |              | 149.2   |              |  |   |  |  |  |   | 4.6   |  |  |   | 21.6  |  |  |   | 153.8   | 
|                                               
|                                               
|                                               
|                                               
|The Westin Cincinnati                           |  |      | Cincinnati     |       |  |                 | OH |                  |  |                 |      |              |  |              | 62.8    |              |  |   |  |  |  |   | 3.1   |  |  |   |      |  |  |   | 65.9    | 
|                                               
|                                               
|                                               
|                                               
|The Westin Tabor Center                         |  |      | Denver         |       |  |                 | CO |                  |  |                 | 9.9   |              |  |              | 66.8    |              |  |   |  |  |  |   | 1.3   |  |  |   | 9.9   |  |  |   | 68.1    | 
|                                               
|                                               
|                                               
|                                               
|The Westin Galleria                             |  |      | Houston        |       |  |                 | TX |                  |  |                 |      |              |  |              | 10.7    |              |  |   |  |  |  |   | 6.1   |  |  |   |      |  |  |   | 16.8    | 
|                                               
|                                               
|                                               
|                                               
|The Westin Oaks                                 |  |      | Houston        |       |  |                 | TX |                  |  |                 |      |              |  |              |        |              |  |   |  |  |  |   | 14.3  |  |  |   |      |  |  |   | 14.3    | 
|                                               
|                                               
|                                               
|                                               
|The St. Regis                                   |  |      | New York       |       |  |                 | NY |                  |  |                 | 65.0  |              |  |              | 149.8   |              |  |   |  |  |  |   | 5.5   |  |  |   | 65.0  |  |  |   | 155.3   | 
|                                               
|                                               
|                                               
|                                               
|Danbury Hilton & Towers                         |  |      | Danbury        |       |  |                 | CT |                  |  |                 | 2.0   |              |  |              | 15.8    |              |  |   |  |  |  |   | 0.1   |  |  |   | 2.0   |  |  |   | 15.9    | 
|                                               
|                                               
|                                               
|                                               
|W Seattle                                       |  |      | Seattle        |       |  |                 | WA |                  |  |                 | 9.6   |              |  |              | 63.3    |              |  |   |  |  |  |   |      |  |  |   | 9.6   |  |  |   | 63.3    | 
|                                               
|                                               
|                                               
|                                               
|W San Francisco                                 |  |      | San Francisco  |       |  |                 | CA |                  |  |                 | 7.1   |              |  |              | 51.8    |              |  |   |  |  |  |   | 9.0   |  |  |   | 7.1   |  |  |   | 60.8    | 
|                                               
|                                               
|                                               
|                                               
|Boston Park Plaza Hotel                         |  |      | Boston         |       |  |                 | MA |                  |  |                 | 12.5  |              |  |              | 124.0   |              |  |   |  |  |  |   | 18.6  |  |  |   | 12.5  |  |  |   | 142.6   | 
|                                                |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |              |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   |         | 
|                                                |  |      |                |       |  |                 |    |                  |  | $               | 472.3 |              |  | $            | 3,575.7 |              |  | $ |  |  |  | $ | 121.3 |  |  | $ | 472.3 |  |  |   | 3,697.0 | 
|                                                |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |              |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   |         | 
|Land                                            |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |              |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   | 472.3   | 
|                                               
|                                               
|                                               
|                                               
|Furniture, fixtures and equipment               |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |              |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   | 385.2   | 
|                                               
|                                               
|                                               
|                                               
|Construction in progress                        |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |              |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   | 44.5    | 
|                                                |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |              |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   |         | 
|                                                |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |              |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  | $ | 4,599.0 | 
|                                                |  |      |                |       |  |                 |    |                  |  |                 |       |              |  |              |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   |         | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                |  |                |       |              |  |          |      |      |  |  |       |  |  |  |    | 
|----------------------------------------------- |  | -------------- | ----- | ------------ |  | -------- | ---- | ---- |  |  | ----- |  |  |  | -- | 
|                                                |  | Accumulated    |       |              |  |          |      |     
|                                                |  | Depreciation & |       | Year of      |  | Date     |      |     
|Description                                     |  | Amortization   |       | Construction |  | Acquired |      | Life
|                                                |  |                |       |              |  |          |      |     
|Four Points Hotel New Orleans Convention Center |  |                | 2.9   |              |  |          | 1984 |      |  |  | 02/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|One Washington Circle Hotel                     |  |                | 1.1   |              |  |          | 1964 |      |  |  | 02/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|Sheraton Omaha Hotel                            |  |                | 0.5   |              |  |          | 1924 |      |  |  | 02/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The Westin Mission Hills Resort                 |  |                | 4.9   |              |  |          | 1987 |      |  |  | 02/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The St. Regis Aspen                             |  |                | 7.2   |              |  |          | 1992 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The St. Regis Houston                           |  |                | 2.2   |              |  |          | 1982 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The Westin Fairfax                              |  |                | 2.2   |              |  |          | 1927 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|Four Points Hotel Denver Cherry Creek           |  |                | 1.2   |              |  |          | 1979 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The Westin South Coast Plaza                    |  |                | 5.1   |              |  |          | 1975 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The Westin Indianapolis                         |  |                | 4.0   |              |  |          | 1989 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The Westin San Francisco Airport                |  |                | 3.8   |              |  |          | 1987 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The Westin Ft. Lauderdale                       |  |                | 1.1   |              |  |          | 1986 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The Westin Seattle                              |  |                | 8.0   |              |  |          | 1969 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The Westin Cincinnati                           |  |                | 3.5   |              |  |          | 1981 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The Westin Tabor Center                         |  |                | 3.6   |              |  |          | 1984 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|The Westin Galleria                             |  |                | 3.5   |              |  |          | 1977 |      |  |  | 01/98 |  |  |  | 9  | 
|                                               
|                                               
|                                               
|                                               
|The Westin Oaks                                 |  |                | 3.0   |              |  |          | 1971 |      |  |  | 01/98 |  |  |  | 9  | 
|                                               
|                                               
|                                               
|                                               
|The St. Regis                                   |  |                | 5.6   |              |  |          | 1904 |      |  |  | 06/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|Danbury Hilton & Towers                         |  |                | 0.7   |              |  |          | 1981 |      |  |  | 05/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|W Seattle                                       |  |                | 0.6   |              |  |          | 1999 |      |  |  | 01/98 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|W San Francisco                                 |  |                | 1.9   |              |  |          | 1999 |      |  |  | 05/99 |  |  |  | 40 | 
|                                               
|                                               
|                                               
|                                               
|Boston Park Plaza Hotel                         |  |                | 12.9  |              |  |          | 1927 |      |  |  | 02/98 |  |  |  | 40 | 
|                                                |  |                |       |              |  |          |      |      |  |  |       |  |  |  |    | 
|                                                |  |                | 196.7 |              |  |          |      |      |  |  |       |  |  |  |    | 
|                                               
|                                               
|                                               
|                                               
|Land                                            |  |                |      |              |  |          |      |      |  |  |       |  |  |  |    | 
|                                               
|                                               
|                                               
|                                               
|Furniture, fixtures and equipment               |  |                | 109.3 |              |  |          |      |      |  |  |       |  |  |  |    | 
|                                               
|                                               
|                                               
|                                               
|Construction in progress                        |  |                |      |              |  |          |      |      |  |  |       |  |  |  |    | 
|                                                |  |                |       |              |  |          |      |      |  |  |       |  |  |  |    | 
|                                                |  | $              | 306.0 |              |  |          |      |      |  |  |       |  |  |  |    | 
|                                                |  |                |       |              |  |          |      |      |  |  |       |  |  |  |    | 




