##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K


| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| | þ | Joint Annual Report Pursuant to Section 13 or 15(d) of
    the Securities Exchange Act of 1934

| |                                            
| | -------------------------------------------
| | For the Fiscal Year Ended December 31, 2004
|
| | OR                                         



| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| | o | 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)                                                                                                                                                                            |  | 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)52-1193298(I.R.S. employer identification no.)1111 Westchester Avenue
    White Plains, NY 10604(Address of principal executive
    offices, including zip code)(914) 640-8100(Registrants telephone number,
    including area code) |  | Maryland(State or other jurisdiction
    of incorporation or organization)52-0901263(I.R.S. employer identification no.)1111 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:


|                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Title of Each Class                                                                                                                                                                                                                                                                                                                                                                                           |  | Name of Each Exchange on Which Registered
|                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                          
|Common Stock, par value $0.01 per share (Corporation
    Share), of Starwood Hotels & Resorts Worldwide,
    Inc. (the Corporation), 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:




þ o


o


þ o








Document Incorporated by Reference:


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









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TABLE OF CONTENTS


|         |  |                                                                                                                      |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                                                      |  | Page |   
|         |  |                                                                                                                      |  |      |   
|PART I  
|         |  | Forward-Looking Statements                                                                                           |  |      | 1  | 
|Item 1.  |  | Business                                                                                                             |  |      | 10 | 
|Item 2.  |  | Properties                                                                                                           |  |      | 16 | 
|Item 3.  |  | Legal Proceedings                                                                                                    |  |      | 19 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
    Holders                                                              |  |      | 19 | 
|         |  | Executive Officers of the Registrants                                                                                |  |      | 19 | 
|        
|PART II 
|Item 5.  |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |  |      | 19 | 
|Item 6.  |  | Selected Financial Data                                                                                              |  |      | 21 | 
|Item 7.  |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |  |      | 21 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures
    about Market Risk                                                       |  |      | 36 | 
|Item 8.  |  | Financial Statements and Supplementary
    Data                                                                      |  |      | 36 | 
|Item 9.  |  | Changes In and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |  |      | 37 | 
|Item 9A. |  | Controls and Procedures                                                                                              |  |      | 37 | 
|        
|PART III
|Item 10. |  | Directors, Trustees and Executive Officers
    of the Registrants                                                    |  |      | 39 | 
|Item 11. |  | Executive Compensation                                                                                               |  |      | 42 | 
|Item 12. |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |  |      | 43 | 
|Item 13. |  | Certain Relationships and Related
    Transactions                                                                   |  |      | 43 | 
|Item 14. |  | Principal Accountant Fees and Services                                                                               |  |      | 47 | 
|        
|PART IV 
|Item 15. |  | Exhibits, Financial Statements, Financial
    Statement Schedules and Reports on Form 8-K                            |  |      | 48 | 
|EX-3.2  
|EX-3.4  
|EX-10.3 
|EX-10.4 
|EX-10.13
|EX-10.14
|EX-10.15
|EX-10.17
|EX-10.19
|EX-10.23
|EX-10.26
|EX-10.30
|EX-10.31
|EX-10.35
|EX-10.41
|EX-10.70
|EX-10.73
|EX-12.1 
|EX-21.1 
|EX-23.1 
|EX-31.1 
|EX-31.2 
|EX-31.3 
|EX-31.4 
|EX-32.1 
|EX-32.2 
|EX-32.3 
|EX-32.4 





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##### Table of Contents





PART I





Forward-Looking Statements




Where you can find more information


http://www.sec.gov http://www.starwoodhotels.com/corporate/investorrelations.html


Risks Relating to Hotel, Resort and Vacation Ownership
Operations


We Are Subject to All the Operating Risks Common to the
Hotel and Vacation Ownership Industries.




| |   |                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in general economic conditions, including the timing and
    robustness of the apparent recovery in the United States from
    the recent economic downturn and the prospects for improved
    performance in other parts of the world;
|
| |  | impact of war and terrorist activity (including threatened
    terrorist activity) and heightened travel security measures
    instituted in response thereto;                                                                                 
|
| |  | domestic and international political and geopolitical conditions;                                                                                                                                                                              
|
| |  | travelers fears of exposures to contagious diseases or the
    occurrence of natural disasters;                                                                                                                                               

1



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| |   |                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | decreases in the demand for transient rooms and related lodging
    services, including a reduction in business travel as a result
    of general economic conditions;                                                                                                     
|
| |  | the impact of internet intermediaries on pricing and our
    increasing reliance on technology;                                                                                                                                                                            
|
| |  | cyclical over-building in the hotel and vacation ownership
    industries;                                                                                                                                                                                                 
|
| |  | restrictive changes in zoning and similar land use laws and
    regulations or in health, safety and environmental laws, rules
    and regulations and other governmental and regulatory action;                                                                           
|
| |  | changes in travel patterns;                                                                                                                                                                                                                                                
|
| |  | changes in operating costs including, but not limited to,
    energy, labor costs (including the impact of unionization),
    workers compensation and health-care related costs,
    insurance and unanticipated costs such as acts of nature and
    their consequences;
|
| |  | disputes with owners of properties, franchisees and homeowner
    associations which may result in litigation;                                                                                                                                                             
|
| |  | the availability of capital to allow us and potential hotel
    owners and franchisees to fund construction, renovations and
    investments;                                                                                                                              
|
| |  | foreign exchange fluctuations;                                                                                                                                                                                                                                             
|
| |  | the financial condition of third-party property owners and
    franchisees; and                                                                                                                                                                                            
|
| |  | the financial condition of the airline industry and the impact
    on air travel.                                                                                                                                                                                          



General Economic Conditions May Negatively Impact Our
Results.


We Must Compete for Customers.


We Must Compete for Management and Franchise
Agreements.


The Hotel Industry Is Seasonal in Nature.


2



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Internet Reservation Channels May Negatively Impact our
Bookings.


We Place Significant Reliance on Technology.


Our Businesses Are Capital Intensive.


Real Estate Investments Are Subject to Numerous
Risks.


Hotel and Resort Development Is Subject to Timing,
Budgeting and Other Risks.


3



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| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | construction delays or cost overruns that may increase project
    costs;                                                                                                                          
|
| |  | receipt of zoning, occupancy and other required governmental
    permits and authorizations;                                                                                                       
|
| |  | development costs incurred for projects that are not pursued to
    completion;                                                                                                                    
|
| |  | so-called acts of God such as earthquakes, hurricanes, floods or
    fires that could adversely impact a project;                                                                                  
|
| |  | defects in design or construction that may result in additional
    costs to remedy or require all or a portion of a property to be
    closed during the period required to rectify the situation;
|
| |  | ability to raise capital; and                                                                                                                                                                      
|
| |  | governmental restrictions on the nature or size of a project or
    timing of completion.                                                                                                          



Environmental Regulations.


International Operations Are Subject to Special Political
and Monetary Risks.


Debt Financing




4



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Risks Relating to So-Called Acts of God, Terrorist Activity
and War




Some Potential Losses are Not Covered by Insurance








5



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Acquisitions






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




Dispositions




Our Vacation Ownership Business Is Subject to Extensive
Regulation and Risk of Default




6



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Recent Privacy Initiatives




Certain Interests




Ability to Manage Growth




7



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Tax Risks


Failure of the Trust to Qualify as a REIT Would Increase
Our Tax Liability.


Additional Legislation Could Eliminate or Reduce Certain
Benefits of Our Structure.








Evolving government regulation could impose taxes or other
burdens on our business.




8



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Risks Relating to Ownership of Our Shares


No Person or Group May Own More Than 8% of Our
Shares.


Our Board of Directors May Issue Preferred Stock and
Establish the Preferences and Rights of Such Preferred
Stock.


Our Board of Directors May Implement Anti-Takeover Devices
and our Charter and By-Laws Contain Provisions which May Prevent
Takeovers.


Our Shareholder Rights Plan Would Cause Substantial
Dilution to Any Shareholder That Attempts to Acquire Us on Terms
Not Approved by Our Board of Directors.


9



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Changes in Stock Option Accounting Rules May
Adversely Impact Our Reported Operating Results Prepared in
Accordance with Generally Accepted Accounting Principles, Our
Stock Price and Our Competitiveness in the Employee
Marketplace.









|        |          
|------- | ---------
|Item 1. | Business.

General












10



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Competitive Strengths




Brand Strength.


Frequent Guest Program.


Significant Presence in Top Markets.


Premier and Distinctive Properties.


Scale.


11



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Diversification of Cash Flow and Assets.






|                                                |  |            |     |  |       |  |         | 
|----------------------------------------------- |  | ---------- | --- |  | ----- |  | ------- | 
|                                                |  | Number of  |     |  |      
|                                                |  | Properties |     |  | Rooms | 
|                                                |  |            |     |  |       | 
|Owned
    hotels(a)                             |  |            | 140 |  |       |  | 50,000  | 
|Managed and unconsolidated joint venture hotels |  |            | 283 |  |       |  | 101,000 | 
|Franchised hotels                               |  |            | 310 |  |       |  | 80,000  | 
|Vacation ownership resorts                      |  |            | 19  |  |       |  | 5,000   | 
|                                                |  |            |     |  |       | 
|Total properties                                |  |            | 752 |  |       |  | 236,000 | 
|                                                |  |            |     |  |       | 






|    |  |                                                         
|--- |  | --------------------------------------------------------
|(a) |  | Includes wholly owned, majority owned and leased hotels.

|                                   |  |            |     |  |       |  |         | 
|---------------------------------- |  | ---------- | --- |  | ----- |  | ------- | 
|                                   |  | Number of  |     |  |      
|                                   |  | Properties |     |  | Rooms | 
|                                   |  |            |     |  |       | 
|North America                      |  |            | 437 |  |       |  | 151,000 | 
|Europe, Africa and the Middle East |  |            | 175 |  |       |  | 43,000  | 
|Latin America                      |  |            | 46  |  |       |  | 10,000  | 
|Asia Pacific                       |  |            | 94  |  |       |  | 32,000  | 
|                                   |  |            |     |  |       | 
|Total                              |  |            | 752 |  |       |  | 236,000 | 
|                                   |  |            |     |  |       | 

Business Segment and Geographical Information




Business Strategy




12



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Growth Opportunities.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continuing to expand our role as a third-party manager of hotels
    and resorts. This allows us to expand the presence of our
    lodging brands and gain additional cash flow generally with
    modest capital commitment;                                                                                                                                                                                                             
|
| |  | Franchising the Sheraton, Westin, Four Points by Sheraton and
    Luxury Collection brands to selected third-party operators and
    licensing the Westin, W and St. Regis brand names to selected
    third parties in connection with luxury residential
    condominiums, thereby expanding our market presence, enhancing
    the exposure of our hotel brands and providing additional income
    through franchise and license fees;
|
| |  | Expanding our internet presence and sales capabilities to
    increase revenue and improve customer service;                                                                                                                                                                                                                                                                                                                              
|
| |  | Continuing to grow our frequent guest program, thereby
    increasing occupancy rates while providing our customers with
    benefits based upon loyalty to our hotels and vacation ownership
    resorts;                                                                                                                                                                                                                                
|
| |  | Enhancing our marketing efforts by integrating our proprietary
    customer databases, so as to sell additional products and
    services to existing customers, improve occupancy rates and
    create additional marketing opportunities;                                                                                                                                                                                               
|
| |  | Optimizing use of our real estate assets to improve ancillary
    revenue, such as condominium sales and restaurant, beverage and
    parking revenue from our hotels and resorts;                                                                                                                                                                                                                                                        
|
| |  | Continuing to build the W hotel brand to appeal to
    upscale business travelers and other customers seeking
    full-service hotels in major markets by, among other things,
    placing Bliss Spas® and Bliss branded amenities in
    W hotels and expanding the W brand to resorts, in
    non-urban areas;                                                                                                                      
|
| |  | Innovations such as the Heavenly Bed® and Heavenly
    Bath®, the Sheraton Sweet
    Sleepersm
    Bed, the Sheraton Service
    Promisesm
    and the Four Points by Sheraton Four Comfort
    Bedsm;                                                                                                                                                                                                                                    
|
| |  | Renovating, upgrading and expanding our branded hotels to
    further our strategy of strengthening brand identity;                                                                                                                                                                                                                                                                                                                       
|
| |  | Developing additional vacation ownership resorts and leveraging
    our hotel real estate assets where possible through VOI
    construction and residential or condominium sales;                                                                                                                                                                                                                                                        
|
| |  | Leveraging the Bliss product line and distribution
    channels; and                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Increasing operating efficiencies through increased use of
    technology.                                                                                                                                                                                                                                                                                                                                                                





| |   |                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Luxury and upscale hotels and resorts 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 our 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;                 

13



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| |   |                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Hotels or brands which would enable us to provide a wider range
    of amenities and services to customers or provide attractive
    geographic distribution; 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 us to obtain favorable pricing
    or obtain attractive assets that would otherwise not be
    available or realize cost reductions on operating the hotels by
    incorporating them into the Starwood system.





Competition






Environmental Matters




14



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Seasonality and Diversification




Comparability of Owned Hotel Results




Employees




15



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|        |            
|------- | -----------
|Item 2. | Properties.







|                                |  |            |     |  |       |  |         |            |  |  |       |  |  |  |       | 
|------------------------------- |  | ---------- | --- |  | ----- |  | ------- | ---------- |  |  | ----- |  |  |  | ----- | 
|                                |  | Hotels     |     |  | VOI   | 
|                                |  |            |     |  |       | 
|                                |  | Properties |     |  | Rooms |  |         | Properties |  |  | Rooms | 
|                                |  |            |     |  |       |  |         |            |  |  |       | 
|St. Regis and Luxury Collection |  |            | 50  |  |       |  | 8,000   |            |  |  | 1     |  |  |  |      | 
|Sheraton                        |  |            | 391 |  |       |  | 135,000 |            |  |  | 6     |  |  |  | 3,000 | 
|Westin                          |  |            | 120 |  |       |  | 52,000  |            |  |  | 4     |  |  |  | 1,000 | 
|W                               |  |            | 20  |  |       |  | 6,000   |            |  |  |      |  |  |  |      | 
|Four Points                     |  |            | 135 |  |       |  | 24,000  |            |  |  |      |  |  |  |      | 
|Independent/Other               |  |            | 17  |  |       |  | 6,000   |            |  |  | 8     |  |  |  | 1,000 | 
|                                |  |            |     |  |       |  |         |            |  |  |       | 
|Total                           |  |            | 733 |  |       |  | 231,000 |            |  |  | 19    |  |  |  | 5,000 | 
|                                |  |            |     |  |       |  |         |            |  |  |       | 

St. Regis Hotels & Resorts


The Luxury Collection


Sheraton Hotels & Resorts


16



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Westin Hotels & Resorts


W Hotels


Four Points by Sheraton


Hotel Business


Owned, Leased and Consolidated Joint Venture
Hotels. (1)


|                                                         |  |              |        |   |      |   |        |          |  |  |      |  
|-------------------------------------------------------- |  | ------------ | ------ | - | ---- | - | ------ | -------- |  |  | ---- | -
|                                                         |  | Year Ended   |        |   |     
|                                                         |  | December 31, |        |   |     
|                                                         |  |              |        |   |     
|                                                         |  | 2004         |        |   | 2003 |   |        | Variance | 
|                                                         |  |              |        |   |      |   |        |          | 
|Worldwide(138 hotels with approximately 49,000 rooms)    |  |              |        |   |      |   |        |          |  |  |      |  
|REVPAR                                                   |  | $            | 110.81 |   |      | $ | 98.03  |          |  |  | 13.0 | %
|ADR                                                      |  | $            | 161.74 |   |      | $ | 151.49 |          |  |  | 6.8  | %
|Occupancy                                                |  |              | 68.5   | % |      |   | 64.7   | %        |  |  | 3.8  |  
|North America(93 hotels with approximately 36,000 rooms) |  |              |        |   |      |   |        |          |  |  |      |  
|REVPAR                                                   |  | $            | 110.13 |   |      | $ | 98.21  |          |  |  | 12.1 | %
|ADR                                                      |  | $            | 156.65 |   |      | $ | 147.15 |          |  |  | 6.5  | %
|Occupancy                                                |  |              | 70.3   | % |      |   | 66.7   | %        |  |  | 3.6  |  
|International(45 hotels with approximately 13,000 rooms) |  |              |        |   |      |   |        |          |  |  |      |  
|REVPAR                                                   |  | $            | 112.72 |   |      | $ | 97.52  |          |  |  | 15.6 | %
|ADR                                                      |  | $            | 177.57 |   |      | $ | 165.37 |          |  |  | 7.4  | %
|Occupancy                                                |  |              | 63.5   | % |      |   | 59.0   | %        |  |  | 4.5  |  






|    |                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | REVPAR is calculated by dividing room revenue which is derived
    from rooms and suites rented or leased, by total room nights
    available for a given period. REVPAR may not be comparable to
    similarly titled measures such as revenues.



Managed and Franchised Hotels.


17



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Managed Hotels.




Brand Franchising and Licensing.




Vacation Ownership and Residential Business






18



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|        |                   
|------- | ------------------
|Item 3. | Legal Proceedings.








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






Executive Officers of the Registrants




PART II







|        |                                                                                                                      
|------- | ---------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities.

Market Information






|               |  |      |       |  |     |   |       | 
|-------------- |  | ---- | ----- |  | --- | - | ----- | 
|               |  | High |       |  | Low |  
|               |  |      |       |  |     |  
|2004           |  |      |       |  |     |   |       | 
|Fourth quarter |  | $    | 59.50 |  |     | $ | 46.20 | 
|Third quarter  |  | $    | 46.65 |  |     | $ | 40.06 | 
|Second quarter |  | $    | 45.04 |  |     | $ | 38.15 | 
|First quarter  |  | $    | 40.93 |  |     | $ | 34.81 | 
|2003           |  |      |       |  |     |   |       | 
|Fourth quarter |  | $    | 37.60 |  |     | $ | 32.96 | 
|Third quarter  |  | $    | 36.55 |  |     | $ | 28.31 | 
|Second quarter |  | $    | 30.65 |  |     | $ | 23.44 | 
|First quarter  |  | $    | 26.95 |  |     | $ | 21.68 | 

Holders




19



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Distributions Made/ Declared




|                    |  |               |        |  
|------------------- |  | ------------- | ------ | -
|                    |  | Distributions |       
|                    |  | Made          |       
|                    |  |               |       
|2004                |  |               |        |  
|Annual distribution |  | $             | 0.84(a | )
|2003                |  |               |        |  
|Annual distribution |  | $             | 0.84(a | )






|    |                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The Trust declared distributions in the fourth quarter of 2004
    and 2003 to shareholders of record on December 31, 2004 and
    2003, respectively. The distributions were paid in January 2005
    and 2004, respectively.





Conversion of Securities; Sale of Unregistered Securities




Issuer Purchases of Equity Securities




|         |  |           |           |  |          |   |       |                        |  |  |                        |  |  |   |     | 
|-------- |  | --------- | --------- |  | -------- | - | ----- | ---------------------- |  |  | ---------------------- |  |  | - | --- | 
|         |  |           |           |  |          |   |       | Maximum Number (or     | 
|         |  |           |           |  |          |   |       | Approximate Dollar     | 
|         |  | Total     |           |  | Average  |   |       | Total Number of Shares |  |  | Value) of Shares that  | 
|         |  | Number of |           |  | Price    |   |       | Purchased as Part      |  |  | May Yet Be Purchased   | 
|         |  | Shares    |           |  | Paid for |   |       | of Publicly Announced  |  |  | Under the Plans or     | 
|Period   |  | Purchased |           |  | Share    |   |       | Plans or Programs      |  |  | Programs (in millions) | 
|         |  |           |           |  |          |   |       |                        |  |  |                        | 
|October  |  |           |          |  |          | $ |      |                        |  |  |                       |  |  | $ | 374 | 
|November |  |           | 816,600   |  |          | $ | 51.22 |                        |  |  | 816,600                |  |  | $ | 332 | 
|December |  |           | 670,000   |  |          | $ | 53.81 |                        |  |  | 670,000                |  |  | $ | 296 | 
|         |  |           |           |  |          |   |       |                        |  |  |                        | 
|Total    |  |           | 1,486,600 |  |          | $ | 52.38 |                        |  |  | 1,486,600              |  |  |   |     | 
|         |  |           |           |  |          |   |       |                        |  |  |                        | 

20



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|        |                         
|------- | ------------------------
|Item 6. | Selected Financial Data.



|                                                      |  |                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|----------------------------------------------------- |  | ------------------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                                                      |  | Year Ended December 31,              |      
|                                                      |  |                                      |      
|                                                      |  | 2004                                 |       |   | 2003 |   |       | 2002 |  |   | 2001  |   |  | 2000 |      
|                                                      |  |                                      |       |   |      |   |       |      |  |   |       |   |  |      |      
|                                                      |  | (In millions, except per Share data) |      
|Income Statement Data                                 |  |                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Revenues                                              |  | $                                    | 5,368 |   |      | $ | 4,630 |      |  | $ | 4,588 |   |  | $    | 4,633 |   |  | $ | 4,945 |  
|Operating income                                      |  | $                                    | 653   |   |      | $ | 427   |      |  | $ | 551   |   |  | $    | 576   |   |  | $ | 968   |  
|Income from continuing operations                     |  | $                                    | 369   |   |      | $ | 105   |      |  | $ | 251   |   |  | $    | 147   |   |  | $ | 397   |  
|Diluted earnings per Share from continuing operations |  | $                                    | 1.72  |   |      | $ | 0.51  |      |  | $ | 1.22  |   |  | $    | 0.71  |   |  | $ | 1.94  |  
|Operating Data                                        |  |                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Cash from continuing operations                       |  | $                                    | 577   |   |      | $ | 755   |      |  | $ | 744   |   |  | $    | 736   |   |  | $ | 796   |  
|Cash from (used for) investing activities             |  | $                                    | (415  | ) |      | $ | 515   |      |  | $ | (282  | ) |  | $    | (617  | ) |  | $ | (660  | )
|Cash used for financing activities                    |  | $                                    | (273  | ) |      | $ | (979  | )    |  | $ | (487  | ) |  | $    | (162  | ) |  | $ | (417  | )
|Aggregate cash distributions paid                     |  | $                                    | 172   |   |      | $ | 170   |      |  | $ | 40 (a | ) |  | $    | 156   |   |  | $ | 134   |  
|Cash distributions declared per Share                 |  | $                                    | 0.84  |   |      | $ | 0.84  |      |  | $ | 0.84  |   |  | $    | 0.80  |   |  | $ | 0.69  |  






|    |                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | This balance reflects the payment made in January 2002 for the
    dividends declared for the fourth quarter of 2001. As the Trust
    now declares dividends annually, the 2002 annual dividend
    payment, which was made in January 2003, is reflected in the
    2003 column.

|                                                                                                            |  |                 |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        | 
|----------------------------------------------------------------------------------------------------------- |  | --------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------ | 
|                                                                                                            |  | At December 31, |       
|                                                                                                            |  |                 |       
|                                                                                                            |  | 2004            |        |  | 2003 |   |        | 2002 |  |   | 2001   |  |  | 2000 |       
|                                                                                                            |  |                 |        |  |      |   |        |      |  |   |        |  |  |      |       
|                                                                                                            |  | (In millions)   |       
|Balance Sheet Data                                                                                          |  |                 |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        | 
|Total assets                                                                                                |  | $               | 12,298 |  |      | $ | 11,857 |      |  | $ | 12,190 |  |  | $    | 12,416 |  |  | $ | 12,627 | 
|Long-term debt, net of current maturities and including
    exchangeable units and Class B preferred shares |  | $               | 3,823  |  |      | $ | 4,424  |      |  | $ | 4,500  |  |  | $    | 5,301  |  |  | $ | 5,090  | 






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





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CRITICAL ACCOUNTING POLICIES




Revenue Recognition.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Owned, Leased and Consolidated Joint Ventures 
    Represents revenue primarily derived from hotel operations,
    including the rental of rooms and food and beverage sales from
    owned leased or consolidated joint venture hotels and resorts.
    Revenue is recognized when rooms are occupied and services have
    been rendered. These revenues are impacted by global economic
    conditions affecting the travel and hospitality industry as well
    as relative market share of the local competitive set of hotels.
    REVPAR is a leading indicator of revenue trends at owned, leased
    and consolidated joint venture hotels.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Management and Franchise Fees  Represents fees earned
    on hotels managed worldwide, usually under long-term contracts,
    and franchise fees received in connection with the franchise of
    the our Sheraton, Westin, Four Points by Sheraton and Luxury
    Collection brand names. Management fees are comprised of a base
    fee, which is generally based on a percentage of gross revenues,
    and an incentive fee, which is generally based on the
    propertys profitability. For any time during the year,
    incentive fees are recognized for the fees due and earned as if
    the contract was terminated at that date, exclusive of any
    termination fees due or payable. Therefore, during periods prior
    to year-end, the incentive fees recorded may not be indicative
    of the eventual incentive fees that will be recognized at
    year-end as conditions and incentive hurdle calculations may not
    be final. Franchise fees are generally based on a percentage of
    hotel room revenues. As with hotel revenues discussed above,
    these revenue sources are affected by conditions impacting the
    travel and hospitality industry as well as competition from
    other hotel management and franchise companies.
|
| |  | Vacation Ownership and Residential  We recognize
    revenue from VOI sales and financings and the sales of
    residential units which are typically a component of mixed use
    projects that include a hotel. Such revenues are impacted by the
    state of the global economies and, in particular, the
    U.S. economy, as well as interest rate and other economic
    conditions affecting the lending market. We determine the
    portion of revenues to recognize for sales accounted for under
    the percentage of completion method based on judgments and
    estimates including total project costs to complete.
    Additionally, we record reserves against these revenues based on
    expected default levels. Changes in costs could lead to
    adjustments to the percentage of completion status of a project,
    which may result in differences in the timing and amount of
    revenues recognized from the projects. We anticipate developing
    future high end VOI projects adjacent to or as part of our
    luxury resorts, resulting in cross-selling opportunities and an
    audience of higher-end purchasers, yielding both higher revenues
    and reduced risks associated with financing these VOI sales.                

Frequent Guest Program.




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Long-Lived Assets.


Legal Contingencies.


Income Taxes.


RESULTS OF OPERATIONS








23



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|                                                                      |  |          |      |   |          |  |      |  
|--------------------------------------------------------------------- |  | -------- | ---- | - | -------- |  | ---- | -
|Top Ten Metropolitan Areas as a % of Owned North America Revenues for | 
|the Year Ended December 31, 2004 with Comparable Data for 2003        | 
|                                                                      | 
|                                                                      |  | 2004     |      |   | 2003     | 
|Metropolitan Area                                                     |  | Revenues |      |   | Revenues | 
|                                                                      |  |          |      |   |          | 
|New York, NY                                                          |  |          | 19.2 | % |          |  | 17.1 | %
|Boston, MA                                                            |  |          | 9.4  | % |          |  | 9.2  | %
|San Diego, CA                                                         |  |          | 5.2  | % |          |  | 5.8  | %
|Phoenix, AZ                                                           |  |          | 5.0  | % |          |  | 4.9  | %
|Los Angeles-Long Beach, CA                                            |  |          | 4.8  | % |          |  | 4.6  | %
|Atlanta, GA                                                           |  |          | 4.4  | % |          |  | 4.7  | %
|Toronto, Canada                                                       |  |          | 3.9  | % |          |  | 3.3  | %
|Seattle, WA                                                           |  |          | 3.8  | % |          |  | 3.9  | %
|Maui, HI                                                              |  |          | 3.5  | % |          |  | 3.1  | %
|Houston, TX                                                           |  |          | 2.8  | % |          |  | 2.7  | %
|All Other                                                             |  |          | 38.0 | % |          |  | 40.7 | %
|                                                                      |  |          |      |   |          | 
|Total                                                                 |  |          | 100  | % |          |  | 100  | %
|                                                                      |  |          |      |   |          | 



Year Ended December 31, 2004 Compared with Year Ended
December 31, 2003


Continuing Operations


Revenues.




24



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Operating Income.


25



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Restructuring and Other Special Credits, Net.


Depreciation and Amortization.


Gain on Sale of VOI Notes Receivable.


Net Interest Expense.


Loss On Asset Dispositions and Impairments, Net.




Discontinued Operations.


26



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Income Tax Expense.


Year Ended December 31, 2003 Compared with Year Ended
December 31, 2002


Continuing Operations


Revenues.




27



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Operating Income.




Restructuring and Other Special Credits, Net.


Depreciation and Amortization.


28



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Gain on Sale of VOI Notes Receivable.


Net Interest Expense.


Gain (loss) on Asset Dispositions and Impairments,
Net.


Income Tax Expense.


Discontinued Operations.




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LIQUIDITY AND CAPITAL RESOURCES


Cash From Operating Activities








Cash Used for Investing Activities


Contractual Obligations.






30



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|                                          |  |       |       |             |        |   |        |           |  |        |           |  |           |         |     |  |  |   |       | 
|----------------------------------------- |  | ----- | ----- | ----------- | ------ | - | ------ | --------- |  | ------ | --------- |  | --------- | ------- | --- |  |  | - | ----- | 
|                                          |  |       |       | Due in Less |        |   |        |           |  |        |          
|                                          |  |       |       | Than        |        |   | Due in |           |  | Due in |           |  | Due After |        
|                                          |  | Total |       |             | 1 Year |   |        | 1-3 Years |  |        | 4-5 Years |  |           | 5 Years |    
|                                          |  |       |       |             |        |   |        |           |  |        |           |  |           |         |    
|Long-term debt                            |  | $     | 4,440 |             |        | $ | 619    |           |  | $      | 1,744     |  |           | $       | 468 |  |  | $ | 1,609 | 
|Capital lease obligations                 |  |       | 2     |             |        |   |       |           |  |        |          |  |           |         |    |  |  |   | 2     | 
|Operating lease obligations               |  |       | 1,133 |             |        |   | 74     |           |  |        | 137       |  |           |         | 122 |  |  |   | 800   | 
|Unconditional purchase
    obligations(1) |  |       | 161   |             |        |   | 50     |           |  |        | 65        |  |           |         | 26  |  |  |   | 20    | 
|Other long-term obligations               |  |       | 2     |             |        |   | 2      |           |  |        |          |  |           |         |    |  |  |   |      | 
|                                          |  |       |       |             |        |   |        |           |  |        |           |  |           |         |    
|Total contractual obligations             |  | $     | 5,738 |             |        | $ | 745    |           |  | $      | 1,946     |  |           | $       | 616 |  |  | $ | 2,431 | 
|                                          |  |       |       |             |        |   |        |           |  |        |           |  |           |         |    






|    |                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------
|(1) | Included in these balances are commitments that may be satisfied
    by our managed and franchised properties.

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|                                |  |       |     |                                            |        |   |     |           |       |           |   |  |         |   |    |  |  |   |    | 
|------------------------------- |  | ----- | --- | ------------------------------------------ | ------ | - | --- | --------- | ----- | --------- | - |  | ------- | - | -- |  |  | - | -- | 
|                                |  |       |     | Amount of Commitment Expiration Per Period |       
|                                |  |       |     |                                            |       
|                                |  |       |     | Less Than                                  |        |   |     |           | After |          
|                                |  | Total |     |                                            | 1 Year |   |     | 1-3 Years |       | 4-5 Years |   |  | 5 Years |  
|                                |  |       |     |                                            |        |   |     |           |       |           |   |  |         |  
|Standby letters of credit       |  | $     | 125 |                                            |        | $ | 125 |           |       | $         |  |  |         | $ |   |  |  | $ |   | 
|Hotel loan
    guarantees(1)(2) |  |       | 67  |                                            |        |   |    |           |       |           |  |  |         |   | 37 |  |  |   | 30 | 
|Other commercial commitments    |  |       |    |                                            |        |   |    |           |       |           |  |  |         |   |   |  |  |   |   | 
|                                |  |       |     |                                            |        |   |     |           |       |           |   |  |         |   |   
|Total commercial commitments    |  | $     | 192 |                                            |        | $ | 125 |           |       | $         |  |  |         | $ | 37 |  |  | $ | 30 | 
|                                |  |       |     |                                            |        |   |     |           |       |           |   |  |         |   |   






|    |                                                                                             
|--- | --------------------------------------------------------------------------------------------
|(1) | Excludes fair value of guarantees which are reflected in our
    consolidated balance sheet.
|   
|(2) | Excludes a debt service guarantee since no substantial debt has
    been drawn.             







32



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Cash Used for Financing Activities




|                             |                           |                       |       |     |                |         |                  |  |      |          |   |  |            |            | 
|---------------------------- | ------------------------- | --------------------- | ----- | --- | -------------- | ------- | ---------------- |  | ---- | -------- | - |  | ---------- | ---------- | 
|                             |                           | Amount                |       |     |                |         | Interest Rate at |  |      |         
|                             |                           | Outstanding at        |       |     |                |         | December 31,     |  |      | Average  |  
|                             |                           | December 31, 2004(a)  |       |     | Interest Terms |         | 2004             |  |      | Maturity |  
|                             |                           |                       |       |     |                |         |                  |  |      |          |  
|                             |                           | (Dollars in millions) |       |     |                |         |                  |  |     
|Floating Rate Debt           |                           |                       |       |     |                |         |                  |  |      |          |   |  |            |           
|Senior Credit Facility:      |                           |                       |       |     |                |         |                  |  |      |          |   |  |            |           
|                             | Term Loan                 |                       | $     | 550 |                |         | LIBOR(b)+1.25%   |  |      | 3.65     | % |  |            | 1.5  years | 
|                             | Revolving Credit Facility |                       |       | 11  |                |         | CBA+1.25%        |  |      | 3.81     | % |  |            | 1.8  years | 
|Mortgages and Other          |                           |                       | 207   |     |                | Various |                  |  | 5.37 | %        |   |  | 2.1  years |           
|Interest Rate Swaps          |                           |                       | 300   |     |                |         |                  |  | 6.72 | %        |   |  |           |           
|                             |                           |                       |       |     |                |         |                  |  |      |          |  
|Total/ Average               |                           | $                     | 1,068 |     |                |         |                  |  | 4.85 | %        |   |  | 1.7  years |           
|                             |                           |                       |       |     |                |         |                  |  |      |          |  
|Fixed Rate Debt              |                           |                       |       |     |                |         |                  |  |      |          |   |  |            |           
|Sheraton Holding Public Debt |                           | $                     | 1,058 | (c) |                |         |                  |  | 6.00 | %        |   |  | 7.9  years |           
|Senior Notes                 |                           |                       | 1,514 | (c) |                |         |                  |  | 6.70 | %        |   |  | 4.9  years |           
|Convertible Debt             |                           |                       | 360   |     |                |         |                  |  | 3.50 | %        |   |  | 1.4  years |           
|Mortgages and Other          |                           |                       | 742   |     |                |         |                  |  | 7.25 | %        |   |  | 6.2  years |           
|Interest Rate Swaps          |                           |                       | (300  | )   |                |         |                  |  | 7.88 | %        |   |  |           |           
|                             |                           |                       |       |     |                |         |                  |  |      |          |  
|Total/ Average               |                           | $                     | 3,374 |     |                |         |                  |  | 6.11 | %        |   |  | 5.7  years |           
|                             |                           |                       |       |     |                |         |                  |  |      |          |  
|Total Debt                   |                           |                       |       |     |                |         |                  |  |      |          |   |  |            |           
|Total Debt and Average Terms |                           | $                     | 4,442 |     |                |         |                  |  | 5.81 | %        |   |  | 5.0  years |           
|                             |                           |                       |       |     |                |         |                  |  |      |          |  






|    |  |                                                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Excludes approximately $438 million of our share of
    unconsolidated joint venture debt, all of which was
    non-recourse, except as noted earlier.                                                                                     
|   
|(b) |  | At December 31, 2004, LIBOR was 2.40%                                                                                                                                                                                                      
|   
|(c) |  | Included approximately $11 million and $18 million at
    December 31, 2004 of fair value adjustments related to the
    fixed-to-floating interest rate swaps for the Sheraton Holding
    Public Debt and the Senior Notes, respectively.

Fiscal 2004 Developments.






33



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Fiscal 2003 Developments.




Fiscal 2002 Developments.




3 8 7 8


Other.




34



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Stock Sales and Repurchases






Off-Balance Sheet Arrangements




35



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





|                                |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |    |  |            |   |     |      |  |   |       |  |  |   |       |      |   |   |       |  | 
|------------------------------- | -------------------- | -------------------- | --- |  | ---- | - | ------------ | ---- | ---------- | ------------ | ---- |  |  | ---- | -- |  | ---------- | - | --- | ---- |  | - | ----- |  |  | - | ----- | ---- | - | - | ----- |  | 
|                                |                      | Expected Maturity or |     |  |      |   |              |      |           
|                                |                      | Transaction Date     |     |  |      |   |              |      | Total Fair |             
|                                |                      | At December 31,      |     |  |      |   | Total at     |      |            | Value at     |     
|                                |                      |                      |     |  |      |   | December 31, |      |            | December 31, |     
|                                |                      | 2005                 |     |  | 2006 |   |              | 2007 |            |              | 2008 |  |  | 2009 |    |  | Thereafter |   |     | 2004 |  |   | 2004  | 
|                                |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |    |  |            |   |     |      |  |   |       | 
|Liabilities                     |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |    |  |            |   |     |      |  |   |       |  |  |   |       |      |   |   |       | 
|Fixed rate (in millions)        |                      | $                    | 480 |  |      | $ | 379          |      |            | $            | 754  |  |  | $    | 22 |  |            | $ | 432 |      |  | $ | 1,607 |  |  | $ | 3,674 |      |   | $ | 4,024 | 
|Average interest rate           |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |    |  |            |   |     |      |  |   |       |  |  |   | 6.25  | %    |   |   |       | 
|Floating rate (in millions)     |                      | $                    | 139 |  |      | $ | 521          |      |            | $            | 90   |  |  | $    | 5  |  |            | $ | 9   |      |  | $ | 4     |  |  | $ | 768   |      |   | $ | 768   | 
|Average interest rate           |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |    |  |            |   |     |      |  |   |       |  |  |   | 4.12  | %    |   |   |       | 
|Interest Rate Swaps             |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |    |  |            |   |     |      |  |   |       |  |  |   |       |      |   |   |       | 
|Fixed to variable (in millions) |                      | $                    |    |  |      | $ |             |      |            | $            |     |  |  | $    |   |  |            | $ |    |      |  | $ | 300   |  |  | $ | 300   |      |   |   |       | 
|                                | Average pay rate     |                      |     |  |      |   |              |      |            |              |      |  |  |      |    |  |            |   |     |      |  |   |       |  |  |   |       | 6.72 | % |   |       |  | 
|                                | Average receive rate |                      |     |  |      |   |              |      |            |              |      |  |  |      |    |  |            |   |     |      |  |   |       |  |  |   |       | 7.88 | % |   |       |  | 












|        |                                             
|------- | --------------------------------------------
|Item 8. | Financial Statements and Supplementary Data.



36



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








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures.




Managements Report on Internal Control over
Financial Reporting.






| |   |                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the Company;                                                                                                                                                             
|
| |  | Provide reasonable assurance that the transactions are recorded
    as necessary to permit the preparation of financial statements
    in accordance with GAAP, and the receipts and expenditures of
    the Company are being made only in accordance with
    authorizations of management and directors of the
    Company; and
|
| |  | Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys assets that could have a material effect on the
    financial statements.                                                                                                          







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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
INTERNAL CONTROL OVER FINANCIAL REPORTING




















| |                  
| | -----------------
| | ERNST & YOUNG LLP





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| |                             
| | ----------------------------
| | Changes in Internal Controls






PART III







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



|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                         |  | 
|------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- |  | 
|Name (Age)               |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | Service Period                          | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                         | 
|Steven J. Heyer (52)     |  | Chief Executive Officer of the Company since October 2004.
    Served as President and Chief Operating Officer of The Coca-Cola
    Company from December 2002 to September 2004, President and
    Chief Operating Officer, Coca-Cola Ventures from April 2001 to
    December 2002. Mr. Heyer was President and Chief Operating
    Officer of Turner Broadcasting System, Inc. from 1996 until
    April 2001. Mr. Heyer is a director of Internet Security
    Systems, Inc.                                                                                                                                                                                                                                                                                                                |  |                                         |  | 
|Barry S. Sternlicht (44) |  | Executive Chairman of the Company since October 2004. Chairman
    and Chief Executive Officer of the Company since September 1997
    and January 1999, respectively. 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 was Chief Executive Officer of iStar
    Financial, Inc. (iStar), a publicly-held real estate
    investment firm, from September 1996 to November 1997 and served
    as the Chairman of the Board of Directors of iStar from
    September 1996 to April 2000. He is a director of The Estee
    Lauder Companies, Inc. |  |                                         |  | 
|Charlene Barshefsky (54) |  | Senior International Partner at the law firm of Wilmer Cutler
    Pickering Hale and Dorr LLP, Washington, D.C. From March
    1997 to January 2001, Ambassador Barshefsky was the United
    States Trade Representative, the chief trade negotiator and
    principal trade policy maker for the United States and a member
    of the Presidents Cabinet. Ambassador Barshefsky is a
    director of The Estee Lauder Companies, Inc., American Express
    Company, Intel Corporation and Idenix Pharmaceuticals.                                                                                                                                                                                                                                                                          |  | Director and Trustee since October 2001

39



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|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                                                                         |  | 
|--------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | 
|Name (Age)                  |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                    |  | Service Period                                                                          | 
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                                                                         | 
|Jean-Marc Chapus (45)       |  | Group Managing Director and Portfolio Manager of Trust Company
    of the West, an investment management firm, and President of
    TCW/ Crescent Mezzanine L.L.C., a private investment fund, since
    March 1995. Mr. Chapus is a director of MEMC Electronic
    Materials, Inc.                                                                                                                                                            |  | Director from August 1995 to November 1997; since April 1999Trustee since November 1997
|Bruce W. Duncan (53)        |  | President, Chief Executive Officer and Trustee of Equity
    Residential (EQR) the largest publicly traded
    apartment company in the United States since April 2002. From
    April 2000 until March 2002, he was a private investor. From
    December 1995 until March 2000, Mr. Duncan served as
    Chairman, President and Chief Executive Officer of The Cadillac
    Fairview Corporation Limited, a real estate operating company. |  | Director since April 1999Trustee since August 1995                                     
|Eric Hippeau (53)           |  | Managing Partner of Softbank Capital Partners, a technology
    venture capital firm, since March 2000. Mr. Hippeau served
    as Chairman and Chief Executive Officer of Ziff-Davis Inc., an
    integrated media and marketing company, from 1993 to March 2000
    and held various other positions with Ziff-Davis from 1989 to
    1993. Mr. Hippeau is a director of Yahoo! Inc.                                                          |  | Director and Trustee since April 1999                                                  
|Stephen R. Quazzo (45)      |  | 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 subsidiary of Equity Group Investments, Inc.,
    a Chicago-based holding company controlled by Samuel Zell.                                               |  | Director since April 1999Trustee since August 1995                                     
|Thomas O. Ryder (60)        |  | Chairman of the Board and Chief Executive Officer of The
    Readers Digest Association, Inc. since April 1998.
    Mr. Ryder was President, American Express Travel Related
    Services International, a division of American Express Company,
    which provides travel, financial and network services, from
    October 1995 to April 1998. He is a director of Amazon.com, Inc.                                                          |  | Director and Trustee since April 2001                                                  
|Daniel W. Yih (46)          |  | Principal and Chief Operating Officer of GTCR Golder Rauner,
    LLC, a private equity firm, since September 2000. From June 1995
    until March 2000, Mr. Yih was a general partner of Chilmark
    Partners, L.P., a private equity firm.                                                                                                                                                                                                    |  | Director since August 1995 Trustee since April 1999                                    
|Kneeland C. Youngblood (49) |  | Co-founder and managing partner of Pharos Capital Group, L.L.C.,
    a private equity fund focused on technology companies, business
    service companies and health care companies, since January 1998.
    He is Chairman of the Board of the American Beacon Funds, a
    mutual fund company managed by AMR Investments, an investment
    affiliate of American Airlines. He is a director of the Burger
    King Corp.                   |  | Director and Trustee since April 2001                                                  

40



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Executive Officers of the Registrants




|                    |  |     |    |  |          |                                                                                                                                                                      
|------------------- |  | --- | -- |  | -------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                |  | Age |    |  | Position
|                    |  |     |    |  |         
|Barry S. Sternlicht |  |     | 44 |  |          | Executive Chairman and a Director of the Corporation and
    Executive Chairman and a Trustee of the Trust                                                           
|Steven J. Heyer     |  |     | 52 |  |          | Chief Executive Officer and a Director of the Corporation and
    Chief Executive Officer and a Trustee of the Trust                                                 
|Robert F. Cotter    |  |     | 53 |  |          | President and Chief Operating Officer of the Corporation and a
    Vice President of the Trust                                                                       
|Vasant M. Prabhu    |  |     | 45 |  |          | Executive Vice President and Chief Financial Officer of the
    Corporation and Vice President, Chief Financial Officer and
    Chief Accounting Officer of the Trust
|Kenneth S. Siegel   |  |     | 49 |  |          | Executive Vice President, General Counsel and Secretary of the
    Corporation and Vice President, General Counsel and Secretary of
    the Trust                    
|David K. Norton     |  |     | 49 |  |          | Executive Vice President  Human Resources of the
    Corporation and Vice President  Human Resources of
    the Trust                                              
|Theodore W. Darnall |  |     | 47 |  |          | President, Real Estate Group of the Corporation and the Trust                                                                                                        

Barry S. Sternlicht.


Steven J, Heyer.


Robert F. Cotter.


Vasant M. Prabhu.


Kenneth S. Siegel.


David K. Norton.


41



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##### Table of Contents





Theodore W. Darnall.


Corporate Governance




http://starwoodhotels.com/corporate/investor  relations.html


http://starwoodhotels.com/corporate/investor  relations.html.


http://starwoodhotels.com/corporate/investor  relations.html.




Section 16(a) Beneficial Ownership Reporting
Compliance











|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



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|         |                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters.

Equity Compensation Plan Information 
December 31, 2004


|                                                           |  |                      |            |  |                      |                      |                         |                           |  |  |            |    
|---------------------------------------------------------- |  | -------------------- | ---------- |  | -------------------- | -------------------- | ----------------------- | ------------------------- |  |  | ---------- | ---
|                                                           |  | (a)                  |            |  | (b)                  |                      |                         | (c)                       | 
|                                                           |  |                      |            |  |                      | Number of securities |                        
|                                                           |  | Number of securities |            |  |                      |                      | remaining available for |                          
|                                                           |  | to be issued upon    |            |  | Weighted-average     |                      |                         | future issuance under     | 
|                                                           |  | exercise of          |            |  | exercise price of    |                      |                         | equity compensation plans | 
|                                                           |  | outstanding options, |            |  | outstanding options, |                      |                         | (excluding securities     | 
|                                                           |  | warrants and rights  |            |  | warrants and rights  |                      |                         | reflected in Column (a))  | 
|                                                           |  |                      |            |  |                      |                      |                         |                           | 
|Equity compensation plans approved by security holders     |  |                      | 34,548,670 |  |                      | $                    | 33.81                   |                           |  |  | 57,531,550 | (1)
|Equity compensation plans not approved by security holders |  |                      |           |  |                      |                      |                        |                           |  |  |           |    
|                                                           |  |                      |            |  |                      |                      |                         |                           | 
|Total                                                      |  |                      | 34,548,670 |  |                      | $                    | 33.81                   |                           |  |  | 57,531,550 |    
|                                                           |  |                      |            |  |                      |                      |                         |                           | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Does not include deferred share units (that vest over three
    years and may be settled in Shares) that may be issued pursuant
    to obligations under the Executive Annual Incentive Plan
    (AIP). The Executive AIP does not limit the number
    of deferred share units that may be issued. This plan has been
    amended to provide for a termination date of May 26, 2009
    to comply with new NYSE requirements. In addition,
    9,242,379 Shares remain available for issuance under our
    Employee Stock Purchase Plan, a stock purchase plan meeting the
    requirements of Section 423 of the Internal Revenue Code.








|         |                                                
|-------- | -----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions.

Policies of the Board of Directors of the Corporation and the
Board of Trustees of the Trust




Starwood Capital


General.


Trademark License.


Starwood Capital Noncompete.


43



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Miscellaneous.






44



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##### Table of Contents













Portfolio Investments.




45



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##### Table of Contents







Other Management-Related Investments. Innisbrook.




Savannah.


Aircraft Lease.


46



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##### Table of Contents





Other











|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services





47



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##### Table of Contents



PART IV







|         |                                                                                          
|-------- | -----------------------------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statements, Financial Statement
    Schedules and Reports on Form 8-K





| |    |                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | The financial statements and financial statement schedules
    listed in the Index to Financial Statements and Schedules
    following the signature pages hereof.
|
| | 2. | Exhibits:                                                                                                                                                         

|        |   |    |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | - | -- | ---------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |    |                       
|Number  |   |    | Description of Exhibit
|        |   |    |                       
|        | 2 | .1 |                        | Formation Agreement, dated as of November 1, 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 Exchange 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
    filed with the SEC on September 25, 1997, as amended by the
    Form 8-K/ A filed with the SEC on December 18, 1997).
|        | 3 | .1 |                        | Amended and Restated Declaration of Trust of the Trust, amended
    and restated through April 16, 1999 (incorporated by
    reference to Exhibit 3.1 of the Trusts and the
    Corporations Joint Quarterly Report on Form 10-Q for
    the quarterly period ended March 31, 1999 (the 1999
    Form  10-Q1).                                                                                                                                                                                                                                                                                                                                                                                               
|        | 3 | .2 |                        | Articles of Amendment to the Amended and Restated Declaration of
    Trust of the Trust, dated as of November 15,
    2004.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 3 | .3 |                        | Articles of Restatement of the Corporation, as of May 7,
    2004 (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,
    2004 (the 2004 Form 10-Q2)).                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 3 | .4 |                        | Bylaws of the Trust, as amended and restated through
    November 8,
    2004.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 3 | .5 |                        | Amended and Restated Bylaws of the Corporation, as amended and
    restated through May 7, 2004 (incorporated by reference to
    Exhibit 10.2 to the 2004 Form 10-Q2).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 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
    Trusts and the Corporations Joint Current Report on
    Form 8-K filed with the SEC on March 15, 1999).                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 4 | .3 |                        | First Amendment to Rights Agreement, dated as of October 2,
    2003 (incorporated by reference to Exhibit 4 of
    Form 8-A/ A filed on October 7, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 4 | .4 |                        | Second Amendment to Rights Agreement, dated as of
    October 24, 2003 (incorporated by reference to
    Exhibit 4 of Form 8-A/ A filed on October 30,
    2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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|        |    |    |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | -- | -- | ---------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |    |                       
|Number  |    |    | Description of Exhibit
|        |    |    |                       
|        | 4  | .5 |                        | 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 Corporations Registration Statement on
    Form S-3 filed November 13, 1996).                                                                                                                                                                                     
|        | 4  | .6 |                        | First Indenture Supplement, dated as of December 31, 1998,
    among ITT Corporation, 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  | .7 |                        | Indenture, dated as of May 25, 2001, by and among the
    Corporation, as Issuer, the guarantors named therein and Firstar
    Bank, N.A., as Trustee (incorporated by reference to
    Exhibit 10.2 to the Corporations and the Trusts
    Joint Quarterly Report on Form 10-Q for the quarterly
    period ended June 30, 2001 (the 2001
    Form 10-Q2)).                                                                                                                                                                                                                                       
|        | 4  | .8 |                        | Indenture, dated as of April 19, 2002, among the
    Corporation, the guarantor parties named therein and
    U.S. Bank National Association, as trustee (incorporated by
    reference to Exhibit 4.1 to the Corporations and
    Sheraton Holding Corporations Joint Registration Statement
    on Form S-4 filed on November 19, 2002 the 2002
    Forms S-4)).                                                                                                                                                                                                                                 
|        | 4  | .9 |                        | Indenture dated May 16, 2003 between the Corporation, the
    Trust, the Guarantor and U.S. Bank National Association as
    trustee (incorporated by reference to Exhibit 4.9 to the
    July 8, 2003 Form S-3) (Registration Nos. 333-106888,
    333-106888-01, 333-106888-02) (the Form S-3).                                                                                                                                                                                                                                                                                                    
|        |    |    |                        | 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 Corporations and the
    Trusts Joint Annual Report on Form 10-K for the
    fiscal year ended December 31, 1998 (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 Lease Agreement, entered into as of February 14,
    1997, between the Trust (or a subsidiary) as Lessor and the
    Corporation (or a subsidiary) as
    Lessee.(2)                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10 | .4 |                        | Form of Amendment of Lease, dated as of June 1, 2002,
    between the Trust (or a subsidiary) as Lessor and the
    Corporation (or a subsidiary) as
    Lessee.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10 | .5 |                        | 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
    Trusts and the Corporations Joint Annual Report on
    Form 10-K for the fiscal year ended December 31, 1997
    (the 1997 Form 10-K)).                                                                                                                                                                                                                                                                                  
|        | 10 | .6 |                        | Credit Agreement, dated October 9, 2002, among the
    Corporation, certain additional alternative currency revolving
    loan borrowers and various lenders, Deutsche Bank, AG, New York
    Branch, as Administrative Agent, JP Morgan Chase Bank, as
    Syndication Agent, Bank of America, N.A., Fleet National Bank
    and Societe Generale, as Co-Documentation Agents, and Deutsche
    Bank Securities Inc. and JP Morgan Securities Inc. as Co-Lead
    Arrangers and joint Book Running Managers (incorporated by
    reference to Exhibit 10.1 of Form 8-K filed on
    October 11, 2002).
|        | 10 | .7 |                        | First Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.5 to the Corporations and the
    Trusts Joint Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 2003 (the 2003
    10-Q1)).                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .8 |                        | Second Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.1 to Form 10-Q for the quarter ended
    June 30, 2003 (the 2003 10-Q2)).                                                                                                                                                                                                                                                                                                                                                                                                                                          

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|        |    |     |                        |                                                                                                                                                                                                                                                                                                                                      
|------- | -- | --- | ---------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .9  |                        | Third Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.1 to Form 10-Q for the quarter ended
    September 30, 2004 (the 2004 10-Q3)).                                                                                                                                                                    
|        | 10 | .10 |                        | Incremental Term Loan Commitment to Credit Agreement
    (incorporated by reference to Exhibit 10.2 to the 2004
    10-Q3).                                                                                                                                                                                                          
|        | 10 | .11 |                        | 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 Bankers
    Trust Company as Collateral Agent (incorporated by
    reference to Exhibit 10.63 to the 1997 Form 10-K).                                   
|        | 10 | .12 |                        | 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 | .13 |                        | First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, Realty Partnership, Sheraton Phoenician
    Corporation, and Starwood Phoenician CMBS I
    LLC.(2)                                                                                               
|        | 10 | .14 |                        | Second Modification, dated as of December 30, 1999, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, Realty Partnership, the Trust and Starwood Hotels
    and Resorts Holdings,
    Inc.(2)                                                                                                         
|        | 10 | .15 |                        | Third Modification, dated as of June 30, 2000, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, the Corporation, Realty Partnership, the Trust and
    Starwood Hotels and Resorts Holdings,
    Inc.(2)                                                                                             
|        | 10 | .16 |                        | 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 | .17 |                        | First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among the
    Corporation, Harbor-Cal S.D., Starwood Sheraton San Diego
    CMBS I LLC and Realty
    Partnership.(2)                                                                                                        
|        | 10 | .18 |                        | 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 | .19 |                        | First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among the
    Corporation, Harbor-Cal S.D., Starwood Sheraton San Diego
    CMBS I LLC and Realty
    Partnership.(2)                                                                                                        
|        | 10 | .20 |                        | Loan Agreement, dated as of January 27, 1999, among the
    Borrowers named therein, as Borrowers, Starwood Operator I LLC,
    as Operator, and Lehman Brothers Holding Inc., d/b/a Lehman
    Capital, a division of Lehman Brothers Holdings Inc.
    (incorporated by reference to Exhibit 10.58 to the 1998
    Form 10-K).     
|        | 10 | .21 |                        | Starwood Hotels & Resorts 1995 Long-Term Incentive Plan
    (the Trust 1995 LTIP) (Amended and Restated as
    of December 3, 1998) (incorporated by reference to
    Annex D to the Trusts and the Corporations
    Joint Proxy Statement dated December 3, 1998 (the
    1998 Proxy
    Statement))(1)                       
|        | 10 | .22 |                        | Second Amendment to the Trust 1995 LTIP (incorporated by
    reference to Exhibit 10.4 to the
    2003 10-Q1).(1)                                                                                                                                                                                                                    
|        | 10 | .23 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    Trust 1995
    LTIP.(1)(2)                                                                                                                                                                                                                                          
|        | 10 | .24 |                        | Starwood Hotels & Resorts Worldwide, Inc. 1995
    Long-Term Incentive Plan (the Corporation 1995 LTIP)
    (Amended and Restated as of December 3, 1998) (incorporated
    by reference to Annex E to the 1998 Proxy
    Statement).(1)                                                                                           

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|        |    |     |                        |                                                                                                                                                                                                                                                                                                                                                     
|------- | -- | --- | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .25 |                        | Second Amendment to the Corporation 1995 LTIP (incorporated by
    reference to Exhibit 10.3 to the 2003
    10-Q1).(1)                                                                                                                                                                                                                             
|        | 10 | .26 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    Corporation 1995
    LTIP.(1)(2)                                                                                                                                                                                                                                                   
|        | 10 | .27 |                        | Starwood Hotels & Resorts Worldwide, Inc. 1999
    Long-Term Incentive Compensation Plan (the 1999
    LTIP) (incorporated by reference to Exhibit 10.4 to
    the Corporations and the Trusts Joint Quarterly
    Report on Form 10-Q for the quarterly period ended
    June 30, 1999 (the 1999
    Form  10-Q2)).(1)                       
|        | 10 | .28 |                        | First Amendment to the 1999 LTIP, dated as of August 1,
    2001 (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,
    2001).(1)                                                                                         
|        | 10 | .29 |                        | Second Amendment to the 1999 LTIP (incorporated by reference to
    Exhibit 10.2 to the
    2003 10-Q1).(1)                                                                                                                                                                                                                                         
|        | 10 | .30 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    1999
    LTIP.(1)(2)                                                                                                                                                                                                                                                               
|        | 10 | .31 |                        | Form of Restricted Stock Agreement pursuant to the 1999
    LTIP.(1)(2)                                                                                                                                                                                                                                                                             
|        | 10 | .32 |                        | Starwood Hotels & Resorts Worldwide, Inc. 2002
    Long-Term Incentive Compensation Plan (the 2002
    LTIP) (incorporated by reference to Annex B of the
    Corporations 2002 Proxy
    Statement).(1)                                                                                                                                         
|        | 10 | .33 |                        | First Amendment to the 2002 LTIP (incorporated by reference to
    Exhibit 10.1 to the 2003
    10-Q1).(1)                                                                                                                                                                                                                                          
|        | 10 | .34 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    2002 LTIP (incorporated by reference to Exhibit 10.49 to
    the 2002 Form 10-K filed on February 28, 2003 (the
    2002
    10-K)).(1)                                                                                                                                          
|        | 10 | .35 |                        | Form of Restricted Stock Agreement pursuant to the 2002
    LTIP.(1)(2)                                                                                                                                                                                                                                                                             
|        | 10 | .36 |                        | 2004 Long-Term Incentive Compensation Plan (2004
    LTIP) (incorporated by reference to the Corporations
    2004 Notice of Annual Meeting of Stockholders and Proxy
    Statement, pages A-1 through
    A-20).(1)                                                                                                                             
|        | 10 | .37 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    2004 LTIP (incorporated by reference to Exhibit 10.4 to the
    2004
    10-Q2).(1)                                                                                                                                                                                                
|        | 10 | .38 |                        | Form of Restricted Stock Agreement pursuant to the 2004 LTIP
    (incorporated by reference to Exhibit 99.1 to the
    Corporation and the Trusts Joint Current Report on
    Form 8-K filed with the SEC on February 16, 2005 (the
    February 2005
    8-K)).(1)                                                                              
|        | 10 | .39 |                        | Starwood Hotels & Resorts Worldwide, Inc. 1999 Annual
    Incentive Plan for Certain Executives (the 1999 AIP)
    (incorporated by reference to Exhibit 10.5 to the 1999
    Form 10-Q2).(1)                                                                                                                                                     
|        | 10 | .40 |                        | First Amendment to the 1999 AIP, dated as of December 17,
    2003 (incorporated by reference to Exhibit 10.65 to the
    Corporations and the Trusts Joint Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003
    (the 2003
    10-K)).(1)                                                                             
|        | 10 | .41 |                        | Starwood Hotels & Resorts Worldwide, Inc. Annual
    Incentive Plan, dated June 1,
    2001.(1)(2)                                                                                                                                                                                                                                                  
|        | 10 | .42 |                        | Starwood Hotels & Resorts Worldwide, Inc. Deferred
    Compensation Plan, effective as of January 1, 2001
    (incorporated by reference to Exhibit 10.1 to the 2001
    Form 10-Q2).(1)                                                                                                                                                            
|        | 10 | .43 |                        | Form of Indemnification Agreement between the Corporation, the
    Trust and each of its Directors/ Trustees and executive officers
    (incorporated by reference to Exhibit 10.10 to the
    2003 10-K).(1)                                                                                                                                       
|        | 10 | .44 |                        | Registration Rights Agreement, dated May 16, 2003, among
    the Corporation, the Guarantor and the Initial Purchasers
    (incorporated by reference to Exhibit 4.10 to the
    Form S-3).                                                                                                                                                         
|        | 10 | .45 |                        | 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)).