|    |                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | As of December 31, 1999, land, building,
	furniture, fixtures and equipment and construction in progress
	have a cost basis of $445.3 million, $2,658.9 million, $466.8
	million and $44.5 million, respectively, for federal income tax
	purposes.
|   
|(b) | Building and improvements include amounts
	allocated for leasehold interest in land and net assets held for
	sale.                                                                                                                                 
|   
|(c) | In December 1999, the Company recorded an
	impairment write-down on these 14 hotels. See Note 9 in the
	notes to financial statements.                                                                                                             

S-4



---



SCHEDULE III  (Continued)

STARWOOD HOTELS & RESORTS

REAL ESTATE AND ACCUMULATED DEPRECIATION


(In millions)


A reconciliation of the Trusts investment in real estate,
furniture and fixtures and related accumulated depreciation is as
 follows:

|                                       |                      |                   |       |      |  
|-------------------------------------- | -------------------- | ----------------- | ----- | ---- | -
|                                       |                      | Year Ended       
|                                       |                      | December 31, 1999
|                                       |                      |                  
|Real Estate and Furniture and Fixtures |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|Balance at beginning of period         |                      | $                 | 4,575 |     
|                                      
|                                      
|                                      
|                                      
|Additions during period:               |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|                                       | Acquisitions         |                   |       |     |  
|                                      
|                                      
|                                      
|                                      
|                                       | Improvements         |                   |       | 279  |  
|                                      
|                                      
|                                      
|                                      
|Deductions during period:              |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|                                       | Sale of properties   |                   |       | (160 | )
|                                      
|                                      
|                                      
|                                      
|                                       | Other(a)             |                   |       | (95  | )
|                                       |                      |                   |       |     
|Balance at end of period               |                      | $                 | 4,599 |     
|                                       |                      |                   |       |     
|Accumulated Depreciation               |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|Balance at beginning of period         |                      | $                 | (146  | )   
|                                      
|                                      
|                                      
|                                      
|Additions during period:               |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|                                       | Depreciation expense |                   |       | (169 | )
|                                      
|                                      
|                                      
|                                      
|Deductions during period:              |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|                                       | Sale of properties   |                   |       | 9    |  
|                                       |                      |                   |       |     
|Balance at end of period               |                      | $                 | (306  | )   
|                                       |                      |                   |       |     




|    |                                                                               
|--- | ------------------------------------------------------------------------------
|(a) | See Note 9 in the notes to financial
	statements for discussion of write-down.

S-5



---



SCHEDULE IV

STARWOOD HOTELS & RESORTS

MORTGAGE LOANS ON REAL ESTATE


December 31, 1999


(In millions)