51



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##### Table of Contents



|        |    |     |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- | -- | --- | ---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .46 |                        | 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 | .47 |                        | 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 | .48 |                        | 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 | .49 |                        | 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 | .50 |                        | 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 | .51 |                        | 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 | .52 |                        | Amendment to Exchange Rights Agreement (Class A Realty
    Partnership Units), dated as of October 10, 2002, among the
    Trust, Realty Partnership and certain limited partners of the
    Realty Partnership (incorporated by reference to
    Exhibit 10.53 to the 2002 Form 10-K).                                                                                                                                               
|        | 10 | .53 |                        | Amendment to Exchange Rights Agreement, dated as of
    December 17, 2003 for the Class A Realty Partnership
    Units (incorporated by reference to Exhibit 10.67 to the
    2003 10-K).                                                                                                                                                                                                                                             
|        | 10 | .54 |                        | 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 | .55 |                        | Amendment to Exchange Rights Agreement (Class B Operating
    Partnership Units), dated as of October 10, 2002, among the
    Corporation, Operating Partnership and certain limited partners
    of the Operating Partnership (incorporated by reference to
    Exhibit 10.54 to the 2002 form 10-K).                                                                                                                                
|        | 10 | .56 |                        | Amendment to Exchange Rights Agreement, dated as of
    December 17, 2003 for the Class B Operating
    Partnership Units (incorporated by reference to
    Exhibit 10.66 to the 2003 10-K).                                                                                                                                                                                                                                          
|        | 10 | .57 |                        | Second Amended and Restated Employment Agreement, dated as of
    January 1, 2003, between Barry S. Sternlicht and the
    Company (incorporated by reference to Exhibit 10.69 to the
    2003
    10-K).(1)                                                                                                                                                                                                                          
|        | 10 | .58 |                        | Form of Severance Agreement, dated December 1999, between the
    Corporation and Barry S. Sternlicht (incorporated by reference
    to Exhibit 10.52 to the 1999
    Form 10-K).(1)                                                                                                                                                                                                                                                  
|        | 10 | .59 |                        | Starwood Hotels & Resorts Amended and Restated
    Non-Qualified Stock Option Agreement by and between the Trust
    and Barry S. Sternlicht, dated as of May 22, 2002 relating
    to a grant made on June 29, 1995 (incorporated by reference
    to Exhibit 10.3 to the 2002
    Form 10-Q2).(1)                                                                                                                                   
|        | 10 | .60 |                        | Starwood Hotels & Resorts Amended and Restated
    Non-Qualified Stock Option Agreement by and between the Trust
    and Barry S. Sternlicht, dated as of May 22, 2002 relating
    to a grant made on August 12, 1996 (incorporated by
    reference to Exhibit 10.4 to the 2002
    Form 10-Q2).(1)                                                                                                                                 
|        | 10 | .61 |                        | Starwood Hotels & Resorts Amended and Restated
    Non-Qualified Stock Option Agreement by and between the Trust
    and Barry S. Sternlicht, dated as of May 22, 2002 relating
    to a grant made on August 12, 1996 (incorporated by
    reference to Exhibit 10.5 to the 2002
    Form 10-Q2).(1)                                                                                                                                 

52



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|        |    |     |                        |                                                                                                                                                                                                                                                                                             
|------- | -- | --- | ---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .62 |                        | Employment Agreement, dated as of June 27, 2000, between
    the Corporation and Robert F. Cotter (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,
    2000).(1)
|        | 10 | .63 |                        | Addendum to Robert F. Cotter Offer Letter, effective as of
    February 16, 2002 (incorporated by reference to
    Exhibit 10.1 to the Corporations and Trusts
    Joint Quarterly Report on Form 10-Q for the quarter ended
    March 31,
    2002).(1)                                  
|        | 10 | .64 |                        | Form of Severance Agreement, dated as of August 14, 2000,
    between the Corporation and Robert F. Cotter (incorporated by
    reference to Exhibit 10.56 to the 2000
    Form 10-K).(1)                                                                                                   
|        | 10 | .65 |                        | Letter Agreement, dated March 9, 2004 between the
    Corporation and Robert Cotter (incorporated by reference to the
    Trusts and the Corporations Joint Quarterly Report
    on Form 10-Q for the quarterly period ended March 31,
    2004).
    (1)                                 
|        | 10 | .66 |                        | Employment Agreement, dated March 25, 1998, between
    Theodore Darnall and the Corporation (incorporated by reference
    to Exhibit 10.61 to the 2002
    Form 10-K).(1)                                                                                                                 
|        | 10 | .67 |                        | Severance Agreement, dated December 1999, between the
    Corporation and Theodore Darnall (incorporated by reference to
    Exhibit 10.55 to the 2002
    Form 10-K).(1)                                                                                                                   
|        | 10 | .68 |                        | Employment Agreement, dated as of November 13, 2003,
    between the Corporation and Vasant Prabhu (incorporated by
    reference to Exhibit 10.68 to the 2003
    10-K).(1)                                                                                                                
|        | 10 | .69 |                        | Employment Agreement, dated as of September 20, 2004,
    between the Corporation and Steven J. Heyer (incorporated by
    reference to Exhibit 10.1 to the Trusts and the
    Corporations Joint Current Report on Form 8-K filed
    with the SEC on September 24,
    2004).(1)        
|        | 10 | .70 |                        | Form of Non-Qualified Stock Option Agreement between the
    Corporation and Steven J. Heyer pursuant to the 2004 LTIP.
    (1)(2)                                                                                                                                                          
|        | 10 | .71 |                        | Form of Restricted Stock Unit Agreement between the Corporation
    and Steven J. Heyer pursuant to the 2004 LTIP (incorporated by
    reference to Exhibit 99.2 to the February 2005
    8-K.(1)                                                                                           
|        | 10 | .72 |                        | Employment Agreement, dated as of September 25, 2000,
    between the Corporation and Kenneth Siegel (incorporated by
    reference to Exhibit 10.57 to the Corporations and
    Trusts Joint Annual Report on Form 10-K for the
    fiscal year ended December 31,
    2000).(1)         
|        | 10 | .73 |                        | Letter Agreement, dated July 22, 2004 between the
    Corporation and Kenneth
    Siegel.(1)(2)                                                                                                                                                                                             
|        | 12 | .1  |                        | Calculation of Ratio of Earnings to Total Fixed Charges.
    (2)                                                                                                                                                                                                                            
|        | 21 | .1  |                        | Subsidiaries of the
    Registrants.(2)                                                                                                                                                                                                                                                     
|        | 23 | .1  |                        | Consent of Ernst & Young
    LLP.(2)                                                                                                                                                                                                                                                        
|        | 31 | .1  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Executive
    Officer 
    Corporation.(2)                                                                                                                                                     
|        | 31 | .2  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Financial
    Officer 
    Corporation.(2)                                                                                                                                                     
|        | 31 | .3  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Executive
    Officer  Trust.
    (2)                                                                                                                                                          
|        | 31 | .4  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Financial and Accounting
    Officer 
    Trust.(2)                                                                                                                                            
|        | 32 | .1  |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Executive Officer 
    Corporation.(2)                                                                                                                                          
|        | 32 | .2  |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Financial Officer 
    Corporation.(2)                                                                                                                                          

53



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|        |    |    |                        |                                                                                                                                                            
|------- | -- | -- | ---------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |    |                       
|Number  |    |    | Description of Exhibit
|        |    |    |                       
|        | 32 | .3 |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Executive Officer 
    Trust.(2)               
|        | 32 | .4 |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Financial and Accounting Officer 
    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.                                                                                                                        

54



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SIGNATURES






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



| |     |                    
| | --- | -------------------
| | By: | /s/ Steven J. Heyer

| |                            
| | ---------------------------
| |                            
| | Steven J. Heyer            
| | Chief Executive Officer and
| | Director                   



| |     |                     
| | --- | --------------------
| | By: | /s/ Vasant M. Prabhu

| |                             
| | ----------------------------
| |                             
| | Vasant M. Prabhu            
| | Executive Vice President and
| | Chief Financial Officer     





|                                               |  |                                                                                                       |  |               |  | 
|---------------------------------------------- |  | ----------------------------------------------------------------------------------------------------- |  | ------------- |  | 
|Signature                                      |  | Title                                                                                                 |  | Date         
|                                               |  |                                                                                                       |  |              
|                                              
|/s/ Steven J. HeyerSteven
    J. Heyer         |  | Chief Executive Officer and Director                                                                  |  | March 2, 2005
|                                              
|/s/ Barry S. SternlichtBarry
    S. Sternlicht |  | Executive Chairman and Director                                                                       |  | March 3, 2005
|                                              
|/s/ Vasant M. PrabhuVasant
    M. Prabhu       |  | Executive Vice President and Chief Financial Officer (Principal
    Financial and Accounting Officer) |  | March 2, 2005
|                                              
|/s/ Charlene BarshefskyCharlene
    Barshefsky |  | Director                                                                                              |  | March 3, 2005
|                                              
|/s/ Jean-Marc ChapusJean-Marc
    Chapus       |  | Director                                                                                              |  | March 3, 2005
|                                              
|/s/ Bruce W. DuncanBruce
    W. Duncan         |  | Director                                                                                              |  | March 3, 2005
|                                              
|/s/ Eric HippeauEric
    Hippeau               |  | Director                                                                                              |  | March 3, 2005

55



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##### Table of Contents



|                                                         |  |          |  |               |  | 
|-------------------------------------------------------- |  | -------- |  | ------------- |  | 
|Signature                                                |  | Title    |  | Date         
|                                                         |  |          |  |              
|                                                        
|/s/ Thomas O. RyderThomas
    O. Ryder                   |  | Director |  | March 3, 2005
|                                                        
|/s/ Daniel W. YihDaniel
    W. Yih                       |  | Director |  | March 3, 2005
|                                                        
|/s/ Kneeland C.
    YoungbloodKneeland
    C. Youngblood |  | Director |  | March 3, 2005

56



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##### Table of Contents



SIGNATURES






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



| |     |                    
| | --- | -------------------
| | By: | /s/ Steven J. Heyer

| |                            
| | ---------------------------
| |                            
| | Steven J. Heyer            
| | Chief Executive Officer and
| | Trustee                    



| |     |                     
| | --- | --------------------
| | By: | /s/ Vasant M. Prabhu

| |                                       
| | --------------------------------------
| |                                       
| | Vasant M. Prabhu                      
| | Vice President and                    
| | Chief Financial and Accounting Officer





|                                               |  |                                                                                                    |  |               |  | 
|---------------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | ------------- |  | 
|Signature                                      |  | Title                                                                                              |  | Date         
|                                               |  |                                                                                                    |  |              
|                                              
|/s/ Steven J. HeyerSteven
    J. Heyer         |  | Chief Executive Officer and Trustee (Principal Executive Officer)                                  |  | March 2, 2005
|                                              
|/s/ Barry S. SternlichtBarry
    S. Sternlicht |  | Chairman and Trustee                                                                               |  | March 3, 2005
|                                              
|/s/ Vasant M. PrabhuVasant
    M. Prabhu       |  | Executive Vice President, Chief Financial Officer (Principal
    Financial and Accounting Officer) |  | March 2, 2005
|                                              
|/s/ Charlene BarshefskyCharlene
    Barshefsky |  | Trustee                                                                                            |  | March 3, 2005
|                                              
|/s/ Jean-Marc ChapusJean-Marc
    Chapus       |  | Trustee                                                                                            |  | March 3, 2005
|                                              
|/s/ Bruce W. DuncanBruce
    W. Duncan         |  | Trustee                                                                                            |  | March 3, 2005
|                                              
|/s/ Eric HippeauEric
    Hippeau               |  | Trustee                                                                                            |  | March 3, 2005

57



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|                                                         |  |         |  |               |  | 
|-------------------------------------------------------- |  | ------- |  | ------------- |  | 
|Signature                                                |  | Title   |  | Date         
|                                                         |  |         |  |              
|                                                        
|/s/ Thomas O. RyderThomas
    O. Ryder                   |  | Trustee |  | March 3, 2005
|                                                        
|/s/ Daniel W. YihDaniel
    W. Yih                       |  | Trustee |  | March 3, 2005
|                                                        
|/s/ Kneeland C.
    YoungbloodKneeland
    C. Youngblood |  | Trustee |  | March 3, 2005

58



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


INDEX TO FINANCIAL STATEMENTS AND SCHEDULES


|                                                            |                                                                                                              |      |      |      | 
|----------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ---- | ---- | ---- | 
|                                                            |                                                                                                              | Page |     
|                                                            |                                                                                                              |      |     
|Report of Independent Registered Public
    Accounting Firm |                                                                                                              |      | F-2  |     
|Starwood Hotels & Resorts
    Worldwide, Inc.:              |                                                                                                              |      |      |     
|                                                            | Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                             |      |      | F-3  | 
|                                                            | Consolidated Statements of Income for the
    Years Ended December 31, 2004, 2003 and 2002                   |      |      | F-4  | 
|                                                            | Consolidated Statements of Comprehensive
    Income for the Years Ended December 31, 2004, 2003 and
    2002 |      |      | F-5  | 
|                                                            | Consolidated Statements of Equity for the
    Years Ended December 31, 2004, 2003 and 2002                   |      |      | F-6  | 
|                                                            | Consolidated Statements of Cash Flows for
    the Years Ended December 31, 2004, 2003 and 2002               |      |      | F-7  | 
|Starwood Hotels & Resorts:                                  |                                                                                                              |      |      |     
|                                                            | Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                             |      |      | F-8  | 
|                                                            | Consolidated Statements of Income for the
    Years Ended December 31, 2004, 2003 and 2002                   |      |      | F-9  | 
|                                                            | Consolidated Statements of Cash Flows for
    the Years Ended December 31, 2004, 2003 and 2002               |      |      | 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-4  | 

F-1



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















| |                  
| | -----------------
| | ERNST & YOUNG LLP





F-2



---



##### Table of Contents






STARWOOD HOTELS & RESORTS WORLDWIDE, INC.





CONSOLIDATED BALANCE SHEETS


(In millions, except share data)


|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |   |        |       |       | 
|---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------ | ----- | ----- | - | ------ | ----- | ----- | 
|                                                                                   |                                                                                                                                                                                                       | December 31,               |       
|                                                                                   |                                                                                                                                                                                                       |                            |       
|                                                                                   |                                                                                                                                                                                                       | 2004                       |        |       | 2003  |  
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|ASSETS                                                                            
|Current assets:                                                                    |                                                                                                                                                                                                       |                            |        |       |       |   |        |      
|                                                                                   | Cash and cash equivalents                                                                                                                                                                             |                            | $      | 326   |       |   | $      | 427   |      
|                                                                                   | Restricted cash                                                                                                                                                                                       |                            |        | 347   |       |   |        | 81    |      
|                                                                                   | Accounts receivable, net of allowance for doubtful accounts of
    $58 and $53                                                                                                                        |                            |        | 482   |       |   |        | 381   |      
|                                                                                   | Inventories                                                                                                                                                                                           |                            |        | 371   |       |   |        | 232   |      
|                                                                                   | Prepaid expenses and other                                                                                                                                                                            |                            |        | 157   |       |   |        | 104   |      
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|                                                                                   |                                                                                                                                                                                                       | Total current assets       |        |       | 1,683 |   |        |       | 1,225 | 
|Investments                                                                        |                                                                                                                                                                                                       |                            | 453    |       |       |   | 415    |      
|Plant, property and equipment, net                                                 |                                                                                                                                                                                                       |                            | 6,997  |       |       |   | 7,106  |      
|Goodwill and intangible assets, net                                                |                                                                                                                                                                                                       |                            | 2,544  |       |       |   | 2,488  |      
|Other assets                                                                       |                                                                                                                                                                                                       |                            | 621    |       |       |   | 623    |      
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|                                                                                   |                                                                                                                                                                                                       | $                          | 12,298 |       |       | $ | 11,857 |      
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                              
|Current liabilities:                                                               |                                                                                                                                                                                                       |                            |        |       |       |   |        |      
|                                                                                   | Short-term borrowings and current maturities of long-term debt                                                                                                                                        |                            | $      | 619   |       |   | $      | 233   |      
|                                                                                   | Accounts payable                                                                                                                                                                                      |                            |        | 200   |       |   |        | 171   |      
|                                                                                   | Accrued expenses                                                                                                                                                                                      |                            |        | 872   |       |   |        | 799   |      
|                                                                                   | Accrued salaries, wages and benefits                                                                                                                                                                  |                            |        | 299   |       |   |        | 228   |      
|                                                                                   | Accrued taxes and other                                                                                                                                                                               |                            |        | 138   |       |   |        | 176   |      
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|                                                                                   |                                                                                                                                                                                                       | Total current liabilities  |        |       | 2,128 |   |        |       | 1,607 | 
|Long-term debt                                                                     |                                                                                                                                                                                                       |                            | 3,823  |       |       |   | 4,393  |      
|Deferred income taxes                                                              |                                                                                                                                                                                                       |                            | 880    |       |       |   | 898    |      
|Other liabilities                                                                  |                                                                                                                                                                                                       |                            | 652    |       |       |   | 574    |      
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|                                                                                   |                                                                                                                                                                                                       |                            | 7,483  |       |       |   | 7,472  |      
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|Minority interest                                                                  |                                                                                                                                                                                                       |                            | 27     |       |       |   | 28     |      
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|Exchangeable units and Class B preferred shares, at
    redemption value of $38.50 |                                                                                                                                                                                                       |                            |       |       |       |   | 31     |      
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|Commitments and contingencies                                                      |                                                                                                                                                                                                       |                            |        |       |       |   |        |      
|Stockholders equity:                                                              |                                                                                                                                                                                                       |                            |        |       |       |   |        |      
|                                                                                   | Class A exchangeable preferred shares of the Trust;
    $0.01 par value; authorized 30,000,000 shares;
    outstanding 597,825 and 480,880 shares at December 31,
    2004 and 2003, respectively     |                            |        |      |       |   |        |      |      
|                                                                                   | Corporation common stock; $0.01 par value; authorized
    1,050,000,000 shares; outstanding 208,730,800 and
    201,812,126 shares at December 31, 2004 and 2003,
    respectively                    |                            |        | 2     |       |   |        | 2     |      
|                                                                                   | Trust Class B shares of beneficial interest;
    $0.01 par value; authorized 1,000,000,000 shares;
    outstanding 208,730,800 and 201,812,126 shares at
    December 31, 2004 and 2003, respectively |                            |        | 2     |       |   |        | 2     |      
|                                                                                   | Additional paid-in capital                                                                                                                                                                            |                            |        | 5,121 |       |   |        | 4,952 |      
|                                                                                   | Deferred compensation                                                                                                                                                                                 |                            |        | (14   | )     |   |        | (9    | )    
|                                                                                   | Accumulated other comprehensive loss                                                                                                                                                                  |                            |        | (255  | )     |   |        | (334  | )    
|                                                                                   | Accumulated deficit                                                                                                                                                                                   |                            |        | (68   | )     |   |        | (287  | )    
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|                                                                                   |                                                                                                                                                                                                       | Total stockholders equity |        |       | 4,788 |   |        |       | 4,326 | 
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  
|                                                                                   |                                                                                                                                                                                                       | $                          | 12,298 |       |       | $ | 11,857 |      
|                                                                                   |                                                                                                                                                                                                       |                            |        |       |       |  



F-3



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.





CONSOLIDATED STATEMENTS OF INCOME


(In millions, except per Share data)


|                                                                              |                                                                                         |                         |       |    |      |   |       |      |   |   |       |     |  
|----------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | ----------------------- | ----- | -- | ---- | - | ----- | ---- | - | - | ----- | --- | -
|                                                                              |                                                                                         | Year Ended December 31, |      
|                                                                              |                                                                                         |                         |      
|                                                                              |                                                                                         | 2004                    |       |    | 2003 |   |       | 2002 |  
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|Revenues                                                                      |                                                                                         |                         |       |    |      |   |       |      |   |   |       |    
|Owned, leased and consolidated joint venture hotels                           |                                                                                         | $                       | 3,326 |    |      | $ | 3,085 |      |   | $ | 3,190 |    
|Vacation ownership and residential sales and services                         |                                                                                         |                         | 640   |    |      |   | 439   |      |   |   | 353   |    
|Management fees, franchise fees and other income                              |                                                                                         |                         | 419   |    |      |   | 255   |      |   |   | 265   |    
|Other revenues from managed and franchised properties                         |                                                                                         |                         | 983   |    |      |   | 851   |      |   |   | 780   |    
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|                                                                              |                                                                                         |                         | 5,368 |    |      |   | 4,630 |      |   |   | 4,588 |    
|Costs and Expenses                                                            |                                                                                         |                         |       |    |      |   |       |      |   |   |       |    
|Owned, leased and consolidated joint venture hotels                           |                                                                                         |                         | 2,519 |    |      |   | 2,392 |      |   |   | 2,350 |    
|Vacation ownership and residential                                            |                                                                                         |                         | 488   |    |      |   | 340   |      |   |   | 274   |    
|Selling, general, administrative and other                                    |                                                                                         |                         | 331   |    |      |   | 200   |      |   |   | 152   |    
|Restructuring and other special credits, net                                  |                                                                                         |                         | (37   | )  |      |   | (9    | )    |   |   | (7    | )  
|Depreciation                                                                  |                                                                                         |                         | 413   |    |      |   | 410   |      |   |   | 473   |    
|Amortization                                                                  |                                                                                         |                         | 18    |    |      |   | 19    |      |   |   | 15    |    
|Other expenses from managed and franchised properties                         |                                                                                         |                         | 983   |    |      |   | 851   |      |   |   | 780   |    
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|                                                                              |                                                                                         |                         | 4,715 |    |      |   | 4,203 |      |   |   | 4,037 |    
|Operating income                                                              |                                                                                         |                         | 653   |    |      |   | 427   |      |   |   | 551   |    
|Gain on sale of VOI notes receivable                                          |                                                                                         |                         | 14    |    |      |   | 15    |      |   |   | 16    |    
|Equity earnings from unconsolidated ventures, net                             |                                                                                         |                         | 32    |    |      |   | 12    |      |   |   | 8     |    
|Interest expense, net of interest income of $3, $5 and $2                     |                                                                                         |                         | (254  | )  |      |   | (282  | )    |   |   | (323  | )  
|Gain (loss) on asset dispositions and impairments, net                        |                                                                                         |                         | (33   | )  |      |   | (183  | )    |   |   | 3     |    
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|Income (loss) from continuing operations before taxes and
    minority equity |                                                                                         |                         | 412   |    |      |   | (11   | )    |   |   | 255   |    
|Income tax benefit (expense)                                                  |                                                                                         |                         | (43   | )  |      |   | 113   |      |   |   | (2    | )  
|Minority equity in net loss (income)                                          |                                                                                         |                         |      |    |      |   | 3     |      |   |   | (2    | )  
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|Income from continuing operations                                             |                                                                                         |                         | 369   |    |      |   | 105   |      |   |   | 251   |    
|Discontinued operations:                                                      |                                                                                         |                         |       |    |      |   |       |      |   |   |       |    
|                                                                              | Loss from operations, net of taxes of $0, $0 and $2                                     |                         |       |   |      |   |       | (2   | ) |   |       | (5  | )
|                                                                              | Gain on dispositions, net of tax expense (benefit) expense of
    $(10), $40 and $(104) |                         |       | 26 |      |   |       | 206  |   |   |       | 109 |  
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|Net income                                                                    |                                                                                         | $                       | 395   |    |      | $ | 309   |      |   | $ | 355   |    
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|Earnings Per Share  Basic                                                    |                                                                                         |                         |       |    |      |   |       |      |   |   |       |    
|Continuing operations                                                         |                                                                                         | $                       | 1.78  |    |      | $ | 0.52  |      |   | $ | 1.24  |    
|Discontinued operations                                                       |                                                                                         |                         | 0.13  |    |      |   | 1.01  |      |   |   | 0.52  |    
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|Net income                                                                    |                                                                                         | $                       | 1.91  |    |      | $ | 1.53  |      |   | $ | 1.76  |    
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|Earnings Per Share  Diluted                                                  |                                                                                         |                         |       |    |      |   |       |      |   |   |       |    
|Continuing operations                                                         |                                                                                         | $                       | 1.72  |    |      | $ | 0.51  |      |   | $ | 1.22  |    
|Discontinued operations                                                       |                                                                                         |                         | 0.12  |    |      |   | 0.99  |      |   |   | 0.51  |    
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|Net income                                                                    |                                                                                         | $                       | 1.84  |    |      | $ | 1.50  |      |   | $ | 1.73  |    
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|Weighted average number of Shares                                             |                                                                                         |                         | 207   |    |      |   | 203   |      |   |   | 201   |    
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  
|Weighted average number of Shares assuming dilution                           |                                                                                         |                         | 215   |    |      |   | 207   |      |   |   | 205   |    
|                                                                              |                                                                                         |                         |       |    |      |   |       |      |  



F-4



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.





CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(In millions)


|                                                                                 |                                             |                         |     |   |      |   |     |      |  |   |     |    | 
|-------------------------------------------------------------------------------- | ------------------------------------------- | ----------------------- | --- | - | ---- | - | --- | ---- |  | - | --- | -- | 
|                                                                                 |                                             | Year Ended December 31, |    
|                                                                                 |                                             |                         |    
|                                                                                 |                                             | 2004                    |     |   | 2003 |   |     | 2002 | 
|                                                                                 |                                             |                         |     |   |      |   |     |      | 
|Net income                                                                       |                                             | $                       | 395 |   |      | $ | 309 |      |  | $ | 355 |   
|                                                                                 |                                             |                         |     |   |      |   |     |      | 
|Other comprehensive income (loss), net of taxes:                                 |                                             |                         |     |   |      |   |     |      |  |   |     |   
|Foreign currency translation adjustments                                         |                                             |                         | 79  |   |      |   | 139 |      |  |   | (2  | ) 
|Minimum pension liability adjustments                                            |                                             |                         | (4  | ) |      |   | (1  | )    |  |   | (13 | ) 
|Unrealized holding gains                                                         |                                             |                         | 4   |   |      |   | 3   |      |  |   | 4   |   
|Derivative instruments, net 
    Change in fair value of derivative instruments |                                             |                         |    |   |      |   | (1  | )    |  |   | 6   |   
|                                                                                 | Early termination of derivative instruments |                         |     |  |      |   |     |     |  |   |     | 15 | 
|                                                                                 |                                             |                         |     |   |      |   |     |      | 
|                                                                                 |                                             |                         | 79  |   |      |   | 140 |      |  |   | 10  |   
|                                                                                 |                                             |                         |     |   |      |   |     |      | 
|Comprehensive income                                                             |                                             | $                       | 474 |   |      | $ | 449 |      |  | $ | 365 |   
|                                                                                 |                                             |                         |     |   |      |   |     |      | 



F-5



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.





CONSOLIDATED STATEMENTS OF EQUITY


(In millions)


|                             |                                                                                                 |              |   |    |             |   |        |        |   |            |        |    |             |   |       |               |  |          |              |    |   |              |   |   |         |   |       |          |   |   |     |    |   |   |      |     |   |   |      |      |  
|---------------------------- | ----------------------------------------------------------------------------------------------- | ------------ | - | -- | ----------- | - | ------ | ------ | - | ---------- | ------ | -- | ----------- | - | ----- | ------------- |  | -------- | ------------ | -- | - | ------------ | - | - | ------- | - | ----- | -------- | - | - | --- | -- | - | - | ---- | --- | - | - | ---- | ---- | -
|                             |                                                                                                 | Exchangeable |   |    |             |   |        |        |   |            |        |    |             |   |       |               |  |          |             
|                             |                                                                                                 | units and    |   |    |             |   |        |        |   |            |        |    | Accumulated |   |       | Retained      | 
|                             |                                                                                                 | Class B EPS  |   |    | Class A EPS |   | Shares |        |   | Additional |        |    |             |   | Other |               |  | Earnings |             
|                             |                                                                                                 |              |   |    |             |   |        |        |   | Paid-in    |        |    | Deferred    |   |       | Comprehensive |  |          | (Accumulated |   
|                             |                                                                                                 | Shares       |   |    | Amount      |   |        | Shares |   |            | Amount |    | Shares      |   |       | Amount        |  |          | Capital(b)   |    |   | Compensation |   |   | Loss(a) |   |       | Deficit) |  
|                             |                                                                                                 |              |   |    |             |   |        |        |   |            |        |    |             |   |       |               |  |          |              |    |   |              |   |   |         |   |       |          |  
|Balance at December 31, 2001 |                                                                                                 |              | 1 |    |             | $ | 52     |        |   |            | 1      |    |             | $ |      |               |  |          | 198          |    |   | $            | 4 |   |         | $ | 4,851 |          |   | $ | (16 | )  |   | $ | (484 | )   |   | $ | (609 | )   
|                             | Net income                                                                                      |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      |    |   |   |      | 355  |  
|                             | Stock option and restricted stock award transactions, net                                       |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              | 2  |   |              |   |  |         |   |       | 52       |   |   |     | 2  |   |   |      |    |   |   |      |     |  
|                             | ESPP stock issuances                                                                            |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       | 1        |   |   |     |   |   |   |      |    |   |   |      |     |  
|                             | Conversion and cancellation of Class A EPS, Class B
    EPS and Partnership Units               |              |   |   |             |   |        | (1     | ) |            |        | (1 | )           |   |       |              |  |          |              |   |   |              |   |  |         |   |       | 1        |   |   |     |   |   |   |      |    |   |   |      |     |  
|                             | Foreign currency translation                                                                    |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | (2  | ) |   |      |     |  
|                             | Minimum pension liability adjustment                                                            |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | (13 | ) |   |      |     |  
|                             | Unrealized gain on securities, net                                                              |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | 4   |   |   |      |     |  
|                             | Unrealized gain on derivative instruments                                                       |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | 6   |   |   |      |     |  
|                             | Early termination of derivative instruments                                                     |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | 15  |   |   |      |     |  
|                             | Distributions declared                                                                          |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      |    |   |   |      | (170 | )
|                             |                                                                                                 |              |   |    |             |   |        |        |   |            |        |    |             |   |       |               |  |          |              |    |   |              |   |   |         |   |       |          |   |  
|Balance at December 31, 2002 |                                                                                                 |              | 1 |    |             |   | 51     |        |   |            |       |    |             |   |      |               |  |          | 200          |    |   |              | 4 |   |         |   | 4,905 |          |   |   | (14 | )  |   |   | (474 | )   |   |   | (424 | )   
|                             | Net income                                                                                      |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      |    |   |   |      | 309  |  
|                             | Stock option and restricted stock award transactions, net                                       |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              | 2  |   |              |   |  |         |   |       | 67       |   |   |     | 5  |   |   |      |    |   |   |      |     |  
|                             | ESPP stock issuances                                                                            |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       | 8        |   |   |     |   |   |   |      |    |   |   |      |     |  
|                             | Share repurchases                                                                               |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       | (28      | ) |   |     |   |   |   |      |    |   |   |      |     |  
|                             | Conversion or redemption and cancellation of Class A EPS,
    Class B EPS and Partnership Units |              |   |   |             |   |        | (20    | ) |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      |    |   |   |      |     |  
|                             | Foreign currency translation                                                                    |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | 139 |   |   |      |     |  
|                             | Minimum pension liability adjustment                                                            |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | (1  | ) |   |      |     |  
|                             | Unrealized gain on securities, net                                                              |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | 3   |   |   |      |     |  
|                             | Unrealized loss on derivative instruments                                                       |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | (1  | ) |   |      |     |  
|                             | Distributions declared                                                                          |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      |    |   |   |      | (172 | )
|                             |                                                                                                 |              |   |    |             |   |        |        |   |            |        |    |             |   |       |               |  |          |              |    |   |              |   |   |         |   |       |          |   |  
|Balance at December 31, 2003 |                                                                                                 |              | 1 |    |             |   | 31     |        |   |            |       |    |             |   |      |               |  |          | 202          |    |   |              | 4 |   |         |   | 4,952 |          |   |   | (9  | )  |   |   | (334 | )   |   |   | (287 | )   
|                             | Net income                                                                                      |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      |    |   |   |      | 395  |  
|                             | Stock option and restricted stock award transactions, net                                       |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              | 14 |   |              |   |  |         |   |       | 456      |   |   |     | (5 | ) |   |      |    |   |   |      |     |  
|                             | ESPP stock issuances                                                                            |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       | 12       |   |   |     |   |   |   |      |    |   |   |      |     |  
|                             | Share repurchases                                                                               |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              | (7 | ) |              |   |  |         |   |       | (310     | ) |   |     |   |   |   |      |    |   |   |      |     |  
|                             | Conversion or redemption and cancellation of Class A EPS,
    Class B EPS and Partnership Units |              |   | (1 | )           |   |        | (31    | ) |            |        | 1  |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       | 11       |   |   |     |   |   |   |      |    |   |   |      |     |  
|                             | Foreign currency translation                                                                    |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | 79  |   |   |      |     |  
|                             | Minimum pension liability adjustment                                                            |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | (4  | ) |   |      |     |  
|                             | Unrealized gain on securities, net                                                              |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      | 4   |   |   |      |     |  
|                             | Distributions declared                                                                          |              |   |   |             |   |        |       |   |            |        |   |             |   |       |              |  |          |              |   |   |              |   |  |         |   |       |         |   |   |     |   |   |   |      |    |   |   |      | (176 | )
|                             |                                                                                                 |              |   |    |             |   |        |        |   |            |        |    |             |   |       |               |  |          |              |    |   |              |   |   |         |   |       |          |   |  
|Balance at December 31, 2004 |                                                                                                 |              |  |    |             | $ |       |        |   |            | 1      |    |             | $ |      |               |  |          | 209          |    |   | $            | 4 |   |         | $ | 5,121 |          |   | $ | (14 | )  |   | $ | (255 | )   |   | $ | (68  | )   
|                             |                                                                                                 |              |   |    |             |   |        |        |   |            |        |    |             |   |       |               |  |          |              |    |   |              |   |   |         |   |       |          |   |  






|    |                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | As of December 31, 2004, this balance is comprised of
    $239 million of cumulative translation adjustments,
    $8 million of cumulative unrealized gains on securities,
    including derivative instruments, and $24 million of
    cumulative minimum pension liability adjustments.



|    |                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------
|(b) | Stock option exercises are net of a tax benefit of
    $70 million, $5 million and $6 million in 2004,
    2003 and 2002, respectively.



F-6



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


|                                                         |                                                                  |                         |      |      |      |   |       |      |   |   |        |      |  
|-------------------------------------------------------- | ---------------------------------------------------------------- | ----------------------- | ---- | ---- | ---- | - | ----- | ---- | - | - | ------ | ---- | -
|                                                         |                                                                  | Year Ended December 31, |     
|                                                         |                                                                  |                         |     
|                                                         |                                                                  | 2004                    |      |      | 2003 |   |       | 2002 |  
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|Operating Activities                                     |                                                                  |                         |      |      |      |   |       |      |   |   |        |     
|Net income                                               |                                                                  | $                       | 395  |      |      | $ | 309   |      |   | $ | 355    |     
|Exclude:                                                 |                                                                  |                         |      |      |      |   |       |      |   |   |        |     
|Discontinued operations                                  |                                                                  |                         | (26  | )    |      |   | (204  | )    |   |   | (104   | )   
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|Income from continuing operations                        |                                                                  |                         | 369  |      |      |   | 105   |      |   |   | 251    |     
|Adjustments to income from continuing operations:        |                                                                  |                         |      |      |      |   |       |      |   |   |        |     
|                                                         | Depreciation and amortization                                    |                         |      | 431  |      |   |       | 429  |   |   |        | 488  |  
|                                                         | Amortization of deferred loan costs                              |                         |      | 12   |      |   |       | 14   |   |   |        | 15   |  
|                                                         | Non-cash portion of restructuring and other special credits, net |                         |      | (37  | )    |   |       | (9   | ) |   |        | (3   | )
|                                                         | Non-cash foreign currency gains, net                             |                         |      | (9   | )    |   |       | (4   | ) |   |        | (33  | )
|                                                         | Provision for doubtful accounts                                  |                         |      | 25   |      |   |       | 34   |   |   |        | 27   |  
|                                                         | Minority equity in net income (loss)                             |                         |      |     |      |   |       | (3   | ) |   |        | 2    |  
|                                                         | Distributions in excess of equity earnings                       |                         |      | 31   |      |   |       | 71   |   |   |        | 31   |  
|                                                         | Gain on sale of VOI notes receivable                             |                         |      | (14  | )    |   |       | (15  | ) |   |        | (16  | )
|                                                         | Loss (gain) on asset dispositions and impairments, net           |                         |      | 33   |      |   |       | 183  |   |   |        | (3   | )
|Changes in working capital:                              |                                                                  |                         |      |      |      |   |       |      |   |   |        |     
|                                                         | Restricted cash                                                  |                         |      | (257 | )    |   |       | 17   |   |   |        | (54  | )
|                                                         | Accounts receivable                                              |                         |      | (67  | )    |   |       | 6    |   |   |        | 21   |  
|                                                         | Inventories                                                      |                         |      | (22  | )    |   |       | 6    |   |   |        | 10   |  
|                                                         | Prepaid expenses and other                                       |                         |      | (52  | )    |   |       | 8    |   |   |        | (19  | )
|                                                         | Accounts payable and accrued expenses                            |                         |      | 118  |      |   |       | 55   |   |   |        | 39   |  
|Accrued and deferred income taxes                        |                                                                  |                         | 7    |      |      |   | (138  | )    |   |   | (90    | )   
|Other, net                                               |                                                                  |                         | 9    |      |      |   | (4    | )    |   |   | 78     |     
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|                                                         | Cash from continuing operations                                  |                         |      | 577  |      |   |       | 755  |   |   |        | 744  |  
|                                                         | Cash from discontinued operations                                |                         |      | 1    |      |   |       | 11   |   |   |        | 18   |  
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|                                                         | Cash from operating activities                                   |                         |      | 578  |      |   |       | 766  |   |   |        | 762  |  
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|Investing Activities                                     |                                                                  |                         |      |      |      |   |       |      |   |   |        |     
|Purchases of plant, property and equipment               |                                                                  |                         | (333 | )    |      |   | (302  | )    |   |   | (296   | )   
|Proceeds from asset sales, net                           |                                                                  |                         | 74   |      |      |   | 1,042 |      |   |   | 65     |     
|Collection (issuance) of notes receivable, net           |                                                                  |                         | (2   | )    |      |   | (2    | )    |   |   | 7      |     
|Acquisitions, net of acquired cash                       |                                                                  |                         | (65  | )    |      |   |      |      |   |   | (7     | )   
|Investments                                              |                                                                  |                         | (73  | )    |      |   | (11   | )    |   |   | (41    | )   
|Acquisition of senior debt                               |                                                                  |                         | (4   | )    |      |   | (203  | )    |   |   |       |     
|Other, net                                               |                                                                  |                         | (12  | )    |      |   | (9    | )    |   |   | (10    | )   
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|                                                         | Cash from (used for) investing activities                        |                         |      | (415 | )    |   |       | 515  |   |   |        | (282 | )
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|Financing Activities                                     |                                                                  |                         |      |      |      |   |       |      |   |   |        |     
|Revolving credit facility and short-term repayments, net |                                                                  |                         | (20  | )    |      |   | (344  | )    |   |   | (400   | )   
|Long-term debt issued                                    |                                                                  |                         | 300  |      |      |   | 446   |      |   |   | 1,964  |     
|Long-term debt repaid                                    |                                                                  |                         | (451 | )    |      |   | (911  | )    |   |   | (2,017 | )   
|Distributions paid                                       |                                                                  |                         | (172 | )    |      |   | (170  | )    |   |   | (40    | )   
|Proceeds from employee stock option exercises            |                                                                  |                         | 379  |      |      |   | 54    |      |   |   | 35     |     
|Share repurchases                                        |                                                                  |                         | (310 | )    |      |   | (28   | )    |   |   |       |     
|Other, net                                               |                                                                  |                         | 1    |      |      |   | (26   | )    |   |   | (29    | )   
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|                                                         | Cash used for financing activities                               |                         |      | (273 | )    |   |       | (979 | ) |   |        | (487 | )
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|Exchange rate effect on cash and cash equivalents        |                                                                  |                         | 9    |      |      |   | 17    |      |   |   | 8      |     
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|Increase (decrease) in cash and cash equivalents         |                                                                  |                         | (101 | )    |      |   | 319   |      |   |   | 1      |     
|Cash and cash equivalents  beginning of period          |                                                                  |                         | 427  |      |      |   | 108   |      |   |   | 107    |     
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|Cash and cash equivalents  end of period                |                                                                  | $                       | 326  |      |      | $ | 427   |      |   | $ | 108    |     
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|Supplemental Disclosures of Cash Flow Information        |                                                                  |                         |      |      |      |   |       |      |   |   |        |     
|Cash paid during the period for:                         |                                                                  |                         |      |      |      |   |       |      |   |   |        |     
|                                                         | Interest                                                         |                         | $    | 293  |      |   | $     | 287  |   |   | $      | 310  |  
|                                                         |                                                                  |                         |      |      |      |   |       |      |  
|                                                         | Income taxes, net of refunds                                     |                         | $    | 21   |      |   | $     | 17   |   |   | $      | 94   |  
|                                                         |                                                                  |                         |      |      |      |   |       |      |  



F-7



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##### Table of Contents



STARWOOD HOTELS & RESORTS


CONSOLIDATED BALANCE SHEETS


(In millions, except share data)


|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |   |       |        |       | 
|---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ----- | ------ | ----- | - | ----- | ------ | ----- | 
|                                                                                   |                                                                                                                                                                                                       | December 31,               |      
|                                                                                   |                                                                                                                                                                                                       |                            |      
|                                                                                   |                                                                                                                                                                                                       | 2004                       |       |        | 2003  |  
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|ASSETS                                                                            
|Current assets:                                                                    |                                                                                                                                                                                                       |                            |       |        |       |   |       |       
|                                                                                   | Cash and cash equivalents                                                                                                                                                                             |                            | $     | 1      |       |   | $     | 2      |      
|                                                                                   | Receivable, Corporation                                                                                                                                                                               |                            |       | 535    |       |   |       | 465    |      
|                                                                                   | Prepaid expenses and other                                                                                                                                                                            |                            |       |       |       |   |       | 1      |      
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|                                                                                   |                                                                                                                                                                                                       | Total current assets       |       |        | 536   |   |       |        | 468   | 
|Investments, Corporation                                                           |                                                                                                                                                                                                       |                            | 848   |        |       |   | 848   |       
|Investments                                                                        |                                                                                                                                                                                                       |                            | 28    |        |       |   | 25    |       
|Plant, property and equipment, net                                                 |                                                                                                                                                                                                       |                            | 3,254 |        |       |   | 3,324 |       
|Long-term receivables, Corporation, net                                            |                                                                                                                                                                                                       |                            | 2,043 |        |       |   | 2,098 |       
|Goodwill and intangible assets, net                                                |                                                                                                                                                                                                       |                            | 207   |        |       |   | 207   |       
|Other assets                                                                       |                                                                                                                                                                                                       |                            | 9     |        |       |   | 8     |       
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|                                                                                   |                                                                                                                                                                                                       | $                          | 6,925 |        |       | $ | 6,978 |       
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                              
|Current liabilities:                                                               |                                                                                                                                                                                                       |                            |       |        |       |   |       |       
|                                                                                   | Short-term borrowings and current maturities of long-term debt                                                                                                                                        |                            | $     | 10     |       |   | $     | 9      |      
|                                                                                   | Accounts payable                                                                                                                                                                                      |                            |       | 3      |       |   |       | 4      |      
|                                                                                   | Accrued expenses                                                                                                                                                                                      |                            |       | 24     |       |   |       | 20     |      
|                                                                                   | Distributions payable, Corporation                                                                                                                                                                    |                            |       | 225    |       |   |       | 183    |      
|                                                                                   | Distributions payable                                                                                                                                                                                 |                            |       | 176    |       |   |       | 172    |      
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|                                                                                   |                                                                                                                                                                                                       | Total current liabilities  |       |        | 438   |   |       |        | 388   | 
|Long-term debt                                                                     |                                                                                                                                                                                                       |                            | 435   |        |       |   | 445   |       
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|                                                                                   |                                                                                                                                                                                                       |                            | 873   |        |       |   | 833   |       
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|Minority interest                                                                  |                                                                                                                                                                                                       |                            | 29    |        |       |   | 29    |       
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|Exchangeable units and Class B preferred shares, at
    redemption value of $38.50 |                                                                                                                                                                                                       |                            |      |        |       |   | 30    |       
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|Commitments and contingencies                                                      |                                                                                                                                                                                                       |                            |       |        |       |   |       |       
|Stockholders equity:                                                              |                                                                                                                                                                                                       |                            |       |        |       |   |       |       
|                                                                                   | Class A exchangeable preferred shares; $0.01 par
    value; authorized 30,000,000 shares; outstanding 597,825
    and 480,880 shares at December 31, 2004 and 2003,
    respectively                  |                            |       |       |       |   |       |       |      
|                                                                                   | Class A shares of beneficial interest; $0.01 par
    value; authorized 5,000 shares; outstanding 100 shares
    at December 31, 2004 and 2003                                                         |                            |       |       |       |   |       |       |      
|                                                                                   | Trust Class B shares of beneficial interest;
    $0.01 par value; authorized 1,000,000,000 shares;
    outstanding 208,730,800 and 201,812,126 shares at
    December 31, 2004 and 2003, respectively |                            |       | 2      |       |   |       | 2      |      
|                                                                                   | Additional paid-in capital                                                                                                                                                                            |                            |       | 7,761  |       |   |       | 7,714  |      
|                                                                                   | Distributions in excess of net income                                                                                                                                                                 |                            |       | (1,740 | )     |   |       | (1,630 | )    
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|                                                                                   |                                                                                                                                                                                                       | Total stockholders equity |       |        | 6,023 |   |       |        | 6,086 | 
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  
|                                                                                   |                                                                                                                                                                                                       | $                          | 6,925 |        |       | $ | 6,978 |       
|                                                                                   |                                                                                                                                                                                                       |                            |       |        |       |  



F-8



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##### Table of Contents



STARWOOD HOTELS & RESORTS





CONSOLIDATED STATEMENTS OF INCOME


(In millions)


|                                                |  |                         |     |   |      |   |      |      |  |   |     |  
|----------------------------------------------- |  | ----------------------- | --- | - | ---- | - | ---- | ---- |  | - | --- | -
|                                                |  | Year Ended December 31, |    
|                                                |  |                         |    
|                                                |  | 2004                    |     |   | 2003 |   |      | 2002 | 
|                                                |  |                         |     |   |      |   |      |      | 
|Revenues                                        |  |                         |     |   |      |   |      |      |  |   |     |  
|Rent and interest, Corporation                  |  | $                       | 536 |   |      | $ | 526  |      |  | $ | 587 |  
|                                                |  |                         |     |   |      |   |      |      | 
|                                                |  |                         | 536 |   |      |   | 526  |      |  |   | 587 |  
|                                                |  |                         |     |   |      |   |      |      | 
|Costs and Expenses                              |  |                         |     |   |      |   |      |      |  |   |     |  
|Selling, general and administrative             |  |                         | 3   |   |      |   | 3    |      |  |   | 3   |  
|Depreciation                                    |  |                         | 156 |   |      |   | 165  |      |  |   | 222 |  
|                                                |  |                         |     |   |      |   |      |      | 
|                                                |  |                         | 159 |   |      |   | 168  |      |  |   | 225 |  
|                                                |  |                         |     |   |      |   |      |      | 
|Operating income                                |  |                         | 377 |   |      |   | 358  |      |  |   | 362 |  
|Equity losses from unconsolidated joint venture |  |                         | (1  | ) |      |   | (2   | )    |  |   | (1  | )
|Interest expense, net                           |  |                         | (36 | ) |      |   | (35  | )    |  |   | (36 | )
|Loss on asset dispositions and impairments, net |  |                         | (23 | ) |      |   | (186 | )    |  |   | (3  | )
|Income tax benefit (expense)                    |  |                         | 7   |   |      |   | (3   | )    |  |   | (4  | )
|Minority equity in net loss (income)            |  |                         | (2  | ) |      |   | 1    |      |  |   | (3  | )
|                                                |  |                         |     |   |      |   |      |      | 
|Net income                                      |  | $                       | 322 |   |      | $ | 133  |      |  | $ | 315 |  
|                                                |  |                         |     |   |      |   |      |      | 



F-9



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##### Table of Contents



STARWOOD HOTELS & RESORTS





CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


|                                                  |                                                 |                         |      |      |      |   |      |      |   |   |      |     |  
|------------------------------------------------- | ----------------------------------------------- | ----------------------- | ---- | ---- | ---- | - | ---- | ---- | - | - | ---- | --- | -
|                                                  |                                                 | Year Ended December 31, |     
|                                                  |                                                 |                         |     
|                                                  |                                                 | 2004                    |      |      | 2003 |   |      | 2002 |  
|                                                  |                                                 |                         |      |      |      |   |      |      |  
|Operating Activities                              |                                                 |                         |      |      |      |   |      |      |   |   |      |    
|Net income                                        |                                                 | $                       | 322  |      |      | $ | 133  |      |   | $ | 315  |    
|Adjustments to net income:                        |                                                 |                         |      |      |      |   |      |      |   |   |      |    
|                                                  | Depreciation and amortization                   |                         |      | 156  |      |   |      | 165  |   |   |      | 222 |  
|                                                  | Amortization of deferred loan costs             |                         |      | 1    |      |   |      |     |   |   |      | 1   |  
|                                                  | Minority equity in net income (loss)            |                         |      | 2    |      |   |      | (1   | ) |   |      | 3   |  
|                                                  | Distributions in excess of equity earnings      |                         |      |     |      |   |      | 2    |   |   |      | 3   |  
|                                                  | Loss on asset dispositions and impairments, net |                         |      | 23   |      |   |      | 186  |   |   |      | 3   |  
|Receivable, Corporation                           |                                                 |                         | (52  | )    |      |   | (441 | )    |   |   | (446 | )  
|Other, net                                        |                                                 |                         | 3    |      |      |   | (1   | )    |   |   | 3    |    
|                                                  |                                                 |                         |      |      |      |   |      |      |  
|                                                  | Cash from operating activities                  |                         |      | 455  |      |   |      | 43   |   |   |      | 104 |  
|                                                  |                                                 |                         |      |      |      |   |      |      |  
|Investing Activities                              |                                                 |                         |      |      |      |   |      |      |   |   |      |    
|Purchases of plant, property and equipment        |                                                 |                         | (100 | )    |      |   | (66  | )    |   |   | (82  | )  
|Proceeds from asset sales, net                    |                                                 |                         | 43   |      |      |   | 402  |      |   |   | 52   |    
|Acquisitions, net of acquired cash                |                                                 |                         |     |      |      |   |     |      |   |   | (7   | )  
|Collection of notes receivable                    |                                                 |                         |     |      |      |   |     |      |   |   | 2    |    
|Other, net                                        |                                                 |                         | (4   | )    |      |   |     |      |   |   |     |    
|                                                  |                                                 |                         |      |      |      |   |      |      |  
|                                                  | Cash from (used for) investing activities       |                         |      | (61  | )    |   |      | 336  |   |   |      | (35 | )
|                                                  |                                                 |                         |      |      |      |   |      |      |  
|Financing Activities                              |                                                 |                         |      |      |      |   |      |      |   |   |      |    
|Long-term debt issued                             |                                                 |                         |     |      |      |   | 70   |      |   |   |     |    
|Long-term debt repaid                             |                                                 |                         | (9   | )    |      |   | (63  | )    |   |   | (36  | )  
|Distributions paid                                |                                                 |                         | (172 | )    |      |   | (170 | )    |   |   | (40  | )  
|Distributions paid to Corporation                 |                                                 |                         | (213 | )    |      |   | (206 | )    |   |   |     |    
|Share repurchases                                 |                                                 |                         | (30  | )    |      |   | (3   | )    |   |   |     |    
|Other, net                                        |                                                 |                         | 29   |      |      |   | (7   | )    |   |   | 6    |    
|                                                  |                                                 |                         |      |      |      |   |      |      |  
|                                                  | Cash used for financing activities              |                         |      | (395 | )    |   |      | (379 | ) |   |      | (70 | )
|                                                  |                                                 |                         |      |      |      |   |      |      |  
|Decrease in cash and cash equivalents             |                                                 |                         | (1   | )    |      |   |     |      |   |   | (1   | )  
|Cash and cash equivalents  beginning of period   |                                                 |                         | 2    |      |      |   | 2    |      |   |   | 3    |    
|                                                  |                                                 |                         |      |      |      |   |      |      |  
|Cash and cash equivalents  end of period         |                                                 | $                       | 1    |      |      | $ | 2    |      |   | $ | 2    |    
|                                                  |                                                 |                         |      |      |      |   |      |      |  
|Supplemental Disclosures of Cash Flow Information |                                                 |                         |      |      |      |   |      |      |   |   |      |    
|Cash paid (received) during the period for:       |                                                 |                         |      |      |      |   |      |      |   |   |      |    
|                                                  | Interest                                        |                         | $    | 33   |      |   | $    | 33   |   |   | $    | 35  |  
|                                                  |                                                 |                         |      |      |      |   |      |      |  
|                                                  | Income taxes, net of refunds                    |                         | $    | (21  | )    |   | $    | 3    |   |   | $    | 4   |  
|                                                  |                                                 |                         |      |      |      |   |      |      |  



F-10



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS







|        |                      
|------- | ---------------------
|Note 1. | Basis of Presentation













|        |                                
|------- | -------------------------------
|Note 2. | Significant Accounting Policies

Principles of Consolidation.


Cash and Cash Equivalents.


Restricted Cash.


F-11



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




Inventories.


Loan Loss Reserves.




Assets Held for Sale.


Investments.




F-12



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


Plant, Property and Equipment.




Goodwill and Intangible Assets.


Frequent Guest Program.




F-13



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






Legal Contingencies.


Derivative Financial Instruments.






Foreign Currency Translation.


Income Taxes.




F-14



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




Earnings Per Share.


|                                            |                                              |                         |     |   |        |  |     |           |  |   |          |  |  |        |     |   |           |  |     |          |  |   |        |  |  |           |     |   |  |  |     |   |  |   |      |  | 
|------------------------------------------- | -------------------------------------------- | ----------------------- | --- | - | ------ |  | --- | --------- |  | - | -------- |  |  | ------ | --- | - | --------- |  | --- | -------- |  | - | ------ |  |  | --------- | --- | - |  |  | --- | - |  | - | ---- |  | 
|                                            |                                              | Year Ended December 31, |    
|                                            |                                              |                         |    
|                                            |                                              | 2004                    |     |   | 2003   |  |     | 2002      | 
|                                            |                                              |                         |     |   |        |  |     |           | 
|                                            |                                              | Earnings                |     |   | Shares |  |     | Per Share |  |   | Earnings |  |  | Shares |     |   | Per Share |  |     | Earnings |  |   | Shares |  |  | Per Share |    
|                                            |                                              |                         |     |   |        |  |     |           |  |   |          |  |  |        |     |   |           |  |     |          |  |   |        |  |  |           |    
|Basic earnings from continuing operations   |                                              | $                       | 369 |   |        |  | 207 |           |  | $ | 1.78     |  |  | $      | 105 |   |           |  | 203 |          |  | $ | 0.52   |  |  | $         | 251 |   |  |  | 201 |   |  | $ | 1.24 | 
|Effect of dilutive securities:              |                                              |                         |     |   |        |  |     |           |  |   |          |  |  |        |     |   |           |  |     |          |  |   |        |  |  |           |     |   |  |  |     |   |  |   |      | 
|                                            | Employee options and restricted stock awards |                         |     |  |        |  |     | 8         |  |   |          |  |  |        |     |  |           |  |     | 4        |  |   |        |  |  |           |     |  |  |  |     | 4 |  |   |      |  | 
|                                            |                                              |                         |     |   |        |  |     |           |  |   |          |  |  |        |     |   |           |  |     |          |  |   |        |  |  |           |    
|Diluted earnings from continuing operations |                                              | $                       | 369 |   |        |  | 215 |           |  | $ | 1.72     |  |  | $      | 105 |   |           |  | 207 |          |  | $ | 0.51   |  |  | $         | 251 |   |  |  | 205 |   |  | $ | 1.22 | 
|                                            |                                              |                         |     |   |        |  |     |           |  |   |          |  |  |        |     |   |           |  |     |          |  |   |        |  |  |           |    





Stock-Based Compensation.