|                                             |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                       |  |     |  |   |       |       |  |   |       |       |  |  |  |  | 
|-------------------------------------------- | ----------------------------------------- | -------- |  | -------- | - | ------------- |  | ----------- |  | ------------ |  | ------------ |  | --------------------- |  | --- |  | - | ----- | ----- |  | - | ----- | ----- |  |  |  |  | 
|                                             |                                           |          |  |          |   |               |  |             |  |              |  |              |  | Principal Amount of  
|                                             |                                           |          |  |          |   |               |  |             |  | Original     |  | Carrying     |  | Loans Subject to     
|                                             |                                           | Interest |  | Final    |   | Periodic      |  |             |  | Face Amount  |  | Amount of    |  | Delinquent           
|Description                                  |                                           | Rate     |  | Maturity |   | Payment Terms |  | Prior Liens |  | of Mortgages |  | Mortgages(a) |  | Principal or Interest
|                                             |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                      
|First Mortgages:                             |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                       |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | Ramada Inn  Tucker, GA                   |          |  | 9.00     | % |               |  | 2002        |  |              |  | (b)          |  |                       |  | No  |  |   | $     | 2     |  |   | $     | 2     |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|Second Mortgages:                            |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                       |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | Westin Portland  Portland, OR            |          |  | 11.50    | % |               |  | 2003        |  |              |  | (c)          |  |                       |  | Yes |  |   |       | 2     |  |   |       | 2     |  |  |  |  | 
|                                             |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                       |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                                             |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                       |  |     |  | $ | 4     |       |  | $ | 4     |       |  |  |  | 
|                                             |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                       |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|Intercompany Mortgage Loans First Mortgages: |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                       |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | W New York  New York, NY                 |          |  | 9.50     | % |               |  | 2006        |  |              |  | (d)          |  |                       |  | No  |  |   | $     | 40    |  |   | $     | 40    |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | Westin Maui  Maui, HI                    |          |  | 10.00    | % |               |  | 2000        |  |              |  | (e)          |  |                       |  | No  |  |   |       | 105   |  |   |       | 110   |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | Westin Regina  Cancun, Mexico            |          |  | 9.00     | % |               |  | 2005        |  |              |  | (f)          |  |                       |  | No  |  |   |       | 41    |  |   |       | 41    |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | Westin Regina  Los Cabos, Mexico         |          |  | 9.00     | % |               |  | 2005        |  |              |  | (f)          |  |                       |  | No  |  |   |       | 53    |  |   |       | 44    |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | Westin Regina  Puerto Vallarta, Mexico   |          |  | 9.00     | % |               |  | 2005        |  |              |  | (f)          |  |                       |  | No  |  |   |       | 25    |  |   |       | 22    |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | Westin Hotel  Turnberry, Scotland        |          |  | 10.00    | % |               |  | 2000        |  |              |  | (g)          |  |                       |  | No  |  |   |       | 27    |  |   |       | 15    |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | ITT Corporation Mortgage Note             |          |  | 8.50     | % |               |  | 2005        |  |              |  | (h)          |  |                       |  | No  |  |   |       | 2,699 |  |   |       | 1,499 |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | Starwood Hotels & Resorts Worldwide, Inc. |          |  | 8.50     | % |               |  | 2005        |  |              |  | (i)          |  |                       |  | No  |  |   |       | 150   |  |   |       | 150   |  |  |  |  | 
|                                             |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                       |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                                             |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                       |  |     |  | $ | 3,140 |       |  | $ | 1,921 |       |  |  |  | 
|                                             |                                           |          |  |          |   |               |  |             |  |              |  |              |  |                       |  |     |  |   |       |       |  |   |       |       |  |  |  | 




|    |                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | As of December 31, 1999, the aggregate cost
	(before allowance for loan losses) for federal income tax
	purposes is not significantly different from that used for book
	purposes.                                                                                                          
|(b) | Payment of principal and interest due monthly and
	based upon an 18-year amortization schedule with interest rate of
	 9% per annum. Principal and all accrued and unpaid interest are
	due June 1, 2002.                                                                                   
|(c) | Interest only payable monthly; interest calculated
	 based upon 11.5% interest rate, $1.8 million principal balance
	and actual/ 365-day basis. Principal and all accrued and unpaid
	interest are due June 4, 2003.                                                                        
|(d) | Interest only payable monthly; principal and all
	accrued and unpaid interest due October 1, 2006.                                                                                                                                                                                          
|(e) | Interest only payable monthly; interest based on
	current principal balance and 10% interest rate. Principal
	balance comprised of initial advance of $105 million with
	additional advances up to $121 million available. Principal and
	all accrued and unpaid interest are due on demand.
|(f) | Interest only payable monthly; principal and all
	accrued and unpaid interest are due December 2005.                                                                                                                                                                                        
|(g) | Interest only payable monthly; principal and all
	accrued and unpaid interest are due December 2000.                                                                                                                                                                                        
|(h) | Interest only payable monthly; principal and all
	accrued and unpaid interest are due February 2005.                                                                                                                                                                                        
|(i) | Interest only payable monthly; principal and all
	accrued and unpaid interest are due February 2005.                                                                                                                                                                                        

S-6



---



SCHEDULE IV  (Continued)

STARWOOD HOTELS & RESORTS

RECONCILIATION OF MORTGAGE LOANS


(In millions)


|                               |                                  |                         |     |      |   |      |     |     |   |   |    |     |  
|------------------------------ | -------------------------------- | ----------------------- | --- | ---- | - | ---- | --- | --- | - | - | -- | --- | -
|                               |                                  |                        
|                               |                                  | Year Ended December 31,
|                               |                                  |                        
|                               |                                  | 1999                    |     | 1998 |   | 1997
|                               |                                  |                         |     |      |   |     
|Balance at beginning of period |                                  | $                       | 164 |      |   | $    | 51  |     |   | $ | 91 |    
|                              
|                              
|                              
|                              
|Additions:                     |                                  |                         |     |      |   |      |     |     |   |   |    |    
|                              
|                              
|                              
|                              
|                               | New mortgage loans               |                         |     |     |   |      |     | 107 |   |   |    |    |  
|                              
|                              
|                              
|                              
|                               | Purchase accounting revaluation  |                         |     |     |   |      |     | 12  |   |   |    | 5   |  
|                              
|                              
|                              
|                              
|Deductions:                    |                                  |                         |     |      |   |      |     |     |   |   |    |    
|                              
|                              
|                              
|                              
|                               | Principal repayments             |                         |     | (55  | ) |      |     | (6  | ) |   |    | (45 | )
|                              
|                              
|                              
|                              
|                               | Reclassification to Intercompany |                         |     | (105 | ) |      |     |    |   |   |    |    |  
|                               |                                  |                         |     |      |   |      |     |     |   |   |    |    
|Balance at end of period       |                                  | $                       | 4   |      |   | $    | 164 |     |   | $ | 51 |    
|                               |                                  |                         |     |      |   |      |     |     |   |   |    |    

INTERCOMPANY MORTGAGE ROLLFORWARD

December 31, 1999


(In millions)


|                                          |  |           |       |           |  |          |     |           |  |         |    |  |  |   |        |   |  |   |       | 
|----------------------------------------- |  | --------- | ----- | --------- |  | -------- | --- | --------- |  | ------- | -- |  |  | - | ------ | - |  | - | ----- | 
|                                          |  | Beginning |       |           |  | Accrued  |     | Principal |  | Ending 
|Description                               |  | Balance   |       | Additions |  | Interest |     | Payments  |  | Balance
|                                          |  |           |       |           |  |          |     |           |  |        
|W New York  New York, NY                 |  | $         | 40    |           |  | $        |    |           |  | $       |   |  |  | $ |       |   |  | $ | 40    | 
|                                         
|                                         
|                                         
|                                         
|Westin Maui  Maui, HI(a)                 |  |           |      |           |  |          | 105 |           |  |         | 5  |  |  |   |       |   |  |   | 110   | 
|                                         
|                                         
|                                         
|                                         
|Westin Regina  Cancun, Mexico(a)         |  |           | 39    |           |  |          |    |           |  |         | 2  |  |  |   |       |   |  |   | 41    | 
|                                         
|                                         
|                                         
|                                         
|Westin Regina  Los Cabos, Mexico(a)      |  |           | 44    |           |  |          |    |           |  |         | 1  |  |  |   | (1     | ) |  |   | 44    | 
|                                         
|                                         
|                                         
|                                         
|Westin Regina  Puerto Vallarta, Mexico   |  |           | 23    |           |  |          |    |           |  |         |   |  |  |   | (1     | ) |  |   | 22    | 
|                                         
|                                         
|                                         
|                                         
|Westin Hotel  Turnberry, Scotland(a)     |  |           | 30    |           |  |          |    |           |  |         | 2  |  |  |   | (17    | ) |  |   | 15    | 
|                                         
|                                         
|                                         
|                                         
|ITT Corporation(b)                        |  |           | 2,699 |           |  |          |    |           |  |         |   |  |  |   | (1,200 | ) |  |   | 1,499 | 
|                                         
|                                         
|                                         
|                                         
|Starwood Hotels & Resorts Worldwide, Inc. |  |           | 150   |           |  |          |    |           |  |         |   |  |  |   |       |   |  |   | 150   | 
|                                          |  |           |       |           |  |          |     |           |  |         |    |  |  |   |        |   |  |   |       | 
|                                          |  | $         | 3,025 |           |  | $        | 105 |           |  | $       | 10 |  |  | $ | (1,219 | ) |  | $ | 1,921 | 
|                                          |  |           |       |           |  |          |     |           |  |         |    |  |  |   |        |   |  |   |       | 




|    |                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Per mortgage loan agreements, the borrowers are
	not required to pay monthly interest if the cash flows are
	insufficient. Thus, the Trust has accrued interest on the notes.                                                                                                                                                                                             
|   
|(b) | A portion of this mortgage was secured by the
	assets of Caesars. Concurrent with the sale of Caesars in
	December 1999, the Trust declared a (special) dividend
	on the Class A Shares held by the Corporation (representing
	the value of the assets sold) aggregating $1.2 billion. This
	dividend was accounted for as a reduction in the intercompany
	mortgage loan.

S-7



---



EXHIBIT INDEX

|        |     |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | --- | ---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |                       
|Number  |     | Description of Exhibit
|        |     |                       
|        | 2.1 |                        |  | Formation Agreement, dated as of November 11, 1994, among
	the Trust, the Corporation, Starwood Capital and the Starwood
	Partners (incorporated by reference to Exhibit 2 to the
	Trusts and the Corporations Joint Current Report on
	Form 8-K dated November 16, 1994). (The SEC file
	numbers of all filings made by the Corporation and the Trust
	pursuant to the Securities Act of 1934, as amended, and
	referenced herein are: 1-7959 (the Corporation) and 1-6828 (the
	Trust)).                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 2.2 |                        |  | Form of Amendment No. 1 to Formation Agreement, dated as of
	July 1995, among the Trust, the Corporation and the Starwood
	 Partners (incorporated by reference to Exhibit  10.23 to
	the Trusts and the Corporations Joint Registration
	Statement on Form S-2 filed with the SEC on June 29,
	1995 (Registration Nos. 33-59155 and  33-59155-01)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 2.3 |                        |  | Transaction Agreement, dated as of September 8, 1997, by and
	 among the Trust, the Corporation, Realty Partnership, Operating
	Partnership, WHWE L.L.C., Woodstar Investor Partnership
	(Woodstar), Nomura Asset Capital Corporation, Juergen
	 Bartels, Westin Hotels & Resorts Worldwide, Inc.,
	W&S Lauderdale Corp., W&S Seattle Corp., Westin
	St. John Hotel Company, Inc., W&S Denver Corp., W&S
	Atlanta Corp. and W&S Hotel L.L.C. (incorporated by reference
	 to Exhibit 2 to the Trusts and the Corporations
	 Joint Current Report on Form 8-K dated September 9,
	1997, as amended by the Form 8-K/ A dated December 18,
	1997).                                                                                                                                                                                                                                                                                                    
|        | 2.4 |                        |  | Amended and Restated Agreement and Plan of Merger, dated as of
	November 12, 1997, by and among the Corporation, the Trust,
	Chess Acquisition Corp. (Chess) and ITT (incorporated
	 by reference to Exhibit 2.1 to the Trusts and the
	Corporations Joint Current Report on Form 8-K dated
	November 13, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 2.5 |                        |  | Agreement and Plan of Restructuring, dated as of September 
	16, 1998, and amended as of November 30, 1998, among the
	Corporation, ST Acquisition Trust
	(ST Trust) and the Trust (incorporated by
	reference to Annex A to the Trusts and the
	Corporations Joint Proxy Statement dated December  3,
	1998 (the 1998 Proxy Statement)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 2.6 |                        |  | Form of Stock Purchase Agreement, dated as of February 23,
	1998, between the Trust and the Corporation (incorporated by
	reference to Exhibit 10.4 to the Trusts and the
	Corporations Joint Annual Report on Form 10-K for the
	year ended December 31, 1997 (the 1997
	Form 10-K)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 3.1 |                        |  | Amended and Restated Declaration of Trust of the Trust, amended
	and restated as of January 6, 1999 (incorporated by
	reference to Exhibit 1 to the Trusts Registration
	Statement on Form 8-A filed on December 21, 1998 (the
	Trust Form 8-A), except that the following
	changes were made on January 6, 1999, upon the filing by the
	 Trust and ST Trust of the Articles of Merger of
	ST Trust into the Trust (the Articles of Merger)
	 with, and the acceptance thereof for record by, the State
	Department of Assessments and Taxation of the State of Maryland
	(the SDAT): Section 6.14 specifies
	January 6, 1999 as the date of the Intercompany Agreement;
	Section 6.19.1 specifies January  6, 1999 as the date
	of the acceptance for record by the SDAT of the Articles of
	Merger; and the definition of Intercompany Agreement
	in Section 6.19.2 specifies January 6, 1999 as the date
	 of the Intercompany Agreement).
|        | 3.2 |                        |  | Charter of the Corporation, amended and restated as of
	February 1, 1995, as amended through March 26, 1999
	(incorporated by reference to Exhibit 3.2 to the
	Trusts and the Corporations Joint Annual Report on
	Form 10-K for the year ended December 31, 1998, as
	amended by the Form  10-K/ A filed May 17, 1999 (as so
	amended, the 1998 Form  10-K)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 3.3 |                        |  | Bylaws of the Trust, as amended through November 19, 1998
	(incorporated by reference to Exhibit 2 to the Trust
	Form  8-A).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