F-15



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                   |                                        |                          |     |       |      |   |     |       |    |   |     |       |    | 
|---------------------------------- | -------------------------------------- | ------------------------ | --- | ----- | ---- | - | --- | ----- | -- | - | --- | ----- | -- | 
|                                   |                                        | Year Ended December 31,  |    
|                                   |                                        |                          |    
|                                   |                                        | 2004                     |     |       | 2003 |   |     | 2002  |   
|                                   |                                        |                          |     |       |      |   |     |       |   
|                                   |                                        | (In millions, except per |    
|                                   |                                        | Share data)              |    
|Net income, as reported            |                                        | $                        | 395 |       |      | $ | 309 |       |    | $ | 355 |      
|                                   | Deduct: SFAS No. 123 compensation cost |                          |     | (83   | )    |   |     | (75   | )  |   |     | (81   | ) 
|                                   |                                        | Tax effect               |     |       | 28   |   |     |       | 26 |   |     |       | 28 | 
|                                   |                                        |                          |     |       |      |   |     |       |   
|                                   | Proforma net income                    |                          | $   | 340   |      |   | $   | 260   |    |   | $   | 302   |   
|                                   |                                        |                          |     |       |      |   |     |       |   
|                                   | Earnings per Share:                    |                          |     |       |      |   |     |       |    |   |     |       |   
|                                   | Basic, as reported                     |                          | $   | 1.91  |      |   | $   | 1.53  |    |   | $   | 1.76  |   
|                                   |                                        |                          |     |       |      |   |     |       |   
|                                   | Basic, proforma                        |                          | $   | 1.64  |      |   | $   | 1.28  |    |   | $   | 1.50  |   
|                                   |                                        |                          |     |       |      |   |     |       |   
|                                   | Diluted, as reported                   |                          | $   | 1.84  |      |   | $   | 1.50  |    |   | $   | 1.73  |   
|                                   |                                        |                          |     |       |      |   |     |       |   
|                                   | Diluted, proforma                      |                          | $   | 1.59  |      |   | $   | 1.26  |    |   | $   | 1.47  |   
|                                   |                                        |                          |     |       |      |   |     |       |   
|Average Black Scholes Assumptions: |                                        |                          |     |       |      |   |     |       |    |   |     |      
|                                   | Dividend Yield                         |                          |     | 2.5   | %    |   |     | 3.1   | %  |   |     | 2.7   | % 
|                                   | Volatility                             |                          |     | 42    | %    |   |     | 42    | %  |   |     | 41    | % 
|                                   | Risk-free rate                         |                          |     | 3.2   | %    |   |     | 3.2   | %  |   |     | 3.2   | % 
|                                   | Expected life                          |                          |     | 6 yrs |      |   |     | 6 yrs |    |   |     | 6 yrs |   



Revenue Recognition.




| |   |                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Owned, Leased and Consolidated Joint Ventures 
    Represents revenue primarily derived from hotel operations,
    including the rental of rooms and food and beverage sales, from
    owned, leased or consolidated joint venture hotels and resorts.
    Revenue is recognized when rooms are occupied and services have
    been rendered.
|
| |  | Management and Franchise Fees  Represents fees earned
    on hotels managed worldwide, usually under long-term contracts,
    and franchise fees received in connection with the franchise of
    the                                                                                                                                        

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | Companys Sheraton, Westin, Four Points by Sheraton and
    Luxury Collection brand names. Management fees are comprised of
    a base fee, which is generally based on a percentage of gross
    revenues, and an incentive fee, which is generally based on the
    propertys profitability. Base fee revenues are recognized
    when earned in accordance with the terms of the contract. For
    any time during the year, when the provisions of the management
    contracts allow receipt of incentive fees upon termination,
    incentive fees are recognized for the fees due and earned as if
    the contract was terminated at that date, exclusive of any
    termination fees due or payable. Franchise fees are generally
    based on a percentage of hotel room revenues and are recognized
    in accordance with SFAS No. 45, Accounting for
    Franchise Fee Revenue, as the fees are earned and become
    due from the franchisee.
|
| |  | Vacation Ownership and Residential  The Company
    recognizes revenue from VOI and residential sales in accordance
    with SFAS No. 66, Accounting for Sales of Real
    Estate. The Company recognizes sales when a minimum of 10%
    of the purchase price for the VOI or residential deposit has
    been received in cash, the period of cancellation with refund
    has expired and receivables are deemed collectible. For sales
    that do not qualify for full revenue recognition as the project
    has progressed beyond the preliminary stages but has not yet
    reached completion, all revenue and profit are initially
    deferred and recognized in earnings through the
    percentage-of-completion method.                                                                                                                                                                                                                      
|
| |  | Revenues from Managed and Franchised Properties 
    These revenues represent reimbursements of costs incurred on
    behalf of managed hotel properties and franchisees. These costs
    relate primarily to payroll costs at managed properties where
    the Company is the employer. Since the reimbursements are made
    based upon the costs incurred with no added margin, these
    revenues and corresponding expenses have no effect on the
    Companys operating income and net income.                                                                                                                                                                                                                                                                                                                                                                                                                                                        

Insurance Retention.


Costs Incurred to Sell VOIs.


VOI Inventory Costs.


Advertising Costs.


F-17



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




Retained Interests.


Use of Estimates.


Reclassifications.


Impact of Recently Issued Accounting Standards.






F-18



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)














F-19



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






Note 3.     Significant
Acquisitions


Acquisition of Sheraton Kauai Resort.


Tender Offer to Acquire Partnership Units of Westin Hotels
Limited Partnership.


Acquisition of BlissWorld LLC.


F-20



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|        |                                                       
|------- | ------------------------------------------------------
|Note 4. | Gain (Loss) on Asset Dispositions and Impairments, Net











|        |                                           
|------- | ------------------------------------------
|Note 5. | Notes Receivable Securitizations and Sales





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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


















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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)














|                                    |                             |  |   |      |  
|----------------------------------- | --------------------------- |  | - | ---- | -
|Annual prepayment rate:             |                             |  |   |     
|                                    | 100 basis points-dollars    |  | $ | 0.4  |  
|                                    | 100 basis points-percentage |  |   | 0.7  | %
|                                    | 200 basis points-dollars    |  | $ | 0.8  |  
|                                    | 200 basis points-percentage |  |   | 1.4  | %
|Discount rate:                      |                             |  |   |     
|                                    | 100 basis points-dollars    |  | $ | 1.6  |  
|                                    | 100 basis points-percentage |  |   | 3.0  | %
|                                    | 200 basis points-dollars    |  | $ | 3.1  |  
|                                    | 200 basis points-percentage |  |   | 5.8  | %
|Gross annual rate of credit losses: |                             |  |   |     
|                                    | 100 basis points-dollars    |  | $ | 3.5  |  
|                                    | 100 basis points-percentage |  |   | 6.6  | %
|                                    | 200 basis points-dollars    |  | $ | 6.9  |  
|                                    | 200 basis points-percentage |  |   | 12.9 | %



|        |                        
|------- | -----------------------
|Note 6. | Discontinued Operations



F-23



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                                    |  |              |    |  |      |   |     |      |  |   |     |  
|--------------------------------------------------- |  | ------------ | -- |  | ---- | - | --- | ---- |  | - | --- | -
|                                                    |  | Year Ended   |   
|                                                    |  | December 31, |   
|                                                    |  |              |   
|                                                    |  | 2004         |    |  | 2003 |   |     | 2002 | 
|                                                    |  |              |    |  |      |   |     |      | 
|Income Statement Data                               |  |              |    |  |      |   |     |      |  |   |     |  
|Revenues                                            |  | $            |   |  |      | $ | 22  |      |  | $ | 42  |  
|Operating income                                    |  | $            |   |  |      | $ | 5   |      |  | $ | 12  |  
|Interest expense on debt repaid with sales proceeds |  | $            |   |  |      | $ | 7   |      |  | $ | 15  |  
|Income tax expense                                  |  | $            |   |  |      | $ |    |      |  | $ | 2   |  
|Loss from operations, net of tax                    |  | $            |   |  |      | $ | (2  | )    |  | $ | (5  | )
|Gain on disposition, net of tax                     |  | $            | 26 |  |      | $ | 206 |      |  | $ | 109 |  







F-24



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|        |                               
|------- | ------------------------------
|Note 7. | Goodwill and Intangible Assets



|                                  |  |         |       |          |           |   |     |       |  |   |       |  
|--------------------------------- |  | ------- | ----- | -------- | --------- | - | --- | ----- |  | - | ----- | -
|                                  |  |         |       | Vacation |           |   |    
|                                  |  | Hotel   |       |          | Ownership |   |     |      
|                                  |  | Segment |       |          | Segment   |   |     | Total | 
|                                  |  |         |       |          |           |   |     |       | 
|Balance at January 1, 2004        |  | $       | 1,869 |          |           | $ | 241 |       |  | $ | 2,110 |  
|Acquisitions                      |  |         | 22    |          |           |   |    |       |  |   | 22    |  
|Settlement of tax contingency     |  |         | (3    | )        |           |   |    |       |  |   | (3    | )
|Purchase price adjustment         |  |         | 22    |          |           |   |    |       |  |   | 22    |  
|Cumulative translation adjustment |  |         | 11    |          |           |   |    |       |  |   | 11    |  
|Asset dispositions                |  |         | (5    | )        |           |   |    |       |  |   | (5    | )
|                                  |  |         |       |          |           |   |     |       | 
|Balance at December 31, 2004      |  | $       | 1,916 |          |           | $ | 241 |       |  | $ | 2,157 |  
|                                  |  |         |       |          |           |   |     |       | 



|                                    |  |              |     |   |      |   |     |  
|----------------------------------- |  | ------------ | --- | - | ---- | - | --- | -
|                                    |  | December 31, |    
|                                    |  |              |    
|                                    |  | 2004         |     |   | 2003 |  
|                                    |  |              |     |   |      |  
|Trademarks and trade names          |  | $            | 232 |   |      | $ | 226 |  
|Management and franchise agreements |  |              | 177 |   |      |   | 168 |  
|Other                               |  |              | 64  |   |      |   | 59  |  
|                                    |  |              |     |   |      |  
|                                    |  |              | 473 |   |      |   | 453 |  
|Accumulated amortization            |  |              | (86 | ) |      |   | (75 | )
|                                    |  |              |     |   |      |  
|                                    |  | $            | 387 |   |      | $ | 378 |  
|                                    |  |              |     |   |      |  





|        |             
|------- | ------------
|Note 8. | Other Assets



Contractual Obligations.


F-25



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|        |                                                  
|------- | -------------------------------------------------
|Note 9. | Restructuring and Other Special Charges (Credits)



|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |     |  
|-------------------------------- | ---------------------------------------------------------------- | ------- | --- | --- | -------- | - | --- | ------------ | - | - | ------------ | -- | - | - | --- | --- | -
|                                 |                                                                  | Noncash |     |     | Cash     |   |     | Expenditures |   |   | Total Charge |   
|                                 |                                                                  | Credits |     |     | Receipts |   |     | Accrued      |   |   | (Credit)     |   
|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Year Ended December 31, 2004     |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|Restructuring charges (credits): |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|                                 | Adjustments to liability as a result of benefit plan termination |         | $   |    |          |   | $   |             |   |   | $            |   |   |   | $   |    |  
|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Other special credits:           |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|                                 | Adjustments from favorable settlement of litigation              |         | $   | (37 | )        |   | $   |             |   |   | $            |   |   |   | $   | (37 | )
|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Total other special credits      |                                                                  | $       | (37 | )   |          | $ |    |              |   | $ |             |    |   | $ | (37 | )  
|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Year Ended December 31, 2003     |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|Restructuring credits:           |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|                                 | Adjustments to liability as a result of benefit plan termination |         | $   | (9  | )        |   | $   |             |   |   | $            |   |   |   | $   | (9  | )
|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Other special credits:           |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|                                 | Proceeds from favorable settlement of litigation                 |         | $   |    |          |   | $   | (12          | ) |   | $            |   |   |   | $   | (12 | )
|                                 | Legal defense costs                                              |         |     |    |          |   |     |             |   |   |              | 13 |   |   |     | 13  |  
|                                 | Adjustments to receivables previously written down               |         |     |    |          |   |     |             |   |   |              | (1 | ) |   |     | (1  | )
|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Total other special credits      |                                                                  | $       |    |     |          | $ | (12 | )            |   | $ | 12           |    |   | $ |    |    
|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Year Ended December 31, 2002     |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|Restructuring credits            |                                                                  | $       |    |     |          | $ | (1  | )            |   | $ |             |    |   | $ | (1  | )  
|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Other special credits:           |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|                                 | Adjustments to receivables previously written down               |         | $   |    |          |   | $   |             |   |   | $            | (3 | ) |   | $   | (3  | )
|                                 | Adjustments to e-business investments previously written down    |         |     | (3  | )        |   |     |             |   |   |              |   |   |   |     | (3  | )
|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Total other special credits      |                                                                  | $       | (3  | )   |          | $ |    |              |   | $ | (3           | )  |   | $ | (6  | )  
|                                 |                                                                  |         |     |     |          |   |     |              |   |   |              |   

2004 Other Special Credits.


2003 Restructuring and Other Special Charges
(Credits).


F-26



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


2002 Restructuring and Other Special Credits.




|         |                              
|-------- | -----------------------------
|Note 10. | Plant, Property and Equipment



|                                               |  |              |        |   |      |   |        |  
|---------------------------------------------- |  | ------------ | ------ | - | ---- | - | ------ | -
|                                               |  | December 31, |       
|                                               |  |              |       
|                                               |  | 2004         |        |   | 2003 |  
|                                               |  |              |        |   |      |  
|Land and improvements                          |  | $            | 1,337  |   |      | $ | 1,334  |  
|Buildings and improvements                     |  |              | 6,350  |   |      |   | 6,193  |  
|Furniture, fixtures and equipment              |  |              | 2,095  |   |      |   | 1,942  |  
|Construction work in process                   |  |              | 189    |   |      |   | 217    |  
|                                               |  |              |        |   |      |  
|                                               |  |              | 9,971  |   |      |   | 9,686  |  
|Less accumulated depreciation and amortization |  |              | (2,974 | ) |      |   | (2,580 | )
|                                               |  |              |        |   |      |  
|                                               |  | $            | 6,997  |   |      | $ | 7,106  |  
|                                               |  |              |        |   |      |  



|         |                 
|-------- | ----------------
|Note 11. | Accrued Expenses



F-27



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|         |             
|-------- | ------------
|Note 12. | Income Taxes



|                                   |                 |                         |     |     |      |   |      |      |   |   |     |     |  
|---------------------------------- | --------------- | ----------------------- | --- | --- | ---- | - | ---- | ---- | - | - | --- | --- | -
|                                   |                 | Year Ended December 31, |    
|                                   |                 |                         |    
|                                   |                 | 2004                    |     |     | 2003 |   |      | 2002 |  
|                                   |                 |                         |     |     |      |   |      |      |  
|Pretax income (loss)               |                 |                         |     |     |      |   |      |      |   |   |     |    
|U.S.                               |                 | $                       | 307 |     |      | $ | (64  | )    |   | $ | 169 |    
|Foreign                            |                 |                         | 105 |     |      |   | 53   |      |   |   | 86  |    
|                                   |                 |                         |     |     |      |   |      |      |  
|                                   |                 | $                       | 412 |     |      | $ | (11  | )    |   | $ | 255 |    
|                                   |                 |                         |     |     |      |   |      |      |  
|Provision (benefit) for income tax |                 |                         |     |     |      |   |      |      |   |   |     |    
|Current:                           |                 |                         |     |     |      |   |      |      |   |   |     |    
|                                   | U.S. federal    |                         | $   | (33 | )    |   | $    | 1    |   |   | $   | (14 | )
|                                   | State and local |                         |     | 6   |      |   |      | 4    |   |   |     | (3  | )
|                                   | Foreign         |                         |     | 39  |      |   |      | 48   |   |   |     | 69  |  
|                                   |                 |                         |     |     |      |   |      |      |  
|                                   |                 |                         | 12  |     |      |   | 53   |      |   |   | 52  |    
|                                   |                 |                         |     |     |      |   |      |      |  
|Deferred:                          |                 |                         |     |     |      |   |      |      |   |   |     |    
|                                   | U.S. federal    |                         |     | 32  |      |   |      | (108 | ) |   |     | (32 | )
|                                   | State and local |                         |     | (7  | )    |   |      | (14  | ) |   |     | (4  | )
|                                   | Foreign         |                         |     | 6   |      |   |      | (44  | ) |   |     | (14 | )
|                                   |                 |                         |     |     |      |   |      |      |  
|                                   |                 |                         | 31  |     |      |   | (166 | )    |   |   | (50 | )  
|                                   |                 |                         |     |     |      |   |      |      |  
|                                   |                 | $                       | 43  |     |      | $ | (113 | )    |   | $ | 2   |    
|                                   |                 |                         |     |     |      |   |      |      |  





F-28



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                                    |  |              |      |   |      |   |      |  
|--------------------------------------------------- |  | ------------ | ---- | - | ---- | - | ---- | -
|                                                    |  | December 31, |     
|                                                    |  |              |     
|                                                    |  | 2004         |      |   | 2003 |  
|                                                    |  |              |      |   |      |  
|Plant, property and equipment                       |  | $            | (546 | ) |      | $ | (575 | )
|Intangibles                                         |  |              | (157 | ) |      |   | (153 | )
|Allowances for doubtful accounts and other reserves |  |              | 125  |   |      |   | 155  |  
|Employee benefits                                   |  |              | 53   |   |      |   | 44   |  
|Deferred gain on ITT World Directories disposition  |  |              | (551 | ) |      |   | (551 | )
|Net operating loss and tax credit carryforwards     |  |              | 397  |   |      |   | 373  |  
|Deferred income                                     |  |              | (134 | ) |      |   | (136 | )
|Other                                               |  |              | (62  | ) |      |   | (38  | )
|                                                    |  |              |      |   |      |  
|                                                    |  |              | (875 | ) |      |   | (881 | )
|Less valuation allowance                            |  |              | (5   | ) |      |   | (17  | )
|                                                    |  |              |      |   |      |  
|Deferred income taxes                               |  | $            | (880 | ) |      | $ | (898 | )
|                                                    |  |              |      |   |      |  









F-29



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                               |  |                         |     |   |      |   |      |      |  |   |     |  
|---------------------------------------------- |  | ----------------------- | --- | - | ---- | - | ---- | ---- |  | - | --- | -
|                                               |  | Year Ended December 31, |    
|                                               |  |                         |    
|                                               |  | 2004                    |     |   | 2003 |   |      | 2002 | 
|                                               |  |                         |     |   |      |   |      |      | 
|Tax provision (benefit) at U.S. statutory rate |  | $                       | 144 |   |      | $ | (4   | )    |  | $ | 89  |  
|U.S. state and local income taxes              |  |                         | (1  | ) |      |   | (7   | )    |  |   | (5  | )
|Exempt Trust income                            |  |                         | (62 | ) |      |   | (60  | )    |  |   | (60 | )
|Tax on repatriation of foreign earnings        |  |                         | 13  |   |      |   | 12   |      |  |   | 15  |  
|Foreign tax rate differential                  |  |                         | (6  | ) |      |   | (1   | )    |  |   | 10  |  
|Change in tax law and regulations              |  |                         | (15 | ) |      |   |     |      |  |   |    |  
|Tax settlements                                |  |                         | (15 | ) |      |   | (36  | )    |  |   | (30 | )
|Basis difference on asset sales                |  |                         |    |   |      |   | (5   | )    |  |   |    |  
|Reduction of valuation allowance               |  |                         | (12 | ) |      |   | (12  | )    |  |   | (18 | )
|Other                                          |  |                         | (3  | ) |      |   |     |      |  |   | 1   |  
|                                               |  |                         |     |   |      |   |      |      | 
|Provision for income tax (benefit)             |  | $                       | 43  |   |      | $ | (113 | )    |  | $ | 2   |  
|                                               |  |                         |     |   |      |   |      |      | 







F-30



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|         |     
|-------- | ----
|Note 13. | Debt



|                                                                                                    |                                                                                                                                      |              |       |     |      |   |       |     | 
|--------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | ------------ | ----- | --- | ---- | - | ----- | --- | 
|                                                                                                    |                                                                                                                                      | December 31, |      
|                                                                                                    |                                                                                                                                      |              |      
|                                                                                                    |                                                                                                                                      | 2004         |       |     | 2003 |  
|                                                                                                    |                                                                                                                                      |              |       |     |      |  
|Senior Credit Facility:                                                                             |                                                                                                                                      |              |       |     |      |   |       |    
|                                                                                                    | Term loan, interest at LIBOR+1.25% (3.65% at December 31,
    2004) maturing through 2006                                            |              | $     | 550 |      |   | $     | 300 | 
|                                                                                                    | Revolving Credit Facility, interest at Canadian Bankers
    Acceptance rate + 1.25% (3.81% at December 31, 2004),
    maturing 2006 |              |       | 11  |      |   |       | 15  | 
|Senior Notes interest rates of 7.375% and 7.875%, maturing 2007
    and 2012                        |                                                                                                                                      |              | 1,514 |     |      |   | 1,532 |    
|Sheraton Holding public debt, interest rates ranging from 6.75%
    to 7.75%, maturing through 2025 |                                                                                                                                      |              | 1,058 |     |      |   | 1,067 |    
|Convertible Senior Notes  Series B                                                                 |                                                                                                                                      |              |      |     |      |   | 326   |    
|Convertible Debt                                                                                    |                                                                                                                                      |              | 360   |     |      |   | 360   |    
|Mortgages and other, interest rates ranging from 2.00% to 9.21%,
    various maturities             |                                                                                                                                      |              | 949   |     |      |   | 1,026 |    
|                                                                                                    |                                                                                                                                      |              |       |     |      |  
|                                                                                                    |                                                                                                                                      |              | 4,442 |     |      |   | 4,626 |    
|Less current maturities                                                                             |                                                                                                                                      |              | (619  | )   |      |   | (233  | )  
|                                                                                                    |                                                                                                                                      |              |       |     |      |  
|Long-term debt                                                                                      |                                                                                                                                      | $            | 3,823 |     |      | $ | 4,393 |    
|                                                                                                    |                                                                                                                                      |              |       |     |      |  



|           |  |   |       | 
|---------- |  | - | ----- | 
|2005       |  | $ | 619   | 
|2006       |  |   | 900   | 
|2007       |  |   | 844   | 
|2008       |  |   | 27    | 
|2009       |  |   | 441   | 
|Thereafter |  |   | 1,611 | 
|           |  |   |      
|           |  | $ | 4,442 | 
|           |  |   |      





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AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)










3 8 7 8










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AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)








|         |                       
|-------- | ----------------------
|Note 14. | Employee Benefit Plans

Defined Benefit and Postretirement Benefit Plans.








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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |   |     |     |   |   |     |     |  
|---------------------------------------------------------------------------------------------------------- | --------------------------------------------- | -------- | --- | --- | ---------------- | - | --- | -------------- | - | - | ---- | --- | - | ---- | --- | --- | ---- | - | --- | --- | - | - | --- | --- | -
|                                                                                                           |                                               | Pension  |     |     | Foreign          |   |     | Postretirement |  
|                                                                                                           |                                               | Benefits |     |     | Pension Benefits |   |     | Benefits       |  
|                                                                                                           |                                               |          |     |     |                  |   |     |                |  
|                                                                                                           |                                               | 2004     |     |     | 2003             |   |     | 2004           |   |   | 2003 |     |   | 2004 |     |     | 2003 |  
|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |  
|Change in Benefit Obligation                                                                               |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |   |     |     |   |   |     |    
|Benefit obligation at beginning of year                                                                    |                                               | $        | 20  |     |                  | $ | 34  |                |   | $ | 134  |     |   | $    | 112 |     |      | $ | 31  |     |   | $ | 29  |    
|                                                                                                           | Service cost                                  |          |     |    |                  |   |     |               |   |   |      | 4   |   |      |     | 4   |      |   |     |    |   |   |     |    |  
|                                                                                                           | Interest cost                                 |          |     | 1   |                  |   |     | 2              |   |   |      | 8   |   |      |     | 7   |      |   |     | 2   |   |   |     | 2   |  
|                                                                                                           | Actuarial loss (gain)                         |          |     | 1   |                  |   |     | (2             | ) |   |      | 9   |   |      |     | 8   |      |   |     | (3  | ) |   |     | 2   |  
|                                                                                                           | Settlements                                   |          |     | (1  | )                |   |     | (3             | ) |   |      |    |   |      |     |    |      |   |     |    |   |   |     |    |  
|                                                                                                           | Annuity purchase                              |          |     | (4  | )                |   |     | (8             | ) |   |      |    |   |      |     |    |      |   |     |    |   |   |     |    |  
|                                                                                                           | Effect of foreign exchange rates              |          |     |    |                  |   |     |               |   |   |      | 6   |   |      |     | 7   |      |   |     |    |   |   |     |    |  
|                                                                                                           | Benefits paid                                 |          |     | (1  | )                |   |     | (3             | ) |   |      | (5  | ) |      |     | (4  | )    |   |     | (3  | ) |   |     | (2  | )
|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |  
|Benefit obligation at end of year                                                                          |                                               | $        | 16  |     |                  | $ | 20  |                |   | $ | 156  |     |   | $    | 134 |     |      | $ | 27  |     |   | $ | 31  |    
|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |  
|Change in Plan Assets                                                                                      |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |   |     |     |   |   |     |    
|Fair value of plan assets at beginning of year                                                             |                                               | $        | 5   |     |                  | $ | 16  |                |   | $ | 97   |     |   | $    | 80  |     |      | $ | 13  |     |   | $ | 13  |    
|                                                                                                           | Actual return on plan assets, net of expenses |          |     |    |                  |   |     | 1              |   |   |      | 9   |   |      |     | 12  |      |   |     | 1   |   |   |     | 2   |  
|                                                                                                           | Reimbursement of benefit payments             |          |     |    |                  |   |     |               |   |   |      |    |   |      |     |    |      |   |     | (3  | ) |   |     | (3  | )
|                                                                                                           | Employer contribution                         |          |     | 1   |                  |   |     | 2              |   |   |      | 5   |   |      |     | 4   |      |   |     | 3   |   |   |     | 3   |  
|                                                                                                           | Settlements                                   |          |     | (1  | )                |   |     | (3             | ) |   |      |    |   |      |     |    |      |   |     |    |   |   |     |    |  
|                                                                                                           | Annuity purchase                              |          |     | (4  | )                |   |     | (8             | ) |   |      |    |   |      |     |    |      |   |     |    |   |   |     |    |  
|                                                                                                           | Effect of foreign exchange rates              |          |     |    |                  |   |     |               |   |   |      | 4   |   |      |     | 5   |      |   |     |    |   |   |     |    |  
|                                                                                                           | Benefits paid                                 |          |     | (1  | )                |   |     | (3             | ) |   |      | (5  | ) |      |     | (4  | )    |   |     | (3  | ) |   |     | (2  | )
|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |  
|Fair value of plan assets at end of year                                                                   |                                               | $        |    |     |                  | $ | 5   |                |   | $ | 110  |     |   | $    | 97  |     |      | $ | 11  |     |   | $ | 13  |    
|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |  
|Funded status                                                                                              |                                               | $        | (16 | )   |                  | $ | (15 | )              |   | $ | (46  | )   |   | $    | (37 | )   |      | $ | (16 | )   |   | $ | (18 | )  
|                                                                                                           | Unrecognized net actuarial loss (gain)        |          |     | 2   |                  |   |     | (1             | ) |   |      | 58  |   |      |     | 50  |      |   |     | (1  | ) |   |     | 1   |  
|                                                                                                           | Unrecognized prior service cost               |          |     |    |                  |   |     |               |   |   |      | (3  | ) |      |     | (3  | )    |   |     |    |   |   |     |    |  
|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |  
|Net amount recognized at end of year                                                                       |                                               | $        | (14 | )   |                  | $ | (16 | )              |   | $ | 9    |     |   | $    | 10  |     |      | $ | (17 | )   |   | $ | (17 | )  
|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |  
|Amounts recognized in the consolidated balance sheets consist of:                                          |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |   |     |     |   |   |     |    
|                                                                                                           | Accrued benefit cost                          |          | $   | (18 | )                |   | $   | (18            | ) |   | $    | (19 | ) |      | $   | (16 | )    |   | $   | (17 | ) |   | $   | (17 | )
|                                                                                                           | Accumulated other comprehensive income        |          |     | 4   |                  |   |     | 2              |   |   |      | 28  |   |      |     | 26  |      |   |     | N/A |   |   |     | N/A |  
|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |  
|Net amount recognized at end of year                                                                       |                                               | $        | (14 | )   |                  | $ | (16 | )              |   | $ | 9    |     |   | $    | 10  |     |      | $ | (17 | )   |   | $ | (17 | )  
|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |  
|Increase (decrease) in additional minimum liability included in
    accumulated other comprehensive income |                                               | $        | 2   |     |                  | $ | 1   |                |   | $ | 2    |     |   | $    | (1  | )   |      |   | N/A |     |   |   | N/A |    
|                                                                                                           |                                               |          |     |     |                  |   |     |                |   |   |      |     |   |      |     |     |      |  