---



|        |      |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- | ---- | ---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                       
|Number  |      | Description of Exhibit
|        |      |                       
|        | 3.4  |                        |  | Bylaws of the Corporation, as amended through March 15, 1999
	 (incorporated by reference to Exhibit 3 to the
	Corporations and the Trusts Joint Current Report on
	Form  8-K dated March 15, 1999 (the March 15
	 Form 8-K)).                                                                                                                                                                                                    
|        | 4.1  |                        |  | Amended and Restated Intercompany Agreement, dated as of
	January 6, 1999, between the Corporation and the Trust
	(incorporated by reference to Exhibit 3 to the Trust
	Form  8-A, except that on January 6, 1999, the
	Intercompany Agreement was executed and dated as of
	January 6, 1999).                                                                                                                                        
|        | 4.2  |                        |  | Rights Agreement, dated as of March 15, 1999, between the
	Corporation and Chase Mellon Shareholder Services, L.L.C., as
	Rights Agent (incorporated by reference to Exhibit 4 to the
	March 15 Form 8-K).                                                                                                                                                                                                                            
|        | 4.3  |                        |  | Amended and Restated Indenture, dated as of November 15,
	1995, as Amended and Restated as of December 15, 1995
	between ITT Corporation (formerly known as ITT Destinations,
	Inc.) and the First National Bank of Chicago, as trustee
	(incorporated by reference to Exhibit 4.A.IV to the First
	Amendment to ITTs Registration Statement on Form S-3
	filed November 13, 1996).                                                  
|        | 4.4  |                        |  | First Indenture Supplement, dated as of December 31, 1998,
	among ITT, the Corporation and the Bank of New York (incorporated
	 by reference to Exhibit 4.1 to the Trusts and the
	Corporations Joint Current Report on Form 8-K filed
	January 8, 1999).                                                                                                                                                                           
|        | 4.5  |                        |  | The Registrants hereby agree to file with the Commission a copy
	of any instrument, including indentures, defining the rights of
	long-term debt holders of the Registrants and their consolidated
	subsidiaries upon the request of the Commission.                                                                                                                                                                                  
|        | 10.1 |                        |  | Third Amended and Restated Limited Partnership Agreement for
	Realty Partnership, dated January 6, 1999, among the Trust
	and the limited partners of Realty Partnership (incorporated by
	reference to Exhibit 10.1 to the 1998 Form 10-K).                                                                                                                                                                                          
|        | 10.2 |                        |  | Third Amended and Restated Limited Partnership Agreement for
	Operating Partnership, dated January 6, 1999, among the
	Corporation and the limited partners of Operating Partnership
	(incorporated by reference to Exhibit 10.2 to the 1998
	Form 10-K).                                                                                                                                                                             
|        | 10.3 |                        |  | Form of Amended and Restated Lease Agreement, entered into as of
	January 1, 1993, between the Trust as Lessor and the
	Corporation (or a subsidiary) as Lessee (incorporated by
	reference to Exhibit 10.19 to the Trusts and the
	Corporations Joint Annual Report on Form 10-K for the
	year ended December 31, 1992).                                                                                                           
|        | 10.4 |                        |  | Employment Agreement, dated May 24, 1999, between the
	Corporation and Ronald C. Brown.(1)(2)                                                                                                                                                                                                                                                                                                                                         
|        | 10.5 |                        |  | Employment Agreement, dated October 1, 1998, between the
	Corporation and Thomas C. Janson, Jr. (incorporated by
	reference to Exhibit 10.9 to the 1998 Form 10-K.)(1)                                                                                                                                                                                                                                                                
|        | 10.6 |                        |  | Indemnification Agreement, dated as of August 24, 1998,
	between the Corporation and Thomas C. Janson, Jr., as
	amended by Amendment Nos. 1 and 2 thereto (incorporated
	 by reference to Exhibit 10.1 to the Trusts and the
	Corporations Joint Quarterly Report on Form 10-Q for
	the quarterly period ended September 30, 1998, as amended by
	 the Form 10-Q/A filed November 30, 1998 (as so
	amended, the 1998 Form 10-Q3)).
|        | 10.7 |                        |  | Employment Agreement, dated March 25, 1998, between the
	Trust and Steven R. Goldman (incorporated by reference to
	the Exhibit 10.11 to the 1997 Form 10-K).(1)                                                                                                                                                                                                                                                                      
|        | 10.8 |                        |  | Starwood Hotels & Resorts 1995 Long-Term Incentive Plan
	(Amended and Restated as of December 3, 1998) (incorporated
	by reference to Annex D to the 1998 Proxy Statement).(1)                                                                                                                                                                                                                                                        
|        | 10.9 |                        |  | Starwood Hotels & Resorts Worldwide, Inc. 1995 Long-Term
	 Incentive Plan (Amended and Restated as of December 3,
	1998) (incorporated by reference to Annex E to the 1998
	Proxy Statement).(1)                                                                                                                                                                                                                                      



---



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | ----- | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.10 |                        |  | Incentive and Non-Qualified Share Option Plan (1986) of the Trust
	 (incorporated by reference to Exhibit 10.8 to the
	Trusts and the Corporations Joint Annual Report on
	Form  10-K for the year ended August 31, 1986 (the
	1986 Form  10-K)).(1)                                                                                                                                                          
|        | 10.11 |                        |  | Corporation Stock Non-Qualified Stock Option Plan (1986) of the
	Trust (incorporated by reference to Exhibit 10.9 to the 1986
	 Form 10-K).(1)                                                                                                                                                                                                                                                                    
|        | 10.12 |                        |  | Stock Option Plan (1986) of the Corporation (incorporated by
	reference to Exhibit 10.10 to the 1986 Form 10-K).(1)                                                                                                                                                                                                                                                                                               
|        | 10.13 |                        |  | Trust Shares Option Plan (1986) of the Corporation (incorporated
	by reference to Exhibit 10.11 to the 1986 Form 10-K).
	(1)                                                                                                                                                                                                                                                                                      
|        | 10.14 |                        |  | Form of Indemnification Agreement and Amendment No. 1 to
	Indemnification Agreement between the Trust and each of its
	Trustees and executive officers (incorporated by reference to
	Exhibit 10.7 to the Trusts and the Corporations
	Joint Annual Report on Form 10-K for the year ended
	December 31, 1995 (the 1995 Form 10-K)).
	(1)                                                                     
|        | 10.15 |                        |  | Form of Indemnification Agreement and Amendment No. 1 to
	Indemnification Agreement between the Corporation and each of its
	 Directors and executive officers (incorporated by reference to
	Exhibit 10.8 to the 1995 Form 10-K).(1)                                                                                                                                                                             
|        | 10.16 |                        |  | Form of Amendment No. 2 to Indemnification Agreement, dated
	June 26, 1997, between the Trust and each of its Trustees
	and executive officers (incorporated by reference to
	Exhibit 10.1 to the Trusts and the Corporations
	Joint Quarterly Report on Form 10-Q for the quarterly period
	 ended June 30, 1997 (the 1997
	Form 10-Q2)).(1)                                                                 
|        | 10.17 |                        |  | Form of Amendment No. 2 to Indemnification Agreement, dated
	June 26, 1997, between the Corporation and each of its
	Directors and executive officers (incorporated by reference to
	Exhibit 10.2 to the 1997 Form 10-Q2).(1)                                                                                                                                                                                     
|        | 10.18 |                        |  | Form of Trademark License Agreement, dated as of December 
	10, 1997, between Starwood Capital and the Trust (incorporated by
	 reference to Exhibit 10.22 to the 1997 Form 10-K).                                                                                                                                                                                                                                
|        | 10.19 |                        |  | Exchange Rights Agreement, dated as of January 1, 1995,
	among the Trust, the Corporation, Realty Partnership, Operating
	Partnership and the Starwood Partners (incorporated by reference
	to Exhibit 2B to the Trusts and the Corporations
	 Joint Current Report on Form 8-K dated January 31,
	1995 (the Formation Form 8-K)).                                                                            
|        | 10.20 |                        |  | Registration Rights Agreement, dated as of January 1, 1995,
	among the Trust, the Corporation and Starwood Capital
	(incorporated by reference to Exhibit 2C to the Formation
	Form 8-K).                                                                                                                                                                                                                         
|        | 10.21 |                        |  | Exchange Rights Agreement, dated as of June 3, 1996, among
	the Trust, the Corporation, Realty Partnership, Operating
	Partnership, Philadelphia HIR Limited Partnership and
	Philadelphia HSR Limited Partnership (incorporated by reference
	to Exhibit 10.1 to the Trusts and the
	Corporations Joint Quarterly Report on Form 10-Q for
	the quarterly period ended June 30, 1996 (the 1996
	Form  10-Q2)).
|        | 10.22 |                        |  | Registration Rights Agreement, dated as of June 3, 1996,
	among the Trust, the Corporation and Philadelphia HSR Limited
	Partnership (incorporated by reference to Exhibit  10.2 to
	the 1996 Form 10-Q2).                                                                                                                                                                                                        
|        | 10.23 |                        |  | Units Exchange Rights Agreement, dated as of February 14,
	1997, by and among, inter alia, the Trust, the
	Corporation, Realty Partnership, Operating Partnership and the
	Starwood Partners (incorporated by reference to Exhibit 
	10.34 to the 1997 Form 10-K).                                                                                                                                                
|        | 10.24 |                        |  | Class A Exchange Rights Agreement, dated as of
	February  14, 1997, by and among, inter alia, the
	Trust, the Corporation, Operating Partnership and the Starwood
	Partners (incorporated by reference to Exhibit 10.35 to the
	1997 Form 10-K).                                                                                                                                                                  