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AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






|                                      |  |          |    |   |                  |   |    |                |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |    |   |  |   |    |   |  |   |    |  
|------------------------------------- |  | -------- | -- | - | ---------------- | - | -- | -------------- |  | - | ---- | - |  | ---- | -- | - | ---- | - | -- | ---- |  | - | ---- | - |  | ---- | -- | - |  | - | -- | - |  | - | -- | -
|                                      |  | Pension  |    |   | Foreign          |   |    | Postretirement | 
|                                      |  | Benefits |    |   | Pension Benefits |   |    | Benefits       | 
|                                      |  |          |    |   |                  |   |    |                | 
|                                      |  | 2004     |    |   | 2003             |   |    | 2002           |  |   | 2004 |   |  | 2003 |    |   | 2002 |   |    | 2004 |  |   | 2003 |   |  | 2002 |   
|                                      |  |          |    |   |                  |   |    |                |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |   
|Service cost                          |  | $        |   |   |                  | $ |   |                |  | $ |     |   |  | $    | 4  |   |      | $ | 4  |      |  | $ | 3    |   |  | $    |   |   |  | $ |   |   |  | $ |   |  
|Interest cost                         |  |          | 1  |   |                  |   | 2  |                |  |   | 3    |   |  |      | 8  |   |      |   | 7  |      |  |   | 6    |   |  |      | 2  |   |  |   | 2  |   |  |   | 2  |  
|Expected return on plan assets        |  |          |   |   |                  |   | (1 | )              |  |   | (2   | ) |  |      | (8 | ) |      |   | (7 | )    |  |   | (8   | ) |  |      | (1 | ) |  |   | (1 | ) |  |   | (1 | )
|Amortization of actuarial loss (gain) |  |          |   |   |                  |   |   |                |  |   |     |   |  |      | 3  |   |      |   | 2  |      |  |   |     |   |  |      |   |   |  |   |   |   |  |   | (1 | )
|                                      |  |          |    |   |                  |   |    |                |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |   
|SFAS No. 87 cost/ SFAS No. 106 cost   |  |          | 1  |   |                  |   | 1  |                |  |   | 1    |   |  |      | 7  |   |      |   | 6  |      |  |   | 1    |   |  |      | 1  |   |  |   | 1  |   |  |   |   |  
|                                      |  |          |    |   |                  |   |    |                |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |   
|SFAS No. 88 settlement gain           |  |          | (2 | ) |                  |   | (5 | )              |  |   | (3   | ) |  |      |   |   |      |   |   |      |  |   |     |   |  |      |   |   |  |   |   |   |  |   |   |  
|                                      |  |          |    |   |                  |   |    |                |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |   
|Net periodic benefit cost (income)    |  | $        | (1 | ) |                  | $ | (4 | )              |  | $ | (2   | ) |  | $    | 7  |   |      | $ | 6  |      |  | $ | 1    |   |  | $    | 1  |   |  | $ | 1  |   |  | $ |   |  
|                                      |  |          |    |   |                  |   |    |                |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |   





|                              |  |          |      |   |                  |  |      |                |  |  |      |   |  |      |      |   |      |  |      |   |  |  |      |  
|----------------------------- |  | -------- | ---- | - | ---------------- |  | ---- | -------------- |  |  | ---- | - |  | ---- | ---- | - | ---- |  | ---- | - |  |  | ---- | -
|                              |  | Pension  |      |   | Foreign          |  |      | Postretirement | 
|                              |  | Benefits |      |   | Pension Benefits |  |      | Benefits       | 
|                              |  |          |      |   |                  |  |      |                | 
|                              |  | 2004     |      |   | 2003             |  |      | 2004           |  |  | 2003 |   |  | 2004 |      |   | 2003 | 
|                              |  |          |      |   |                  |  |      |                |  |  |      |   |  |      |      |   |      | 
|Discount rate                 |  |          | 5.51 | % |                  |  | 5.99 | %              |  |  | 5.49 | % |  |      | 5.87 | % |      |  | 5.50 | % |  |  | 6.25 | %
|Rate of compensation increase |  |          | N/A  |   |                  |  | N/A  |                |  |  | 3.63 | % |  |      | 3.74 | % |      |  | N/A  |   |  |  | N/A  |  



|                               |  |          |      |   |                  |  |      |                |  |  |      |   |  |      |      |   |      |  |      |      |  |  |      |   |  |      |      |   |  |  |      |   |  |  |      |  
|------------------------------ |  | -------- | ---- | - | ---------------- |  | ---- | -------------- |  |  | ---- | - |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | - |  | ---- | ---- | - |  |  | ---- | - |  |  | ---- | -
|                               |  | Pension  |      |   | Foreign          |  |      | Postretirement | 
|                               |  | Benefits |      |   | Pension Benefits |  |      | Benefits       | 
|                               |  |          |      |   |                  |  |      |                | 
|                               |  | 2004     |      |   | 2003             |  |      | 2002           |  |  | 2004 |   |  | 2003 |      |   | 2002 |  |      | 2004 |  |  | 2003 |   |  | 2002 |     
|                               |  |          |      |   |                  |  |      |                |  |  |      |   |  |      |      |   |      |  |      |      |  |  |      |   |  |      |     
|Discount rate                  |  |          | 5.99 | % |                  |  | 5.86 | %              |  |  | 6.37 | % |  |      | 5.87 | % |      |  | 6.09 | %    |  |  | 6.44 | % |  |      | 6.25 | % |  |  | 6.75 | % |  |  | 7.25 | %
|Rate of compensation increase  |  |          | N/A  |   |                  |  | N/A  |                |  |  | N/A  |   |  |      | 3.74 | % |      |  | 3.96 | %    |  |  | 4.29 | % |  |      | N/A  |   |  |  | N/A  |   |  |  | N/A  |  
|Expected return on plan assets |  |          | 6.00 | % |                  |  | 6.00 | %              |  |  | 6.00 | % |  |      | 7.02 | % |      |  | 7.37 | %    |  |  | 7.94 | % |  |      | 8.00 | % |  |  | 8.75 | % |  |  | 8.00 | %



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                  |  |                  |     |               |                          |  |     |                         |               |  |            |   |  |               |     |   |      |  |     |            |  |  |      |   |  |      |     |   |  |  |     |   |  |  |     |  
|----------------- |  | ---------------- | --- | ------------- | ------------------------ |  | --- | ----------------------- | ------------- |  | ---------- | - |  | ------------- | --- | - | ---- |  | --- | ---------- |  |  | ---- | - |  | ---- | --- | - |  |  | --- | - |  |  | --- | -
|                  |  | Pension Benefits |     |               | Foreign Pension Benefits |  |     | Postretirement Benefits |              
|                  |  |                  |     |               |                          |  |     |                         |              
|                  |  |                  |     | Percentage of |                          |  |     |                         | Percentage of |  |            |   |  | Percentage of |    
|                  |  |                  |     | Plan Assets   |                          |  |     |                         | Plan Assets   |  |            |   |  | Plan Assets   |    
|                  |  | Target           |     |               |                          |  |     | Target                  |               |  |            |   |  | Target        |     |   |      | 
|                  |  | Allocation       |     |               | 2004                     |  |     | 2003                    |               |  | Allocation |   |  | 2004          |     |   | 2003 |  |     | Allocation |  |  | 2004 |   |  | 2003 |    
|                  |  |                  |     |               |                          |  |     |                         |               |  |            |   |  |               |     |   |      |  |     |            |  |  |      |   |  |      |    
|Equity securities |  |                  | N/A |               |                          |  | N/A |                         |               |  | 0          | % |  |               | 62  | % |      |  | 66  | %          |  |  | 67   | % |  |      | 60  | % |  |  | 63  | % |  |  | 57  | %
|Debt securities   |  |                  | N/A |               |                          |  | N/A |                         |               |  | 79         | % |  |               | 37  | % |      |  | 29  | %          |  |  | 26   | % |  |      | 40  | % |  |  | 35  | % |  |  | 42  | %
|Cash and other    |  |                  | N/A |               |                          |  | N/A |                         |               |  | 21         | % |  |               | 1   | % |      |  | 5   | %          |  |  | 7    | % |  |      | 0   | % |  |  | 2   | % |  |  | 1   | %
|                  |  |                  |     |               |                          |  |     |                         |               |  |            |   |  |               |     |   |      |  |     |            |  |  |      |   |  |      |    
|                  |  |                  |     |               |                          |  |     |                         |               |  | 100        | % |  |               | 100 | % |      |  | 100 | %          |  |  | 100  | % |  |      | 100 | % |  |  | 100 | % |  |  | 100 | %
|                  |  |                  |     |               |                          |  |     |                         |               |  |            |   |  |               |     |   |      |  |     |            |  |  |      |   |  |      |    





|          |  |          |   |  |                 |   |    |                |  |   |    | 
|--------- |  | -------- | - |  | --------------- | - | -- | -------------- |  | - | -- | 
|          |  | Pension  |   |  | Foreign Pension |   |    | Postretirement | 
|          |  | Benefits |   |  | Benefits        |   |    | Benefits       | 
|          |  |          |   |  |                 |   |    |                | 
|2005      |  | $        | 1 |  |                 | $ | 2  |                |  | $ | 3  | 
|2006      |  | $        | 1 |  |                 | $ | 2  |                |  | $ | 2  | 
|2007      |  | $        | 1 |  |                 | $ | 2  |                |  | $ | 3  | 
|2008      |  | $        | 1 |  |                 | $ | 2  |                |  | $ | 2  | 
|2009      |  | $        | 1 |  |                 | $ | 2  |                |  | $ | 2  | 
|2010-2014 |  | $        | 6 |  |                 | $ | 10 |                |  | $ | 11 | 

Defined Contribution Plans.


Multi-Employer Pension Plans.




|         |                   
|-------- | ------------------
|Note 15. | Leases and Rentals



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)








|           |  |   |     | 
|---------- |  | - | --- | 
|2005       |  | $ | 74  | 
|2006       |  | $ | 70  | 
|2007       |  | $ | 67  | 
|2008       |  | $ | 63  | 
|2009       |  | $ | 59  | 
|Thereafter |  | $ | 800 | 







|     |  |   |     | 
|---- |  | - | --- | 
|2005 |  | $ | 262 | 
|2006 |  | $ | 262 | 
|2007 |  | $ | 109 | 



|         |                     
|-------- | --------------------
|Note 16. | Stockholders Equity

Share Repurchases.


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




Exchangeable Units and Preferred Shares.




|         |                      
|-------- | ---------------------
|Note 17. | Stock Incentive Plans



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                 |           |         |            |                  |                 |   |       |       | 
|-------------------------------- | --------- | ------- | ---------- | ---------------- | --------------- | - | ----- | ----- | 
|                                 |           |         |            | Weighted Average |                
|                                 |           |         |            | Exercise         |                
|                                 |           | Options |            |                  | Price Per Share |  
|                                 |           |         |            |                  |                 |  
|Outstanding at December 31, 2001 |           |         | 32,865,304 |                  |                 |   | 33.22 |      
|                                 | Granted   |         |            | 15,641,647       |                 |   |       | 29.54 | 
|                                 | Exercised |         |            | (1,439,332       | )               |   |       | 24.30 | 
|                                 | Forfeited |         |            | (2,260,305       | )               |   |       | 33.48 | 
|                                 |           |         |            |                  |                 |  
|Outstanding at December 31, 2002 |           |         | 44,807,314 |                  |                 |   | 32.22 |      
|                                 | Granted   |         |            | 682,596          |                 |   |       | 26.01 | 
|                                 | Exercised |         |            | (2,336,980       | )               |   |       | 23.59 | 
|                                 | Forfeited |         |            | (3,851,559       | )               |   |       | 38.97 | 
|                                 |           |         |            |                  |                 |  
|Outstanding at December 31, 2003 |           |         | 39,301,371 |                  |                 |   | 32.01 |      
|                                 | Granted   |         |            | 8,724,616        |                 |   |       | 39.18 | 
|                                 | Exercised |         |            | (13,209,744      | )               |   |       | 28.73 | 
|                                 | Forfeited |         |            | (1,428,237       | )               |   |       | 36.90 | 
|                                 |           |         |            |                  |                 |  
|Outstanding at December 31, 2004 |           |         | 33,388,006 |                  |                 | $ | 34.98 |      
|                                 |           |         |            |                  |                 |  
|Exercisable at December 31, 2004 |           |         | 17,297,333 |                  |                 | $ | 35.02 |      
|                                 |           |         |            |                  |                 |  



|                |                 |                     |             |                  |                     |                  |                  |  |             |  |  |                  |       |  |             |  |            |  |  |   |       | 
|--------------- | --------------- | ------------------- | ----------- | ---------------- | ------------------- | ---------------- | ---------------- |  | ----------- |  |  | ---------------- | ----- |  | ----------- |  | ---------- |  |  | - | ----- | 
|                |                 | 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 | 
|                |                 |                     |             |                  |                     |                  |                  |  |             |  |  |                  |       |  |             | 
|                | $15.00  $23.92 |                     |             |                  | 3,663,330           |                  |                  |  | 3.57        |  |  | $                | 22.47 |  |             |  | 3,424,422  |  |  | $ | 22.45 | 
|                | $24.00  $24.25 |                     |             |                  | 2,399,854           |                  |                  |  | 4.34        |  |  | $                | 24.01 |  |             |  | 2,396,750  |  |  | $ | 24.01 | 
|                | $24.88  $24.88 |                     |             |                  | 5,447,165           |                  |                  |  | 5.98        |  |  | $                | 24.88 |  |             |  | 2,092,475  |  |  | $ | 24.88 | 
|                | $25.16  $34.52 |                     |             |                  | 620,385             |                  |                  |  | 6.00        |  |  | $                | 30.21 |  |             |  | 456,864    |  |  | $ | 30.37 | 
|                | $34.58  $34.58 |                     |             |                  | 4,056,928           |                  |                  |  | 7.13        |  |  | $                | 34.58 |  |             |  | 1,220,864  |  |  | $ | 34.58 | 
|                | $34.90  $37.83 |                     |             |                  | 1,676,904           |                  |                  |  | 5.75        |  |  | $                | 36.55 |  |             |  | 794,334    |  |  | $ | 36.81 | 
|                | $37.84  $38.50 |                     |             |                  | 3,162,290           |                  |                  |  | 6.07        |  |  | $                | 37.85 |  |             |  | 1,962,689  |  |  | $ | 37.86 | 
|                | $38.75  $38.75 |                     |             |                  | 6,353,885           |                  |                  |  | 7.13        |  |  | $                | 38.75 |  |             |  | 36,000     |  |  | $ | 38.75 | 
|                | $38.76  $58.81 |                     |             |                  | 6,007,265           |                  |                  |  | 3.83        |  |  | $                | 50.99 |  |             |  | 4,912,935  |  |  | $ | 52.56 | 
|                |                 |                     |             |                  |                     |                  |                  |  |             |  |  |                  |       |  |             | 
|                | Total/ Average  |                     |             |                  | 33,388,006          |                  |                  |  | 5.57        |  |  | $                | 34.98 |  |             |  | 17,297,333 |  |  | $ | 35.02 | 
|                |                 |                     |             |                  |                     |                  |                  |  |             |  |  |                  |       |  |             | 



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |                                  
| | ---------------------------------
| | 2002 Employee Stock Purchase Plan









|         |                                 
|-------- | --------------------------------
|Note 18. | Derivative Financial Instruments











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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)












|         |                           
|-------- | --------------------------
|Note 19. | Related Party Transactions

General.


Trademark License.


Starwood Capital Noncompete.


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




Miscellaneous.






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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)












Portfolio Investments.


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)








Other Management-Related Investments. Innisbrook.




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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


Savannah.


Aircraft Lease.


Other




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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






|         |                              
|-------- | -----------------------------
|Note 20. | Commitments and Contingencies



|                                          |  |       |     |             |             |   |        |           |  |        |           |  |           |         |    |  |  |   |    | 
|----------------------------------------- |  | ----- | --- | ----------- | ----------- | - | ------ | --------- |  | ------ | --------- |  | --------- | ------- | -- |  |  | - | -- | 
|                                          |  |       |     | Due in Less |             |   | Due in |           |  | Due in |           |  | Due After |        
|                                          |  | Total |     |             | Than 1 Year |   |        | 1-3 Years |  |        | 4-5 Years |  |           | 5 Years |   
|                                          |  |       |     |             |             |   |        |           |  |        |           |  |           |         |   
|Unconditional purchase
    obligations(a) |  | $     | 161 |             |             | $ | 50     |           |  | $      | 65        |  |           | $       | 26 |  |  | $ | 20 | 
|Other long-term obligations               |  |       | 2   |             |             |   | 2      |           |  |        |          |  |           |         |   |  |  |   |   | 
|                                          |  |       |     |             |             |   |        |           |  |        |           |  |           |         |   
|Total contractual obligations             |  | $     | 163 |             |             | $ | 52     |           |  | $      | 65        |  |           | $       | 26 |  |  | $ | 20 | 
|                                          |  |       |     |             |             |   |        |           |  |        |           |  |           |         |   






|    |                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------
|(a) | Included in these balances are commitments that may be satisfied
    by the Companys managed and franchised properties.



|                                |  |       |     |                                            |        |   |     |           |       |           |   |  |         |   |    |  |  |   |    | 
|------------------------------- |  | ----- | --- | ------------------------------------------ | ------ | - | --- | --------- | ----- | --------- | - |  | ------- | - | -- |  |  | - | -- | 
|                                |  |       |     | Amount of Commitment Expiration Per Period |       
|                                |  |       |     |                                            |       
|                                |  |       |     | Less Than                                  |        |   |     |           | After |          
|                                |  | Total |     |                                            | 1 Year |   |     | 1-3 Years |       | 4-5 Years |   |  | 5 Years |  
|                                |  |       |     |                                            |        |   |     |           |       |           |   |  |         |  
|Standby letters of credit       |  | $     | 125 |                                            |        | $ | 125 |           |       | $         |  |  |         | $ |   |  |  | $ |   | 
|Hotel loan
    guarantees(1)(2) |  |       | 67  |                                            |        |   |    |           |       |           |  |  |         |   | 37 |  |  |   | 30 | 
|Other commercial commitments    |  |       |    |                                            |        |   |    |           |       |           |  |  |         |   |   |  |  |   |   | 
|                                |  |       |     |                                            |        |   |     |           |       |           |   |  |         |   |   
|Total commercial commitments    |  | $     | 192 |                                            |        | $ | 125 |           |       | $         |  |  |         | $ | 37 |  |  | $ | 30 | 
|                                |  |       |     |                                            |        |   |     |           |       |           |   |  |         |   |   






|    |                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------
|(1) | Excludes fair value of guarantees which are reflected in the
    Companys consolidated balance sheet.
|   
|(2) | Excludes a debt service guarantee since no substantial debt has
    been drawn.                       

Guaranteed Loans and Commitments.




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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)










Litigation. 2660 Woodley Road Joint
Venture v. ITT Sheraton Corporation,


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)












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AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)
















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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






| |     |                                                                                                                                                                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | that no breach had been committed; and                                                                                                                                                                                                                                    
|
| | (b) | that even if a breach had been committed, it was merely
    technical, that is as AHIL was unsuccessful in acquiring the
    majority stake in the hotel, AHILs loss, if any, was not
    caused by Starwood, but by its own inability to consummate the
    acquisition.









Environmental Matters.


Captive Insurance Company.


ITT Industries.




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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






|         |                                              
|-------- | ---------------------------------------------
|Note 21. | Business Segment and Geographical Information





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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                                                                |                                    |       |      |        |      |   |      |        |     |   |      |        |     | 
|------------------------------------------------------------------------------- | ---------------------------------- | ----- | ---- | ------ | ---- | - | ---- | ------ | --- | - | ---- | ------ | --- | 
|                                                                                |                                    | 2004  |      |        | 2003 |   |      | 2002   |    
|                                                                                |                                    |       |      |        |      |   |      |        |    
|Revenues:                                                                       |                                    |       |      |        |      |   |      |        |     |   |      |       
|                                                                                | Hotel                              |       | $    | 4,656  |      |   | $    | 4,130  |     |   | $    | 4,177  |    
|                                                                                | Vacation ownership and residential |       |      | 712    |      |   |      | 500    |     |   |      | 411    |    
|                                                                                |                                    |       |      |        |      |   |      |        |    
|                                                                                | Total                              |       | $    | 5,368  |      |   | $    | 4,630  |     |   | $    | 4,588  |    
|                                                                                |                                    |       |      |        |      |   |      |        |    
|Operating income:                                                               |                                    |       |      |        |      |   |      |        |     |   |      |       
|                                                                                | Hotel                              |       | $    | 664    |      |   | $    | 445    |     |   | $    | 589    |    
|                                                                                | Vacation ownership and residential |       |      | 142    |      |   |      | 89     |     |   |      | 69     |    
|                                                                                |                                    |       |      |        |      |   |      |        |    
|                                                                                | Total segment operating income     |       |      | 806    |      |   |      | 534    |     |   |      | 658    |    
|Selling, general, administrative and other                                      |                                    |       | 190  |        |      |   | 116  |        |     |   | 114  |       
|Restructuring and other special credits, net                                    |                                    |       | (37  | )      |      |   | (9   | )      |     |   | (7   | )     
|                                                                                |                                    |       |      |        |      |   |      |        |    
|Operating income                                                                |                                    |       | 653  |        |      |   | 427  |        |     |   | 551  |       
|Gain on sale of VOI notes receivable                                            |                                    |       | 14   |        |      |   | 15   |        |     |   | 16   |       
|Equity earnings (loss) from unconsolidated ventures, net:                       |                                    |       |      |        |      |   |      |        |     |   |      |       
|                                                                                | Hotel                              |       |      | 24     |      |   |      | 7      |     |   |      | 14     |    
|                                                                                | Vacation ownership and residential |       |      | 8      |      |   |      | 5      |     |   |      | (6     | )  
|Interest expense, net                                                           |                                    |       | (254 | )      |      |   | (282 | )      |     |   | (323 | )     
|Gain (loss) on asset dispositions and impairments, net                          |                                    |       | (33  | )      |      |   | (183 | )      |     |   | 3    |       
|                                                                                |                                    |       |      |        |      |   |      |        |    
|Income (loss) from continuing operations before taxes and
    minority interest |                                    | $     | 412  |        |      | $ | (11  | )      |     | $ | 255  |       
|                                                                                |                                    |       |      |        |      |   |      |        |    
|Depreciation and amortization:                                                  |                                    |       |      |        |      |   |      |        |     |   |      |       
|                                                                                | Hotel                              |       | $    | 372    |      |   | $    | 372    |     |   | $    | 431    |    
|                                                                                | Vacation ownership and residential |       |      | 11     |      |   |      | 10     |     |   |      | 10     |    
|                                                                                | Corporate                          |       |      | 48     |      |   |      | 47     |     |   |      | 47     |    
|                                                                                |                                    |       |      |        |      |   |      |        |    
|                                                                                | Total                              |       | $    | 431    |      |   | $    | 429    |     |   | $    | 488    |    
|                                                                                |                                    |       |      |        |      |   |      |        |    
|Assets:                                                                         |                                    |       |      |        |      |   |      |        |     |   |      |       
|                                                                                | Hotel                              |       | $    | 11,019 |      |   | $    | 10,885 |     |   | $    | 11,183 |    
|                                                                                | Vacation ownership and residential |       |      | 1,220  |      |   |      | 879    |     |   |      | 882    |    
|                                                                                | Corporate                          |       |      | 59     |      |   |      | 93     |     |   |      | 125    |    
|                                                                                |                                    |       |      |        |      |   |      |        |    
|                                                                                | Total                              |       | $    | 12,298 |      |   | $    | 11,857 |     |   | $    | 12,190 |    
|                                                                                |                                    |       |      |        |      |   |      |        |    
|Capital expenditures:                                                           |                                    |       |      |        |      |   |      |        |     |   |      |       
|                                                                                | Hotel                              |       | $    | 245    |      |   | $    | 233    |     |   | $    | 227    |    
|                                                                                | Vacation ownership and residential |       |      | 34     |      |   |      | 43     |     |   |      | 34     |    
|                                                                                | Corporate                          |       |      | 54     |      |   |      | 26     |     |   |      | 35     |    
|                                                                                |                                    |       |      |        |      |   |      |        |    
|                                                                                |                                    | Total |      | $      | 333  |   |      | $      | 302 |   |      | $      | 296 | 
|                                                                                |                                    |       |      |        |      |   |      |        |    

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                        |  |               |       |  |                   |   |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|----------------------- |  | ------------- | ----- |  | ----------------- | - | ----- | ---- |  | - | ----- |  |  | ---- | ----- |  |  | - | ----- | 
|                        |  | Revenues      |       |  | Long-Lived Assets |  
|                        |  |               |       |  |                   |  
|                        |  | 2004          |       |  | 2003              |   |       | 2002 |  |   | 2004  |  |  | 2003 |      
|                        |  |               |       |  |                   |   |       |      |  |   |       |  |  |      |      
|                        |  | (In millions) |      
|United States           |  | $             | 4,157 |  |                   | $ | 3,600 |      |  | $ | 3,479 |  |  | $    | 5,304 |  |  | $ | 5,438 | 
|Italy                   |  |               | 434   |  |                   |   | 404   |      |  |   | 413   |  |  |      | 889   |  |  |   | 841   | 
|All other international |  |               | 777   |  |                   |   | 626   |      |  |   | 696   |  |  |      | 1,257 |  |  |   | 1,242 | 
|                        |  |               |       |  |                   |   |       |      |  |   |       |  |  |      |      
|Total                   |  | $             | 5,368 |  |                   | $ | 4,630 |      |  | $ | 4,588 |  |  | $    | 7,450 |  |  | $ | 7,521 | 
|                        |  |               |       |  |                   |   |       |      |  |   |       |  |  |      |      





|         |                     
|-------- | --------------------
|Note 22. | Guarantor Subsidiary







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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                         |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |       |       | 
|---------------------------------------- | -------------------------------------------------------------- | ------------------------- | ------ | --------- | ---------- | - | --------- | ------------ | --- | - | ------------ | ----- | ----- | ------------ | ------- | - | - | - | ------ | ----- | ----- | 
|                                         |                                                                | Balance Sheet             |       
|                                         |                                                                | December 31, 2004         |       
|                                         |                                                                | (In millions)             |       
|                                         |                                                                |                           |       
|                                         |                                                                |                           |        | Non-      |            |   |          
|                                         |                                                                |                           |        | Guarantor |            |   | Guarantor |              |     |  
|                                         |                                                                | Parent                    |        |           | Subsidiary |   |           | Subsidiaries |     |   | Eliminations |       |       | Consolidated |        
|                                         |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |        
|Assets                                   |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |      
|Current assets:                          |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |      
|                                         | Cash and cash equivalents                                      |                           | $      | 160       |            |   | $         |             |     |   | $            | 166   |       |              | $       |  |   |   | $      | 326   |      
|                                         | Restricted cash                                                |                           |        | 5         |            |   |           |             |     |   |              | 342   |       |              |         |  |   |   |        | 347   |      
|                                         | Inventories                                                    |                           |        | 21        |            |   |           |             |     |   |              | 350   |       |              |         |  |   |   |        | 371   |      
|                                         | Other current assets                                           |                           |        | 142       |            |   |           | 2            |     |   |              | 495   |       |              |         |  |   |   |        | 639   |      
|                                         |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                         |                                                                | Total current assets      |        |           | 328        |   |           |              | 2   |   |              |       | 1,353 |              |         |   |  |   |        |       | 1,683 | 
|Intercompany                             |                                                                |                           | (4,754 | )         |            |   | (8,100    | )            |     |   | 12,854       |       |       |              |        |   |   |   |       |      
|Investments in consolidated subsidiaries |                                                                |                           | 10,442 |           |            |   | 10,541    |              |     |   |             |       |       |              | (20,983 | ) |   |   |       |      
|Plant, property and equipment, net       |                                                                |                           | 269    |           |            |   |          |              |     |   | 6,728        |       |       |              |        |   |   |   | 6,997  |      
|Goodwill and intangible assets, net      |                                                                |                           | 1,681  |           |            |   | 1         |              |     |   | 862          |       |       |              |        |   |   |   | 2,544  |      
|Other assets                             |                                                                |                           | 394    |           |            |   | 17        |              |     |   | 663          |       |       |              |        |   |   |   | 1,074  |      
|                                         |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                         |                                                                | $                         | 8,360  |           |            | $ | 2,461     |              |     | $ | 22,460       |       |       | $            | (20,983 | ) |   |   | 12,298 |      
|                                         |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |        
|Liabilities and stockholders equity     |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |      
|Current liabilities:                     |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |      
|                                         | Short-term borrowings and current maturities of long-term debt |                           | $      | 101       |            |   | $         | 461          |     |   | $            | 57    |       |              | $       |  |   |   | $      | 619   |      
|                                         | Other current liabilities                                      |                           |        | 466       |            |   |           | 30           |     |   |              | 1,013 |       |              |         |  |   |   |        | 1,509 |      
|                                         |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                         |                                                                | Total current liabilities |        |           | 567        |   |           |              | 491 |   |              |       | 1,070 |              |         |   |  |   |        |       | 2,128 | 
|Long-term debt                           |                                                                |                           | 2,326  |           |            |   | 597       |              |     |   | 900          |       |       |              |        |   |   |   | 3,823  |      
|Deferred income taxes                    |                                                                |                           | 630    |           |            |   |          |              |     |   | 250          |       |       |              |        |   |   |   | 880    |      
|Other liabilities                        |                                                                |                           | 53     |           |            |   | 80        |              |     |   | 519          |       |       |              |        |   |   |   | 652    |      
|                                         |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                         |                                                                |                           | 3,576  |           |            |   | 1,168     |              |     |   | 2,739        |       |       |              |        |   |   |   | 7,483  |      
|Minority interest                        |                                                                |                           | (4     | )         |            |   |          |              |     |   | 31           |       |       |              |        |   |   |   | 27     |      
|Commitments and contingencies            |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |      
|Total stockholders equity               |                                                                |                           | 4,788  |           |            |   | 1,293     |              |     |   | 19,690       |       |       |              | (20,983 | ) |   |   | 4,788  |      
|                                         |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                         |                                                                | $                         | 8,360  |           |            | $ | 2,461     |              |     | $ | 22,460       |       |       | $            | (20,983 | ) |   | $ | 12,298 |      
|                                         |                                                                |                           |        |           |            |   |           |              |     |   |              |       |       |              |        