---



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- | ----- | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.25 |                        |  | Exchange Rights Agreement, dated as of March 11, 1997, among
	 the Corporation, the Trust, Realty Partnership, Operating
	Partnership and the Hermitage, L.P. (incorporated by reference to
	 Exhibit 10.41 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                   
|        | 10.26 |                        |  | Registration Rights Agreement, dated as of March 11, 1997,
	among the Corporation, the Trust, Realty Partnership, Operating
	Partnership and the Hermitage, L.P. (incorporated by reference to
	 Exhibit 10.42 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                
|        | 10.27 |                        |  | Credit Agreement, dated as of September 10, 1997, between
	Realty Partnership and the Trust and Bankers Trust Company
	(BTC), Lehman Brothers Holdings Inc. d/b/a Lehman
	Capital, a division of Lehman Brothers Holdings Inc.
	(Lehman Capital), BankBoston, N.A., and Bank of
	Montreal (incorporated by reference to Exhibit 10.1 to the
	Trusts and the Corporations Joint Quarterly Report on
	 Form 10-Q for the quarterly period ended September 30,
	 1997, as amended by the Form 10-Q/A dated November 10,
	 1997).                   
|        | 10.28 |                        |  | Exchange Rights Agreement, dated as of January 2, 1998,
	among, inter alia, the Trust, Realty Partnership and
	Woodstar (incorporated by reference to Exhibit 10.50 to the
	1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                          
|        | 10.29 |                        |  | Exchange Rights Agreement, dated as of January 2, 1998,
	among, inter alia, the Corporation, Operating Partnership
	and Woodstar (incorporated by reference to Exhibit 10.51 to
	the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                 
|        | 10.30 |                        |  | Registration Rights Agreement, dated as of January 2, 1998,
	among, inter alia, the Trust, the Corporation, and
	Woodstar (incorporated by reference to Exhibit 10.52 to the
	1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                        
|        | 10.31 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the Trust
	 and New Remington Partners (incorporated by reference to
	Exhibit 10.54 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                      
|        | 10.32 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the Trust
	 and Savannah Limited Partnership (incorporated by reference to
	Exhibit 10.56 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                
|        | 10.33 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the Trust
	 and N.Y. Overnight Partners, L.P. (incorporated by reference to
	Exhibit 10.58 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                               
|        | 10.34 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the Trust
	 and D.C. Overnight Partners, L.P. (incorporated by reference to
	Exhibit 10.60 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                               
|        | 10.35 |                        |  | Credit Agreement, dated as of February 23, 1998, among the
	Trust, Realty Partnership, the Corporation, Chess (and ITT as its
	 successor by merger), certain additional borrowers, various
	lenders, BTC and The Chase Manhattan Bank (Chase
	Bank), as Administrative Agents, and Lehman Commercial
	Paper Inc. (Lehman Paper) and Bank of Montreal, as
	Syndication Agents (incorporated by reference to Exhibit 
	10.1 to the Trusts and the Corporations Joint Current
	 Report on Form 8-K dated February 23, 1998 (the
	ITT Form 8-K)).
|        | 10.36 |                        |  | First Amendment to the Credit Agreement, dated as of March 
	3, 1998, among the Trust, Realty Partnership, the Corporation,
	ITT, the lenders party to the Credit Agreement, BTC and Chase
	Bank, as Administrative Agents, and Lehman Paper and Bank of
	Montreal, as Syndication Agents, and the new lenders
	(incorporated by reference to Exhibit 10.2 to the ITT
	Form 8-K).                                                                                                                                                                     
|        | 10.37 |                        |  | Second Amendment to the Credit Agreement, dated as of April 
	 30, 1998, among the Trust, Realty Partnership, the Corporation,
	ITT, the lenders party to the Credit Agreement, BTC and Chase
	Bank, as Administrative Agents, and Lehman Paper and Bank of
	Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.2 to the Trusts and the Corporations
	Joint Quarterly Report on Form 10-Q for the quarterly period
	 ended June 30, 1998 (the 1998
	Form 10-Q2)).                                                          



---



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | ----- | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.38 |                        |  | Third Amendment to the Credit Agreement, dated as of June 
	15, 1998, among the Trust, Realty Partnership, the Corporation,
	ITT, the lenders party to the Credit Agreement, BTC and Chase
	Bank, as Administrative Agents, and Lehman Paper and Bank of
	Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.3 to the 1998 Form 10-Q2).                                                                                                                                                                                                                                                                                     
|        | 10.39 |                        |  | Fourth Amendment to the Credit Agreement, dated as of July 
	15, 1998, among the Trust, Realty Partnership, the Corporation,
	ITT, the lenders party to the Credit Agreement, BTC and Chase
	Bank, as Administrative Agents, and Lehman Paper and Bank of
	Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.4 to the 1998 Form 10-Q2).                                                                                                                                                                                                                                                                                    
|        | 10.40 |                        |  | Fifth Amendment to the Credit Agreement, dated as of August 
	 26, 1998, among the Trust, Realty Partnership, the Corporation,
	ITT, the lenders party to the Credit Agreement, BTC and Chase
	Bank, as Administrative Agents, and Lehman Paper and Bank of
	Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.2 to the 1998 Form 10-Q3).                                                                                                                                                                                                                                                                                  
|        | 10.41 |                        |  | Sixth Amendment to the Credit Agreement, dated as of
	December 15, 1998, among the Trust, Realty Partnership, the
	Corporation, ITT, the lenders party to the Credit Agreement, BTC
	and Chase Bank, as Administrative Agents, and Lehman Paper and
	Bank of Montreal, as Syndication Agents (incorporated by
	reference to Exhibit 10.50 to the 1998 Form 10-K).                                                                                                                                                                                                                                                                                  
|        | 10.42 |                        |  | Seventh Amendment to the Credit Agreement, dated as of
	February 1999, among the Trust, Realty Partnership, the
	Corporation, ITT, the lenders party to the Credit Agreement, BTC
	and Chase Bank, as Administrative Agents, and Lehman Paper and
	Bank of Montreal, as Syndication Agents (incorporated by
	reference to Exhibit 10.51 to the 1998 Form 10-K).                                                                                                                                                                                                                                                                                    
|        | 10.43 |                        |  | Eighth Amendment to the Credit Agreement and Modification to
	Pledge and Security Agreement, dated as of July 2, 1999,
	among the Trust, Realty Partnership, the Corporation, ITT, the
	lenders party to the Credit Agreement, BTC and Chase Bank, as
	Administrative Agents, Lehman Paper and Bank of Montreal, as
	Syndication Agents, and BTC, as Collateral Agent (incorporated by
	 reference to Exhibit 10.1 to the Corporations and the
	 Trusts Joint Quarterly Report on Form 10-Q for the
	quarterly period ended September 30, 1999, as amended by the
	 Form 10-Q/A filed November 16, 1999 (as so amended,
	the 1999 Form 10-Q3)).
|        | 10.44 |                        |  | Ninth Amendment to the Credit Agreement and Modification to
	Pledge and Security Agreement, dated as of September 20,
	1999, among the Trust, Realty Partnership, the Corporation, ITT,
	the lenders party to the Credit Agreement, BTC and Chase Bank, as
	 Administrative Agents, Lehman Paper and Bank of Montreal, as
	Syndication Agents, and BTC, as Collateral Agent (incorporated by
	 reference to Exhibit 10.2 to the 1999 Form 10-Q3).                                                                                                                                                                                                  
|        | 10.45 |                        |  | Pledge and Security Agreement, dated as of February 23,
	1998, executed and delivered by the Trust, the Corporation and
	the other Pledgors party thereto, in favor of BTC as Collateral
	Agent (incorporated by reference to Exhibit  10.63 to the
	1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                              
|        | 10.46 |                        |  | Second Amended and Restated Senior Secured Note Agreement, dated
	December 30, 1999, among the Corporation, the Trust, the
	guarantors listed therein, the lenders listed therein, Lehman
	Paper, as Arranger and Administrative Agent, and Alex Brown and
	Chase Securities Inc., as Syndication Agents.(2)                                                                                                                                                                                                                                                                                                                                       
|        | 10.47 |                        |  | Loan Agreement, dated as of February 23, 1998, between the
	Trust and the Corporation, together with Promissory Note executed
	 in connection therewith, by the Corporation to the order of the
	Trust, in the principal amount of $3,282,000,000 (incorporated by
	 reference to Exhibit 10.65 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                            
|        | 10.48 |                        |  | Loan Agreement, dated as of February 23, 1998, between the
	Trust and the Corporation, together with Promissory Note executed
	 in connection therewith, by the Corporation to the order of the
	Trust, in the principal amount of $100,000,000 (incorporated by
	reference to Exhibit 10.66 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                               



---



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                    
|------- | ----- | ---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.49 |                        |  | Loan Agreement, dated as of February 23, 1998, between the
	Trust and the Corporation, together with Promissory Note executed
	 in connection therewith, by the Corporation to the order of the
	Trust, in the principal amount of $50,000,000 (incorporated by
	reference to Exhibit 10.67 to the 1997 Form 10-K).
|        | 10.50 |                        |  | Loan Agreement, dated as of January 27, 1999, among the
	Borrowers named therein, as Borrowers, Starwood Operator I
	LLC, as Operator, and Lehman Capital (incorporated by reference
	to Exhibit 10.58 to the 1998 Form 10-K).                                                                                     
|        | 10.51 |                        |  | Aircraft Dry Lease Agreement, entered into as of February 
	6, 1998, between Star Flight, L.L.C. and ITT Flight Operation,
	Inc., as amended by First Amendment thereto, dated as of
	August 25, 1998 (incorporated by reference to
	Exhibit 10.4 to the 1998 Form 10-Q3).                                         
|        | 10.52 |                        |  | Form of Severance Agreement, dated December 1999, between
	the Corporation and each of Barry S. Sternlicht,
	Ronald C. Brown, Steve R. Goldman and Thomas C.
	Janson, Jr.(2)                                                                                                                                       
|        | 10.53 |                        |  | Separation Agreement, dated as of February 10, 2000, by and
	between the Corporation and Susan R. Bolger.(2)                                                                                                                                                                                                       
|        | 10.54 |                        |  | Separation Agreement, dated as of April 30, 1999, by and
	between the Corporation and Richard D. Nanula (incorporated
	by reference to Exhibit 10.6 to the Corporations and
	the Trusts Joint Quarterly Report on Form 10-Q for the
	 quarterly period ended March 31, 1999).                                    
|        | 12.1  |                        |  | Calculation of Ratio of Earnings to Total Fixed Charges. (2)                                                                                                                                                                                                                                                       
|        | 21.1  |                        |  | Subsidiaries of the Registrants.                                                                                                                                                                                                                                                                                   
|        | 23.1  |                        |  | Consent of Arthur Andersen LLP.(2)                                                                                                                                                                                                                                                                                 
|        | 27.1  |                        |  | Financial Data Schedule for the Corporation.(2)                                                                                                                                                                                                                                                                    
|        | 27.2  |                        |  | Financial Data Schedule for the Trust.(2)                                                                                                                                                                                                                                                                          




|    |                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|(1) | Management contract or compensatory plan or
	arrangement required to be filed as an exhibit pursuant to
	Item 14(c) of Form  10-K.
|   
|(2) | Filed herewith.