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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                                                   |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |         |   |   |   |        |       |       | 
|---------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------------------------- | ------ | --------- | ---------- | - | --------- | ------------ | -- | - | ------------ | --- | ----- | ------------ | ------- | - | - | - | ------ | ----- | ----- | 
|                                                                                   |                                                                | Balance Sheet             |       
|                                                                                   |                                                                | December 31, 2003         |       
|                                                                                   |                                                                | (In millions)             |       
|                                                                                   |                                                                |                           |       
|                                                                                   |                                                                |                           |        | Non-      |            |   |          
|                                                                                   |                                                                |                           |        | Guarantor |            |   | Guarantor |              |    |  
|                                                                                   |                                                                | Parent                    |        |           | Subsidiary |   |           | Subsidiaries |    |   | Eliminations |     |       | Consolidated |        
|                                                                                   |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |        
|Assets                                                                             |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |         |   |   |   |        |      
|Current assets:                                                                    |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |         |   |   |   |        |      
|                                                                                   | Cash and cash equivalents                                      |                           | $      | 262       |            |   | $         |             |    |   | $            | 165 |       |              | $       |  |   |   | $      | 427   |      
|                                                                                   | Restricted cash                                                |                           |        | 13        |            |   |           |             |    |   |              | 68  |       |              |         |  |   |   |        | 81    |      
|                                                                                   | Inventories                                                    |                           |        | 22        |            |   |           |             |    |   |              | 210 |       |              |         |  |   |   |        | 232   |      
|                                                                                   | Other current assets                                           |                           |        | 111       |            |   |           | 3            |    |   |              | 371 |       |              |         |  |   |   |        | 485   |      
|                                                                                   |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |        
|                                                                                   |                                                                | Total current assets      |        |           | 408        |   |           |              | 3  |   |              |     | 814   |              |         |   |  |   |        |       | 1,225 | 
|Intercompany                                                                       |                                                                |                           | (4,743 | )         |            |   | (7,878    | )            |    |   | 12,621       |     |       |              |        |   |   |   |       |      
|Investments in consolidated subsidiaries                                           |                                                                |                           | 10,009 |           |            |   | 10,017    |              |    |   |             |     |       |              | (20,026 | ) |   |   |       |      
|Plant, property and equipment, net                                                 |                                                                |                           | 322    |           |            |   |          |              |    |   | 6,784        |     |       |              |        |   |   |   | 7,106  |      
|Goodwill and intangible assets, net                                                |                                                                |                           | 1,665  |           |            |   | 2         |              |    |   | 821          |     |       |              |        |   |   |   | 2,488  |      
|Other assets                                                                       |                                                                |                           | 369    |           |            |   | 34        |              |    |   | 635          |     |       |              |        |   |   |   | 1,038  |      
|                                                                                   |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |        
|                                                                                   |                                                                | $                         | 8,030  |           |            | $ | 2,178     |              |    | $ | 21,675       |     |       | $            | (20,026 | ) |   | $ | 11,857 |      
|                                                                                   |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |        
|Liabilities and stockholders equity                                               |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |         |   |   |   |        |      
|Current liabilities:                                                               |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |         |   |   |   |        |      
|                                                                                   | Short-term borrowings and current maturities of long-term debt |                           | $      | 51        |            |   | $         |             |    |   | $            | 182 |       |              | $       |  |   |   | $      | 233   |      
|                                                                                   | Other current liabilities                                      |                           |        | 411       |            |   |           | 30           |    |   |              | 933 |       |              |         |  |   |   |        | 1,374 |      
|                                                                                   |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |        
|                                                                                   |                                                                | Total current liabilities |        |           | 462        |   |           |              | 30 |   |              |     | 1,115 |              |         | $ |  |   |        |       | 1,607 | 
|Long-term debt                                                                     |                                                                |                           | 2,470  |           |            |   | 1,067     |              |    |   | 856          |     |       |              |        |   |   |   | 4,393  |      
|Deferred income taxes                                                              |                                                                |                           | 733    |           |            |   |          |              |    |   | 165          |     |       |              |        |   |   |   | 898    |      
|Other liabilities                                                                  |                                                                |                           | 40     |           |            |   | 86        |              |    |   | 448          |     |       |              |        |   |   |   | 574    |      
|                                                                                   |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |        
|                                                                                   |                                                                |                           | 3,705  |           |            |   | 1,183     |              |    |   | 2,584        |     |       |              |        |   |   |   | 7,472  |      
|Minority interest                                                                  |                                                                |                           | (2     | )         |            |   |          |              |    |   | 30           |     |       |              |        |   |   |   | 28     |      
|Exchangeable units and Class B preferred shares, at
    redemption value of $38.50 |                                                                |                           | 1      |           |            |   |          |              |    |   | 30           |     |       |              |        |   |   |   | 31     |      
|Commitments and contingencies                                                      |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |         |   |   |   |        |      
|Total stockholders equity                                                         |                                                                |                           | 4,326  |           |            |   | 995       |              |    |   | 19,031       |     |       |              | (20,026 | ) |   |   | 4,326  |      
|                                                                                   |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |        
|                                                                                   |                                                                | $                         | 8,030  |           |            | $ | 2,178     |              |    | $ | 21,675       |     |       | $            | (20,026 | ) |   | $ | 11,857 |      
|                                                                                   |                                                                |                           |        |           |            |   |           |              |    |   |              |     |       |              |        

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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |        |     |   |   |       |    | 
|---------------------------------------------------------------------- | ---------------------------------- | ---------------------------- | ----- | --------- | ---------- | - | --------- | ------------ |  | - | ------------ | -- |  | ------------ | ------ | --- | - | - | ----- | -- | 
|                                                                       |                                    | Statement of Income          |      
|                                                                       |                                    | Year Ended December 31, 2004 |      
|                                                                       |                                    | (In millions)                |      
|                                                                       |                                    |                              |      
|                                                                       |                                    |                              |       | Non-      |            |   |          
|                                                                       |                                    |                              |       | Guarantor |            |   | Guarantor |              |  |  
|                                                                       |                                    | Parent                       |       |           | Subsidiary |   |           | Subsidiaries |  |   | Eliminations |    |  | Consolidated |       
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|Revenues                                                               |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |        |     |   |   |       |   
|Owned, leased and consolidated joint venture hotels                    |                                    | $                            | 1,062 |           |            | $ |          |              |  | $ | 2,264        |    |  | $            |       |     |   | $ | 3,326 |   
|Vacation ownership and residential sales and services                  |                                    |                              |      |           |            |   |          |              |  |   | 640          |    |  |              |       |     |   |   | 640   |   
|Management fees, franchise fees and other income                       |                                    |                              | 112   |           |            |   |          |              |  |   | 600          |    |  |              | (293   | )   |   |   | 419   |   
|Other revenues from managed and franchised properties                  |                                    |                              | 888   |           |            |   |          |              |  |   | 95           |    |  |              |       |     |   |   | 983   |   
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|                                                                       |                                    |                              | 2,062 |           |            |   |          |              |  |   | 3,599        |    |  |              | (293   | )   |   |   | 5,368 |   
|Costs and Expenses                                                     |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |        |     |   |   |       |   
|Owned, leased and consolidated joint venture hotels                    |                                    |                              | 1,078 |           |            |   |          |              |  |   | 1,734        |    |  |              | (293   | )   |   |   | 2,519 |   
|Vacation ownership and residential                                     |                                    |                              |      |           |            |   |          |              |  |   | 488          |    |  |              |       |     |   |   | 488   |   
|Selling, general and administrative and other                          |                                    |                              | 263   |           |            |   | (2        | )            |  |   | 70           |    |  |              |       |     |   |   | 331   |   
|Restructuring and other special credits, net                           |                                    |                              |      |           |            |   |          |              |  |   | (37          | )  |  |              |       |     |   |   | (37   | ) 
|Depreciation and amortization                                          |                                    |                              | 42    |           |            |   |          |              |  |   | 389          |    |  |              |       |     |   |   | 431   |   
|Other expenses from managed and franchised properties                  |                                    |                              | 888   |           |            |   |          |              |  |   | 95           |    |  |              |       |     |   |   | 983   |   
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|                                                                       |                                    |                              | 2,271 |           |            |   | (2        | )            |  |   | 2,739        |    |  |              | (293   | )   |   |   | 4,715 |   
|Operating income (loss)                                                |                                    |                              | (209  | )         |            |   | 2         |              |  |   | 860          |    |  |              |       |     |   |   | 653   |   
|Gain on sale of VOI notes receivable                                   |                                    |                              |      |           |            |   |          |              |  |   | 14           |    |  |              |       |     |   |   | 14    |   
|Equity earnings in consolidated subsidiaries                           |                                    |                              | 604   |           |            |   | 410       |              |  |   |             |    |  |              | (1,014 | )   |   |   |      |   
|Equity earnings from unconsolidated ventures, net                      |                                    |                              | 1     |           |            |   |          |              |  |   | 31           |    |  |              |       |     |   |   | 32    |   
|Interest expense, net of interest income                               |                                    |                              | (197  | )         |            |   | (346      | )            |  |   | 289          |    |  |              |       |     |   |   | (254  | ) 
|Loss on asset dispositions and impairments, net                        |                                    |                              | (6    | )         |            |   |          |              |  |   | (27          | )  |  |              |       |     |   |   | (33   | ) 
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|Income from continuing operations before taxes and minority
    equity |                                    |                              | 193   |           |            |   | 66        |              |  |   | 1,167        |    |  |              | (1,014 | )   |   |   | 412   |   
|Income tax benefit (expense)                                           |                                    |                              | 174   |           |            |   | 120       |              |  |   | (337         | )  |  |              |       |     |   |   | (43   | ) 
|Minority equity in net loss (income)                                   |                                    |                              | 2     |           |            |   |          |              |  |   | (2           | )  |  |              |       |     |   |   |      |   
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|Income from continuing operations                                      |                                    |                              | 369   |           |            |   | 186       |              |  |   | 828          |    |  |              | (1,014 | )   |   |   | 369   |   
|Discontinued operations:                                               |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |        |     |   |   |       |   
|                                                                       | Gain on dispositions, net of taxes |                              |       | 26        |            |   |           | 17           |  |   |              | 18 |  |              |        | (35 | ) |   |       | 26 | 
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|Net income                                                             |                                    | $                            | 395   |           |            | $ | 203       |              |  | $ | 846          |    |  | $            | (1,049 | )   |   | $ | 395   |   
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       

F-56



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |        |      |   |   |       |     |  
|----------------------------------------------------------------------------- | ---------------------------------- | ---------------------------- | ----- | --------- | ---------- | - | --------- | ------------ | - | - | ------------ | --- | - | ------------ | ------ | ---- | - | - | ----- | --- | -
|                                                                              |                                    | Statement of Income          |      
|                                                                              |                                    | Year Ended December 31, 2003 |      
|                                                                              |                                    | (In millions)                |      
|                                                                              |                                    |                              |      
|                                                                              |                                    |                              |       | Non-      |            |   |          
|                                                                              |                                    |                              |       | Guarantor |            |   | Guarantor |              |   |  
|                                                                              |                                    | Parent                       |       |           | Subsidiary |   |           | Subsidiaries |   |   | Eliminations |     |   | Consolidated |       
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |       
|Revenues                                                                      |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |        |      |   |   |       |    
|Owned, leased and consolidated joint venture hotels                           |                                    | $                            | 1,092 |           |            | $ |          |              |   | $ | 1,993        |     |   | $            |       |      |   | $ | 3,085 |    
|Vacation ownership and residential sales and services                         |                                    |                              |      |           |            |   |          |              |   |   | 439          |     |   |              |       |      |   |   | 439   |    
|Management fees, franchise fees and other income                              |                                    |                              | 51    |           |            |   |          |              |   |   | 501          |     |   |              | (297   | )    |   |   | 255   |    
|Other revenues from managed and franchised properties                         |                                    |                              | 774   |           |            |   |          |              |   |   | 77           |     |   |              |       |      |   |   | 851   |    
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |       
|                                                                              |                                    |                              | 1,917 |           |            |   |          |              |   |   | 3,010        |     |   |              | (297   | )    |   |   | 4,630 |    
|Costs and Expenses                                                            |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |        |      |   |   |       |    
|Owned, leased and consolidated joint venture hotels                           |                                    |                              | 1,128 |           |            |   |          |              |   |   | 1,561        |     |   |              | (297   | )    |   |   | 2,392 |    
|Vacation ownership and residential                                            |                                    |                              |      |           |            |   |          |              |   |   | 340          |     |   |              |       |      |   |   | 340   |    
|Selling, general and administrative and other                                 |                                    |                              | 209   |           |            |   | (2        | )            |   |   | (7           | )   |   |              |       |      |   |   | 200   |    
|Restructuring and other special credits, net                                  |                                    |                              |      |           |            |   | (9        | )            |   |   |             |     |   |              |       |      |   |   | (9    | )  
|Depreciation and amortization                                                 |                                    |                              | 49    |           |            |   |          |              |   |   | 380          |     |   |              |       |      |   |   | 429   |    
|Other expenses from managed and franchised properties                         |                                    |                              | 774   |           |            |   |          |              |   |   | 77           |     |   |              |       |      |   |   | 851   |    
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |       
|                                                                              |                                    |                              | 2,160 |           |            |   | (11       | )            |   |   | 2,351        |     |   |              | (297   | )    |   |   | 4,203 |    
|Operating income (loss)                                                       |                                    |                              | (243  | )         |            |   | 11        |              |   |   | 659          |     |   |              |       |      |   |   | 427   |    
|Gain on sale of VOI notes receivable                                          |                                    |                              |      |           |            |   |          |              |   |   | 15           |     |   |              |       |      |   |   | 15    |    
|Equity earnings in consolidated subsidiaries                                  |                                    |                              | 371   |           |            |   | 320       |              |   |   |             |     |   |              | (691   | )    |   |   |      |    
|Equity earnings from unconsolidated ventures, net                             |                                    |                              |      |           |            |   | 1         |              |   |   | 11           |     |   |              |       |      |   |   | 12    |    
|Interest expense, net of interest income                                      |                                    |                              | (180  | )         |            |   | (360      | )            |   |   | 258          |     |   |              |       |      |   |   | (282  | )  
|Loss on asset dispositions and impairments, net                               |                                    |                              | (3    | )         |            |   |          |              |   |   | (180         | )   |   |              |       |      |   |   | (183  | )  
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |       
|Income (loss) from continuing operations before taxes and
    minority equity |                                    |                              | (55   | )         |            |   | (28       | )            |   |   | 763          |     |   |              | (691   | )    |   |   | (11   | )  
|Income tax benefit (expense)                                                  |                                    |                              | 158   |           |            |   | 122       |              |   |   | (167         | )   |   |              |       |      |   |   | 113   |    
|Minority equity in net loss                                                   |                                    |                              | 2     |           |            |   |          |              |   |   | 1            |     |   |              |       |      |   |   | 3     |    
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |       
|Income from continuing operations                                             |                                    |                              | 105   |           |            |   | 94        |              |   |   | 597          |     |   |              | (691   | )    |   |   | 105   |    
|Discontinued operations:                                                      |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |        |      |   |   |       |    
|                                                                              | Loss from operations, net of taxes |                              |       | (2        | )          |   |           | (2           | ) |   |              | (2  | ) |              |        | 4    |   |   |       | (2  | )
|                                                                              | Gain on dispositions, net of taxes |                              |       | 206       |            |   |           | 203          |   |   |              | 174 |   |              |        | (377 | ) |   |       | 206 |  
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |       
|Net income                                                                    |                                    | $                            | 309   |           |            | $ | 295       |              |   | $ | 769          |     |   | $            | (1,064 | )    |   | $ | 309   |    
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |     |   |              |       

F-57



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                                       |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |        |      |   |   |       |     |  
|---------------------------------------------------------------------- | ---------------------------------- | ---------------------------- | ----- | --------- | ---------- | - | --------- | ------------ | - | - | ------------ | -- | - | ------------ | ------ | ---- | - | - | ----- | --- | -
|                                                                       |                                    | Statement of Income          |      
|                                                                       |                                    | Year Ended December 31, 2002 |      
|                                                                       |                                    | (In millions)                |      
|                                                                       |                                    |                              |      
|                                                                       |                                    |                              |       | Non-      |            |   |          
|                                                                       |                                    |                              |       | Guarantor |            |   | Guarantor |              |   |  
|                                                                       |                                    | Parent                       |       |           | Subsidiary |   |           | Subsidiaries |   |   | Eliminations |    |   | Consolidated |       
|                                                                       |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |       
|Revenues                                                               |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |        |      |   |   |       |    
|Owned, leased and consolidated joint venture hotels                    |                                    | $                            | 1,187 |           |            | $ |          |              |   | $ | 2,003        |    |   | $            |       |      |   | $ | 3,190 |    
|Vacation ownership and residential sales and services                  |                                    |                              |      |           |            |   |          |              |   |   | 353          |    |   |              |       |      |   |   | 353   |    
|Management fees, franchise fees and other income                       |                                    |                              | 59    |           |            |   |          |              |   |   | 564          |    |   |              | (358   | )    |   |   | 265   |    
|Other revenues from managed and franchised properties                  |                                    |                              | 703   |           |            |   |          |              |   |   | 77           |    |   |              |       |      |   |   | 780   |    
|                                                                       |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |       
|                                                                       |                                    |                              | 1,949 |           |            |   |          |              |   |   | 2,997        |    |   |              | (358   | )    |   |   | 4,588 |    
|Costs and Expenses                                                     |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |        |      |   |   |       |    
|Owned, leased and consolidated joint venture hotels                    |                                    |                              | 1,221 |           |            |   |          |              |   |   | 1,472        |    |   |              | (343   | )    |   |   | 2,350 |    
|Vacation ownership and residential                                     |                                    |                              |      |           |            |   |          |              |   |   | 274          |    |   |              |       |      |   |   | 274   |    
|Selling, general and administrative and other                          |                                    |                              | 195   |           |            |   | (3        | )            |   |   | (25          | )  |   |              | (15    | )    |   |   | 152   |    
|Restructuring and other special credits, net                           |                                    |                              | (5    | )         |            |   |          |              |   |   | (2           | )  |   |              |       |      |   |   | (7    | )  
|Depreciation and amortization                                          |                                    |                              | 50    |           |            |   |          |              |   |   | 438          |    |   |              |       |      |   |   | 488   |    
|Other expenses from managed and franchised properties                  |                                    |                              | 703   |           |            |   |          |              |   |   | 77           |    |   |              |       |      |   |   | 780   |    
|                                                                       |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |       
|                                                                       |                                    |                              | 2,164 |           |            |   | (3        | )            |   |   | 2,234        |    |   |              | (358   | )    |   |   | 4,037 |    
|Operating income (loss)                                                |                                    |                              | (215  | )         |            |   | 3         |              |   |   | 763          |    |   |              |       |      |   |   | 551   |    
|Gain on sale of VOI notes receivable                                   |                                    |                              |      |           |            |   |          |              |   |   | 16           |    |   |              |       |      |   |   | 16    |    
|Equity earnings in consolidated subsidiaries                           |                                    |                              | 521   |           |            |   | 356       |              |   |   |             |    |   |              | (877   | )    |   |   |      |    
|Equity earnings from unconsolidated ventures, net                      |                                    |                              | 2     |           |            |   | 1         |              |   |   | 5            |    |   |              |       |      |   |   | 8     |    
|Interest expense, net of interest income                               |                                    |                              | (210  | )         |            |   | (359      | )            |   |   | 246          |    |   |              |       |      |   |   | (323  | )  
|Gain on asset dispositions                                             |                                    |                              |      |           |            |   |          |              |   |   | 3            |    |   |              |       |      |   |   | 3     |    
|                                                                       |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |       
|Income from continuing operations before taxes and minority
    equity |                                    |                              | 98    |           |            |   | 1         |              |   |   | 1,033        |    |   |              | (877   | )    |   |   | 255   |    
|Income tax benefit (expense)                                           |                                    |                              | 152   |           |            |   | 155       |              |   |   | (309         | )  |   |              |       |      |   |   | (2    | )  
|Minority equity in net loss (income)                                   |                                    |                              | 1     |           |            |   |          |              |   |   | (3           | )  |   |              |       |      |   |   | (2    | )  
|                                                                       |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |       
|Income from continuing operations                                      |                                    |                              | 251   |           |            |   | 156       |              |   |   | 721          |    |   |              | (877   | )    |   |   | 251   |    
|Discontinued operations:                                               |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |        |      |   |   |       |    
|                                                                       | Loss from operations, net of taxes |                              |       | (5        | )          |   |           | (5           | ) |   |              | (5 | ) |              |        | 10   |   |   |       | (5  | )
|                                                                       | Gain on dispositions, net of taxes |                              |       | 109       |            |   |           | 108          |   |   |              | 83 |   |              |        | (191 | ) |   |       | 109 |  
|                                                                       |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |       
|Net income                                                             |                                    | $                            | 355   |           |            | $ | 259       |              |   | $ | 799          |    |   | $            | (1,058 | )    |   | $ | 355   |    
|                                                                       |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |       

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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                         |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |        |       |   |   |      |      |     | 
|-------------------------------------------------------- | ----------------------------------------------------------------------------------- | ----------------------------------------- | ---- | --------- | ---------- | - | --------- | ------------ | -- | - | ------------ | ---- | --- | ------------ | ------ | ----- | - | - | ---- | ---- | --- | 
|                                                         |                                                                                     | Statement of Cash Flows                   |     
|                                                         |                                                                                     | Year Ended December 31, 2004              |     
|                                                         |                                                                                     | (In millions)                             |     
|                                                         |                                                                                     |                                           |     
|                                                         |                                                                                     |                                           |      | Non-      |            |   |          
|                                                         |                                                                                     |                                           |      | Guarantor |            |   | Guarantor |              |    |  
|                                                         |                                                                                     | Parent                                    |      |           | Subsidiary |   |           | Subsidiaries |    |   | Eliminations |      |     | Consolidated |       
|                                                         |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |       
|Operating Activities                                     |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |        |       |   |   |      |     
|Net income                                               |                                                                                     | $                                         | 395  |           |            | $ | 203       |              |    | $ | 846          |      |     | $            | (1,049 | )     |   | $ | 395  |     
|Exclude:                                                 |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |        |       |   |   |      |     
|Discontinued operations                                  |                                                                                     |                                           | (26  | )         |            |   | (17       | )            |    |   | (18          | )    |     |              | 35     |       |   |   | (26  | )   
|                                                         |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |       
|Income from continuing operations                        |                                                                                     |                                           | 369  |           |            |   | 186       |              |    |   | 828          |      |     |              | (1,014 | )     |   |   | 369  |     
|                                                         | Adjustments to income from continuing operations and changes in
    working capital |                                           |      | (378      | )          |   |           | (195         | )  |   |              | (233 | )   |              |        | 1,014 |   |   |      | 208  |    
|                                                         |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |       
|                                                         | Cash from (used for) continuing operations                                          |                                           |      | (9        | )          |   |           | (9           | )  |   |              | 595  |     |              |        |      |   |   |      | 577  |    
|                                                         |                                                                                     | Cash from discontinued operations         |      |           | 1          |   |           |              |   |   |              |      |    |              |        |       |  |   |      |      | 1   | 
|                                                         |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |       
|                                                         |                                                                                     | Cash from (used for) operating activities |      |           | (8         | ) |           |              | (9 | ) |              |      | 595 |              |        |       |  |   |      |      | 578 | 
|Investing Activities                                     |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |        |       |   |   |      |     
|Purchases of plant, property and equipment               |                                                                                     |                                           | (63  | )         |            |   |          |              |    |   | (270         | )    |     |              |       |       |   |   | (333 | )   
|Proceeds from asset sales                                |                                                                                     |                                           |     |           |            |   |          |              |    |   | 74           |      |     |              |       |       |   |   | 74   |     
|Acquisitions and investments                             |                                                                                     |                                           | (28  | )         |            |   |          |              |    |   | (110         | )    |     |              |       |       |   |   | (138 | )   
|Other, net                                               |                                                                                     |                                           | (2   | )         |            |   |          |              |    |   | (16          | )    |     |              |       |       |   |   | (18  | )   
|                                                         |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |       
|                                                         | Cash used for investing activities                                                  |                                           |      | (93       | )          |   |           |             |    |   |              | (322 | )   |              |        |      |   |   |      | (415 | )  
|Financing Activities                                     |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |        |       |   |   |      |     
|Revolving credit facility and short-term borrowings, net |                                                                                     |                                           | 1    |           |            |   |          |              |    |   | (21          | )    |     |              |       |       |   |   | (20  | )   
|Long-term debt issued                                    |                                                                                     |                                           | 300  |           |            |   |          |              |    |   |             |      |     |              |       |       |   |   | 300  |     
|Long-term debt repaid                                    |                                                                                     |                                           | (381 | )         |            |   |          |              |    |   | (70          | )    |     |              |       |       |   |   | (451 | )   
|Distributions paid                                       |                                                                                     |                                           |     |           |            |   |          |              |    |   | (172         | )    |     |              |       |       |   |   | (172 | )   
|Proceeds from employee stock option exercises            |                                                                                     |                                           | 379  |           |            |   |          |              |    |   |             |      |     |              |       |       |   |   | 379  |     
|Share repurchases                                        |                                                                                     |                                           | (310 | )         |            |   |          |              |    |   |             |      |     |              |       |       |   |   | (310 | )   
|Other, net                                               |                                                                                     |                                           | 10   |           |            |   | 9         |              |    |   | (18          | )    |     |              |       |       |   |   | 1    |     
|                                                         |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |       
|                                                         | Cash from (used for) financing activities                                           |                                           |      | (1        | )          |   |           | 9            |    |   |              | (281 | )   |              |        |      |   |   |      | (273 | )  
|Exchange rate effect on cash and cash equivalents        |                                                                                     |                                           |     |           |            |   |          |              |    |   | 9            |      |     |              |       |       |   |   | 9    |     
|                                                         |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |       
|Increase (decrease) in cash and cash equivalents         |                                                                                     |                                           | (102 | )         |            |   |          |              |    |   | 1            |      |     |              |       |       |   |   | (101 | )   
|Cash and cash equivalents  beginning of period          |                                                                                     |                                           | 262  |           |            |   |          |              |    |   | 165          |      |     |              |       |       |   |   | 427  |     
|                                                         |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |       
|Cash and cash equivalents  end of period                |                                                                                     | $                                         | 160  |           |            | $ |          |              |    | $ | 166          |      |     | $            |       |       |   | $ | 326  |     
|                                                         |                                                                                     |                                           |      |           |            |   |           |              |    |   |              |      |     |              |       

F-59



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                         |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |        |     |     |   |       |      |      |  
|-------------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------- | ---- | --------- | ---------- | - | --------- | ------------ | ---- | - | ------------ | ---- | ---- | ------------ | ------ | --- | --- | - | ----- | ---- | ---- | -
|                                                         |                                                                                     | Statement of Cash Flows      |     
|                                                         |                                                                                     | Year Ended December 31, 2003 |     
|                                                         |                                                                                     | (In millions)                |     
|                                                         |                                                                                     |                              |     
|                                                         |                                                                                     |                              |      | Non-      |            |   |          
|                                                         |                                                                                     |                              |      | Guarantor |            |   | Guarantor |              |      |  
|                                                         |                                                                                     | Parent                       |      |           | Subsidiary |   |           | Subsidiaries |      |   | Eliminations |      |      | Consolidated |       
|                                                         |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |       
|Operating Activities                                     |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |        |     |     |   |       |     
|Net income                                               |                                                                                     | $                            | 309  |           |            | $ | 295       |              |      | $ | 769          |      |      | $            | (1,064 | )   |     | $ | 309   |     
|                                                         | Exclude:                                                                            |                              |      |           |            |   |           |              |      |   |              |      |      |              |        |     |     |   |       |      |     
|                                                         |                                                                                     | Discontinued operations      |      |           | (204       | ) |           |              | (201 | ) |              |      | (172 | )            |        |     | 373 |   |       |      | (204 | )
|                                                         |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |       
|Income from continuing operations                        |                                                                                     |                              | 105  |           |            |   | 94        |              |      |   | 597          |      |      |              | (691   | )   |     |   | 105   |     
|                                                         | Adjustments to income from continuing operations and changes in
    working capital |                              |      | 333       |            |   |           | 155          |      |   |              | (529 | )    |              |        | 691 |     |   |       | 650  |     
|                                                         |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |       
|                                                         | Cash from continuing operations                                                     |                              |      | 438       |            |   |           | 249          |      |   |              | 68   |      |              |        |    |     |   |       | 755  |     
|                                                         | Cash from discontinued operations                                                   |                              |      |          |            |   |           |             |      |   |              | 11   |      |              |        |    |     |   |       | 11   |     
|                                                         |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |       
|                                                         | Cash from operating activities                                                      |                              |      | 438       |            |   |           | 249          |      |   |              | 79   |      |              |        |    |     |   |       | 766  |     
|Investing Activities                                     |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |        |     |     |   |       |     
|Purchases of plant, property and equipment               |                                                                                     |                              | (30  | )         |            |   |          |              |      |   | (272         | )    |      |              |       |     |     |   | (302  | )   
|Proceeds from asset sales                                |                                                                                     |                              |     |           |            |   |          |              |      |   | 1,042        |      |      |              |       |     |     |   | 1,042 |     
|Acquisitions and investments                             |                                                                                     |                              |     |           |            |   |          |              |      |   | (11          | )    |      |              |       |     |     |   | (11   | )   
|Acquisition of senior debt                               |                                                                                     |                              | (203 | )         |            |   |          |              |      |   |             |      |      |              |       |     |     |   | (203  | )   
|Other, net                                               |                                                                                     |                              | (10  | )         |            |   |          |              |      |   | (1           | )    |      |              |       |     |     |   | (11   | )   
|                                                         |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |       
|                                                         | Cash from (used for) investing activities                                           |                              |      | (243      | )          |   |           |             |      |   |              | 758  |      |              |        |    |     |   |       | 515  |     
|Financing Activities                                     |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |        |     |     |   |       |     
|Revolving credit facility and short-term borrowings, net |                                                                                     |                              | (319 | )         |            |   |          |              |      |   | (25          | )    |      |              |       |     |     |   | (344  | )   
|Long-term debt issued                                    |                                                                                     |                              | 360  |           |            |   |          |              |      |   | 86           |      |      |              |       |     |     |   | 446   |     
|Long-term debt repaid                                    |                                                                                     |                              |     |           |            |   | (250      | )            |      |   | (661         | )    |      |              |        |     |     |   | (911  | )   
|Distributions paid                                       |                                                                                     |                              |     |           |            |   |          |              |      |   | (170         | )    |      |              |       |     |     |   | (170  | )   
|Other, net                                               |                                                                                     |                              | 23   |           |            |   |          |              |      |   | (23          | )    |      |              |       |     |     |   |      |     
|                                                         |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |       
|                                                         | Cash from (used for) financing activities                                           |                              |      | 64        |            |   |           | (250         | )    |   |              | (793 | )    |              |        |    |     |   |       | (979 | )   
|Exchange rate effect on cash and cash equivalents        |                                                                                     |                              |     |           |            |   |          |              |      |   | 17           |      |      |              |       |     |     |   | 17    |     
|                                                         |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |       
|Increase (decrease) in cash and cash equivalents         |                                                                                     |                              | 259  |           |            |   | (1        | )            |      |   | 61           |      |      |              |       |     |     |   | 319   |     
|Cash and cash equivalents  beginning of period          |                                                                                     |                              | 3    |           |            |   | 1         |              |      |   | 104          |      |      |              |       |     |     |   | 108   |     
|                                                         |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |       
|Cash and cash equivalents  end of period                |                                                                                     | $                            | 262  |           |            | $ |          |              |      | $ | 165          |      |      | $            |       |     |     | $ | 427   |     
|                                                         |                                                                                     |                              |      |           |            |   |           |              |      |   |              |      |      |              |       

F-60



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                         |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |        |     |     |   |        |      |      |  
|-------------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------- | ------ | --------- | ---------- | - | --------- | ------------ | ---- | - | ------------ | ---- | --- | ------------ | ------ | --- | --- | - | ------ | ---- | ---- | -
|                                                         |                                                                                     | Statement of Cash Flows      |       
|                                                         |                                                                                     | Year Ended December 31, 2002 |       
|                                                         |                                                                                     | (In millions)                |       
|                                                         |                                                                                     |                              |       
|                                                         |                                                                                     |                              |        | Non-      |            |   |          
|                                                         |                                                                                     |                              |        | Guarantor |            |   | Guarantor |              |      |  
|                                                         |                                                                                     | Parent                       |        |           | Subsidiary |   |           | Subsidiaries |      |   | Eliminations |      |     | Consolidated |       
|                                                         |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |       
|Operating Activities                                     |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |        |     |     |   |        |     
|Net income                                               |                                                                                     | $                            | 355    |           |            | $ | 259       |              |      | $ | 799          |      |     | $            | (1,058 | )   |     | $ | 355    |     
|                                                         | Exclude:                                                                            |                              |        |           |            |   |           |              |      |   |              |      |     |              |        |     |     |   |        |      |     
|                                                         |                                                                                     | Discontinued operations      |        |           | (104       | ) |           |              | (103 | ) |              |      | (78 | )            |        |     | 181 |   |        |      | (104 | )
|                                                         |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |       
|Income from continuing operations                        |                                                                                     |                              | 251    |           |            |   | 156       |              |      |   | 721          |      |     |              | (877   | )   |     |   | 251    |     
|                                                         | Adjustments to income from continuing operations and changes in
    working capital |                              |        | 228       |            |   |           | (151         | )    |   |              | (461 | )   |              |        | 877 |     |   |        | 493  |     
|                                                         |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |       
|                                                         | Cash from continuing operations                                                     |                              |        | 479       |            |   |           | 5            |      |   |              | 260  |     |              |        |    |     |   |        | 744  |     
|                                                         | Cash from discontinued operations                                                   |                              |        |          |            |   |           |             |      |   |              | 18   |     |              |        |    |     |   |        | 18   |     
|                                                         |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |       
|                                                         | Cash from operating activities                                                      |                              |        | 479       |            |   |           | 5            |      |   |              | 278  |     |              |        |    |     |   |        | 762  |     
|Investing Activities                                     |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |        |     |     |   |        |     
|Purchases of plant, property and equipment               |                                                                                     |                              | (38    | )         |            |   |          |              |      |   | (258         | )    |     |              |       |     |     |   | (296   | )   
|Acquisitions and investments                             |                                                                                     |                              | (3     | )         |            |   | (4        | )            |      |   | (41          | )    |     |              |       |     |     |   | (48    | )   
|Other, net                                               |                                                                                     |                              | 10     |           |            |   |          |              |      |   | 52           |      |     |              |       |     |     |   | 62     |     
|                                                         |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |       
|                                                         | Cash used for investing activities                                                  |                              |        | (31       | )          |   |           | (4           | )    |   |              | (247 | )   |              |        |    |     |   |        | (282 | )   
|Financing Activities                                     |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |        |     |     |   |        |     
|Revolving credit facility and short-term borrowings, net |                                                                                     |                              | (333   | )         |            |   |          |              |      |   | (67          | )    |     |              |       |     |     |   | (400   | )   
|Long-term debt issued                                    |                                                                                     |                              | 1,800  |           |            |   |          |              |      |   | 164          |      |     |              |       |     |     |   | 1,964  |     
|Long-term debt repaid                                    |                                                                                     |                              | (1,926 | )         |            |   |          |              |      |   | (91          | )    |     |              |       |     |     |   | (2,017 | )   
|Distributions paid                                       |                                                                                     |                              |       |           |            |   |          |              |      |   | (40          | )    |     |              |       |     |     |   | (40    | )   
|Other, net                                               |                                                                                     |                              | 7      |           |            |   |          |              |      |   | (1           | )    |     |              |       |     |     |   | 6      |     
|                                                         |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |       
|                                                         | Cash used for financing activities                                                  |                              |        | (452      | )          |   |           |             |      |   |              | (35  | )   |              |        |    |     |   |        | (487 | )   
|Exchange rate effect on cash and cash equivalents        |                                                                                     |                              |       |           |            |   |          |              |      |   | 8            |      |     |              |       |     |     |   | 8      |     
|                                                         |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |       
|Increase (decrease) in cash and cash equivalents         |                                                                                     |                              | (4     | )         |            |   | 1         |              |      |   | 4            |      |     |              |       |     |     |   | 1      |     
|Cash and cash equivalents  beginning of period          |                                                                                     |                              | 7      |           |            |   |          |              |      |   | 100          |      |     |              |       |     |     |   | 107    |     
|                                                         |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |       
|Cash and cash equivalents  end of period                |                                                                                     | $                            | 3      |           |            | $ | 1         |              |      | $ | 104          |      |     | $            |       |     |     | $ | 108    |     
|                                                         |                                                                                     |                              |        |           |            |   |           |              |      |   |              |      |     |              |       

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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|         |                              
|-------- | -----------------------------
|Note 23. | Quarterly Results (Unaudited)

|                                         |                                          |                                      |       |       |         |   |       |              |  |   |             |      |  |      |       |       |   |   |       |      | 
|---------------------------------------- | ---------------------------------------- | ------------------------------------ | ----- | ----- | ------- | - | ----- | ------------ |  | - | ----------- | ---- |  | ---- | ----- | ----- | - | - | ----- | ---- | 
|                                         |                                          | Three Months Ended                   |      
|                                         |                                          |                                      |      
|                                         |                                          | March 31                             |       |       | June 30 |   |       | September 30 |  |   | December 31 |      |  | Year |      
|                                         |                                          |                                      |       |       |         |   |       |              |  |   |             |      |  |      |      
|                                         |                                          | (In millions, except per Share data) |      
|2004                                     |                                          |                                      |       |       |         |   |       |              |  |   |             |      |  |      |       |       |   |   |       |     
|Revenues                                 |                                          | $                                    | 1,227 |       |         | $ | 1,363 |              |  | $ | 1,336       |      |  | $    | 1,442 |       |   | $ | 5,368 |     
|Costs and expenses                       |                                          | $                                    | 1,132 |       |         | $ | 1,190 |              |  | $ | 1,138       |      |  | $    | 1,255 |       |   | $ | 4,715 |     
|Income from continuing operations        |                                          | $                                    | 33    |       |         | $ | 120   |              |  | $ | 105         |      |  | $    | 111   |       |   | $ | 369   |     
|Discontinued operations                  |                                          | $                                    | 1     |       |         | $ | 34    |              |  | $ | 2           |      |  | $    | (11   | )     |   | $ | 26    |     
|Net income                               |                                          | $                                    | 34    |       |         | $ | 154   |              |  | $ | 107         |      |  | $    | 100   |       |   | $ | 395   |     
|Earnings per Share:                      |                                          |                                      |       |       |         |   |       |              |  |   |             |      |  |      |       |       |   |   |       |     
|Basic                                   |                                          |                                      |       |       |         |   |       |              |  |   |             |      |  |      |       |       |   |   |       |     
|                                         | Income from continuing operations        |                                      | $     | 0.16  |         |   | $     | 0.57         |  |   | $           | 0.51 |  |      | $     | 0.53  |   |   | $     | 1.78 | 
|                                         | Discontinued operations                  |                                      | $     |      |         |   | $     | 0.17         |  |   | $           | 0.01 |  |      | $     | (0.05 | ) |   | $     | 0.13 | 
|                                         | Net income                               |                                      | $     | 0.16  |         |   | $     | 0.74         |  |   | $           | 0.52 |  |      | $     | 0.48  |   |   | $     | 1.91 | 
|Diluted                                 |                                          |                                      |       |       |         |   |       |              |  |   |             |      |  |      |       |       |   |   |       |     
|                                         | Income from continuing operations        |                                      | $     | 0.16  |         |   | $     | 0.56         |  |   | $           | 0.49 |  |      | $     | 0.51  |   |   | $     | 1.72 | 
|                                         | Discontinued operations                  |                                      | $     |      |         |   | $     | 0.16         |  |   | $           | 0.01 |  |      | $     | (0.05 | ) |   | $     | 0.12 | 
|                                         | Net income                               |                                      | $     | 0.16  |         |   | $     | 0.72         |  |   | $           | 0.50 |  |      | $     | 0.46  |   |   | $     | 1.84 | 
|                                        
|2003                                     |                                          |                                      |       |       |         |   |       |              |  |   |             |      |  |      |       |       |   |   |       |     
|Revenues                                 |                                          | $                                    | 1,086 |       |         | $ | 1,211 |              |  | $ | 1,136       |      |  | $    | 1,197 |       |   | $ | 4,630 |     
|Costs and expenses                       |                                          | $                                    | 1,032 |       |         | $ | 1,089 |              |  | $ | 1,027       |      |  | $    | 1,055 |       |   | $ | 4,203 |     
|Income (loss) from continuing operations |                                          | $                                    | (117  | )     |         | $ | 87    |              |  | $ | 47          |      |  | $    | 88    |       |   | $ | 105   |     
|Discontinued operations                  |                                          | $                                    | 1     |       |         | $ | 203   |              |  | $ | 1           |      |  | $    | (1    | )     |   | $ | 204   |     
|Net income (loss)                        |                                          | $                                    | (116  | )     |         | $ | 290   |              |  | $ | 48          |      |  | $    | 87    |       |   | $ | 309   |     
|Earnings per Share:                      |                                          |                                      |       |       |         |   |       |              |  |   |             |      |  |      |       |       |   |   |       |     
|Basic                                   |                                          |                                      |       |       |         |   |       |              |  |   |             |      |  |      |       |       |   |   |       |     
|                                         | Income (loss) from continuing operations |                                      | $     | (0.58 | )       |   | $     | 0.43         |  |   | $           | 0.23 |  |      | $     | 0.43  |   |   | $     | 0.52 | 
|                                         | Discontinued operations                  |                                      | $     |      |         |   | $     | 1.00         |  |   | $           | 0.01 |  |      | $     |      |   |   | $     | 1.01 | 
|                                         | Net income (loss)                        |                                      | $     | (0.58 | )       |   | $     | 1.43         |  |   | $           | 0.24 |  |      | $     | 0.43  |   |   | $     | 1.53 | 
|Diluted                                 |                                          |                                      |       |       |         |   |       |              |  |   |             |      |  |      |       |       |   |   |       |     
|                                         | Income (loss) from continuing operations |                                      | $     | (0.58 | )       |   | $     | 0.42         |  |   | $           | 0.23 |  |      | $     | 0.42  |   |   | $     | 0.51 | 
|                                         | Discontinued operations                  |                                      | $     |      |         |   | $     | 0.99         |  |   | $           |     |  |      | $     |      |   |   | $     | 0.99 | 
|                                         | Net income (loss)                        |                                      | $     | (0.58 | )       |   | $     | 1.41         |  |   | $           | 0.23 |  |      | $     | 0.42  |   |   | $     | 1.50 | 

F-62



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##### Table of Contents






SCHEDULE II


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


VALUATION AND QUALIFYING ACCOUNTS


(In millions)


|                                                    |                                         |                        |    |             |          |   |         |               |   |   |           |    |  |              |     |     |   |   |    |    | 
|--------------------------------------------------- | --------------------------------------- | ---------------------- | -- | ----------- | -------- | - | ------- | ------------- | - | - | --------- | -- |  | ------------ | --- | --- | - | - | -- | -- | 
|                                                    |                                         | Additions (Deductions) |   
|                                                    |                                         |                        |   
|                                                    |                                         |                        |    | Charged     |          |   |        
|                                                    |                                         |                        |    | to/reversed |          |   | Charged |               |   |  
|                                                    |                                         | Balance                |    |             | from     |   |         | to/from Other |   |   | Payments/ |    |  | Balance      |    
|                                                    |                                         | January 1,             |    |             | Expenses |   |         | Accounts(a)   |   |   | Other     |    |  | December 31, |    
|                                                    |                                         |                        |    |             |          |   |         |               |   |   |           |    |  |              |    
|2004                                                |                                         |                        |    |             |          |   |         |               |   |   |           |    |  |              |     |     |   |   |    |   
|Trade receivables  allowance for doubtful accounts |                                         | $                      | 53 |             |          | $ | 8       |               |   | $ | 2         |    |  | $            | (5  | )   |   | $ | 58 |   
|Notes receivable  allowance for doubtful accounts  |                                         | $                      | 64 |             |          | $ | 17      |               |   | $ | (10       | )  |  | $            | (11 | )   |   | $ | 60 |   
|Reserves included in accrued and other liabilities: |                                         |                        |    |             |          |   |         |               |   |   |           |    |  |              |     |     |   |   |    |   
|                                                    | Restructuring and other special charges |                        | $  | 77          |          |   | $       | (37           | ) |   | $         |   |  |              | $   | (11 | ) |   | $  | 29 | 
|2003                                                |                                         |                        |    |             |          |   |         |               |   |   |           |    |  |              |     |     |   |   |    |   
|Trade receivables  allowance for doubtful accounts |                                         | $                      | 45 |             |          | $ | 17      |               |   | $ | 1         |    |  | $            | (10 | )   |   | $ | 53 |   
|Notes receivable  allowance for doubtful accounts  |                                         | $                      | 46 |             |          | $ | 17      |               |   | $ | 7         |    |  | $            | (6  | )   |   | $ | 64 |   
|Reserves included in accrued and other liabilities: |                                         |                        |    |             |          |   |         |               |   |   |           |    |  |              |     |     |   |   |    |   
|                                                    | Restructuring and other special charges |                        | $  | 86          |          |   | $       | (9            | ) |   | $         | 21 |  |              | $   | (21 | ) |   | $  | 77 | 
|2002                                                |                                         |                        |    |             |          |   |         |               |   |   |           |    |  |              |     |     |   |   |    |   
|Trade receivables  allowance for doubtful accounts |                                         | $                      | 48 |             |          | $ | 11      |               |   | $ | (8        | )  |  | $            | (6  | )   |   | $ | 45 |   
|Notes receivable  allowance for doubtful accounts  |                                         | $                      | 41 |             |          | $ | 16      |               |   | $ | 10        |    |  | $            | (21 | )   |   | $ | 46 |   
|Reserves included in accrued and other liabilities: |                                         |                        |    |             |          |   |         |               |   |   |           |    |  |              |     |     |   |   |    |   
|                                                    | Restructuring and other special charges |                        | $  | 98          |          |   | $       | (7            | ) |   | $         | 6  |  |              | $   | (11 | ) |   | $  | 86 | 






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

|                                     |  |                 |    |   |                 |   |    | 
|------------------------------------ |  | --------------- | -- | - | --------------- | - | -- | 
|                                     |  | Trade and Notes |    |   |                
|                                     |  | Receivable     |    |   |                
|                                     |  | Allowance for   |    |   | Restructuring   |  
|                                     |  | Doubtful        |    |   | and Other       |  
|                                     |  | Accounts        |    |   | Special Charges |  
|                                     |  |                 |    |   |                 |  
|2004                                 |  |                 |    |   |                 |   |    | 
|Other assets                         |  | $               | (5 | ) |                 | $ |   | 
|Other liabilities                    |  |                 | (3 | ) |                 |   |   | 
|                                     |  |                 |    |   |                 |  
|Total charged to/from other accounts |  | $               | (8 | ) |                 | $ |   | 
|                                     |  |                 |    |   |                 |  
|2003                                 |  |                 |    |   |                 |   |    | 
|Other assets                         |  | $               | 7  |   |                 | $ | 12 | 
|Other liabilities                    |  |                 | 1  |   |                 |   | 9  | 
|                                     |  |                 |    |   |                 |  
|Total charged to/from other accounts |  | $               | 8  |   |                 | $ | 21 | 
|                                     |  |                 |    |   |                 |  
|2002                                 |  |                 |    |   |                 |   |    | 
|Other assets                         |  | $               |   |   |                 | $ | 6  | 
|Other liabilities                    |  |                 | 2  |   |                 |   |   | 
|                                     |  |                 |    |   |                 |  
|Total charged to/from other accounts |  | $               | 2  |   |                 | $ | 6  | 
|                                     |  |                 |    |   |                 |  

S-1



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##### Table of Contents






SCHEDULE III


STARWOOD HOTELS & RESORTS


REAL ESTATE AND ACCUMULATED DEPRECIATION


December 31, 2004


(In millions)


|                                             |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |                |   |     |              |  |   |              |  |  |          |       |      |  |  |         |  |  |         |  |        
|-------------------------------------------- |  | -------- |  | ------- |  | --------------- | --- | ------------ | ------------------- | ------------ | ----- | -------------------- | ------------ | ----------- | ------------ | - |  | ------------ | --- |  | -------------- | - | --- | ------------ |  | - | ------------ |  |  | -------- | ----- | ---- |  |  | ------- |  |  | ------- |  | -------
|                                             |  |          |  |         |  |                 |     |              |                     | Gross Amount |       |                      |              |             |              |   |  |              |    
|                                             |  |          |  |         |  | Initial Cost to |     |              | Costs Subsequent to |              |       | Book Value           |              |             |              |   |  |              |     |  |               
|                                             |  |          |  |         |  | Company         |     |              | Acquisition         |              |       | at December 31, 2004 |              |             |              |   |  |              |     |  |               
|                                             |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |               
|                                             |  |          |  |         |  |                 |     |              |                     | (a)          |       |                      | (a)(b)       |             |              |   |  |              |     |  |                |  
|                                             |  |          |  |         |  |                 |     |              |                     |              |       |                      |              | Accumulated |              |   |  |              |     |  |               
|                                             |  |          |  |         |  |                 |     | Building and |                     |              |       |                      | Building and |             |              |   |  | Building and |     |  | Depreciation & |   |     | Year of      |  |   | Date         |  | 
|Description                                  |  | City     |  | State   |  | Land            |     |              | Improvements        |              |       | Land                 |              |             | Improvements |   |  | Land         |     |  | Improvements   |   |     | Amortization |  |   | Construction |  |  | Acquired |       | Life
|                                             |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |                |   |     |              |  |   |              |  |  |          |       |     
|The St. Regis, New York                      |  | New York |  | NY      |  | $               | 65  |              |                     | $            | 150   |                      |              | $           |             |   |  | $            | 10  |  |                | $ | 65  |              |  | $ | 160          |  |  | $        | 26    |      |  |  | 1904    |  |  | 6/98    |  | 40     
|Hotel properties, each less than 5% of total |  | Various  |  | Various |  |                 | 335 |              |                     |              | 2,788 |                      |              |             | (11          | ) |  |              | 429 |  |                |   | 324 |              |  |   | 3,217        |  |  |          | 630   |      |  |  | Various |  |  | Various |  | Various
|                                             |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |                |   |     |              |  |   |              |  |  |          |       |     
|                                             |  |          |  |         |  | $               | 400 |              |                     | $            | 2,938 |                      |              | $           | (11          | ) |  | $            | 439 |  |                | $ | 389 |              |  | $ | 3,377        |  |  | $        | 656   |      |  |  |         |  |  |         |  |        
|                                             |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |                |   |     |              |  |   |              |  |  |          |       |     
|Land                                         |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |                |   |     |              |  |   | 389          |  |  |          |      |      |  |  |         |  |  |         |  |        
|Furniture, fixtures and equipment            |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |                |   |     |              |  |   | 516          |  |  |          | 388   |      |  |  |         |  |  |         |  |        
|Construction in progress                     |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |                |   |     |              |  |   | 16           |  |  |          |      |      |  |  |         |  |  |         |  |        
|                                             |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |                |   |     |              |  |   |              |  |  |          |       |     
|                                             |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |                |   |     |              |  | $ | 4,298        |  |  | $        | 1,044 |      |  |  |         |  |  |         |  |        
|                                             |  |          |  |         |  |                 |     |              |                     |              |       |                      |              |             |              |   |  |              |     |  |                |   |     |              |  |   |              |  |  |          |       |     






|    |                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | As of December 31, 2004, land, building and improvements,
    furniture, fixtures and equipment and construction in progress
    have a cost basis of $321 million, $1,644 million,
    $58 million and $14 million, respectively, for federal
    income tax purposes.
|   
|(b) | Building and improvements include amounts allocated for
    leasehold interest in land.                                                                                                                                                                                

S-2



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##### Table of Contents



SCHEDULE III (Continued)


STARWOOD HOTELS & RESORTS


REAL ESTATE AND ACCUMULATED DEPRECIATION


(In millions)




|                                       |                                    |                         |        |      |      |   |       |      |   |   |       |      |  
|-------------------------------------- | ---------------------------------- | ----------------------- | ------ | ---- | ---- | - | ----- | ---- | - | - | ----- | ---- | -
|                                       |                                    | Year Ended December 31, |       
|                                       |                                    |                         |       
|                                       |                                    | 2004                    |        |      | 2003 |   |       | 2002 |  
|                                       |                                    |                         |        |      |      |   |       |      |  
|Real Estate and Furniture and Fixtures |                                    |                         |        |      |      |   |       |      |   |   |       |     
|Balance at beginning of period         |                                    | $                       | 4,229  |      |      | $ | 4,108 |      |   | $ | 4,109 |     
|Additions during period:               |                                    |                         |        |      |      |   |       |      |   |   |       |     
|                                       | Improvements                       |                         |        | 153  |      |   |       | 62   |   |   |       | 75   |  
|                                       | Transfer from assets held for sale |                         |        |     |      |   |       | 80   |   |   |       |     |  
|Deductions during period:              |                                    |                         |        |      |      |   |       |      |   |   |       |     
|                                       | Sale of properties                 |                         |        | (84  | )    |   |       | (21  | ) |   |       | (76  | )
|                                       |                                    |                         |        |      |      |   |       |      |  
|Balance at end of period               |                                    | $                       | 4,298  |      |      | $ | 4,229 |      |   | $ | 4,108 |     
|                                       |                                    |                         |        |      |      |   |       |      |  
|Accumulated Depreciation               |                                    |                         |        |      |      |   |       |      |   |   |       |     
|Balance at beginning of period         |                                    | $                       | (905   | )    |      | $ | (746  | )    |   | $ | (581  | )   
|Additions during period:               |                                    |                         |        |      |      |   |       |      |   |   |       |     
|                                       | Depreciation expense               |                         |        | (156 | )    |   |       | (155 | ) |   |       | (186 | )
|                                       | Transfer from assets held for sale |                         |        |     |      |   |       | (16  | ) |   |       |     |  
|Deductions during period:              |                                    |                         |        |      |      |   |       |      |   |   |       |     
|                                       | Sale of properties                 |                         |        | 17   |      |   |       | 12   |   |   |       | 21   |  
|                                       |                                    |                         |        |      |      |   |       |      |  
|Balance at end of period               |                                    | $                       | (1,044 | )    |      | $ | (905  | )    |   | $ | (746  | )   
|                                       |                                    |                         |        |      |      |   |       |      |  

S-3



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##### Table of Contents






SCHEDULE IV


STARWOOD HOTELS & RESORTS


MORTGAGE LOANS ON REAL ESTATE


December 31, 2004


(In millions)


|                            |                                                     |       |  |          |              |           |           |              |  |        |            |                 |              |               |       |              |  |   |       |     |  |   |     |     | 
|--------------------------- | --------------------------------------------------- | ----- |  | -------- | ------------ | --------- | --------- | ------------ |  | ------ | ---------- | --------------- | ------------ | ------------- | ----- | ------------ |  | - | ----- | --- |  | - | --- | --- | 
|                            |                                                     |       |  |          |              |           |           |              |  |        |            | Interest Earned |             
|                            |                                                     |       |  |          |              | Amount of |           |              |  |        |            |                 | During the   |              
|                            |                                                     |       |  |          |              | Principal |           |              |  |        | Interest   |                 |              | Twelve Months |      
|                            |                                                     |       |  | Carrying |              |           | Unpaid at |              |  | Amount |            | Due at          |              |               | Ended |             
|                            |                                                     | Prior |  |          | Amount of    |           |           | December 31, |  |        | Being      |                 | December 31, |               |       | December 31, | 
|Description                 |                                                     | Liens |  |          | Mortgages(a) |           |           | 2004         |  |        | Foreclosed |                 | 2004         |               |       | 2004         | 
|                            |                                                     |       |  |          |              |           |           |              |  |        |            |                 |              |               |       |              | 
|First Mortgage:             |                                                     |       |  |          |              |           |           |              |  |        |            |                 |              |               |       |              |  |   |       |     |  |   |     |    
|                            | Ramada Inn  GA                                     |       |  | No       |              |           | $         | 2            |  |        | $          | 2               |              |               | $     |             |  |   | $     |    |  |   | $   |    | 
|Second Mortgage:            |                                                     |       |  |          |              |           |           |              |  |        |            |                 |              |               |       |              |  |   |       |     |  |   |     |    
|                            | Tara Merrimack, New Hampshire                       |       |  | No       |              |           |           | 2            |  |        |            | 2               |              |               |       |             |  |   |       |    |  |   |     |    | 
|                            |                                                     |       |  |          |              |           |           |              |  |        |            |                 |              |               |       |              |  |  
|                            |                                                     |       |  |          |              | $         | 4         |              |  | $      | 4          |                 |              | $             |      |              |  | $ |      |     |  | $ |    |    
|                            |                                                     |       |  |          |              |           |           |              |  |        |            |                 |              |               |       |              |  |  
|Intercompany Mortgage Loans |                                                     |       |  |          |              |           |           |              |  |        |            |                 |              |               |       |              |  |   |       |     |  |   |     |    
|First Mortgages:            |                                                     |       |  |          |              |           |           |              |  |        |            |                 |              |               |       |              |  |   |       |     |  |   |     |    
|                            | W New York  New York                               |       |  | No       |              |           | $         |             |  |        | $          |                |              |               | $     |             |  |   | $     |    |  |   | $   | 4   | 
|                            | Westin Maui  Hawaii                                |       |  | No       |              |           |           | 163          |  |        |            | 105             |              |               |       |             |  |   |       | 58  |  |   |     | 10  | 
|                            | Other, all (5) less than 3% of total carrying value |       |  | No       |              |           |           | 127          |  |        |            | 107             |              |               |       |             |  |   |       | 20  |  |   |     | 10  | 
|                            | Sheraton Holding Corporation Mortgage Note          |       |  | No       |              |           |           | 2,106        |  |        |            | 1,289           |              |               |       |             |  |   |       | 817 |  |   |     | 129 | 
|                            | Sheraton Holding Corporation Mortgage Note          |       |  | No       |              |           |           | 323          |  |        |            | 210             |              |               |       |             |  |   |       | 113 |  |   |     | 18  | 
|                            | Starwood Hotels & Resorts                           |       |  | No       |              |           |           | 227          |  |        |            | 150             |              |               |       |             |  |   |       | 77  |  |   |     | 13  | 
|                            |                                                     |       |  |          |              |           |           |              |  |        |            |                 |              |               |       |              |  |  
|                            |                                                     |       |  |          |              | $         | 2,946     |              |  | $      | 1,861      |                 |              | $             |      |              |  | $ | 1,085 |     |  | $ | 184 |    
|                            |                                                     |       |  |          |              |           |           |              |  |        |            |                 |              |               |       |              |  |  

S-4



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##### Table of Contents



SCHEDULE IV (Continued)


STARWOOD HOTELS & RESORTS


RECONCILIATION OF MORTGAGE LOANS


(In millions)


|                               |                         |                         |       |     |      |   |       |      |  |   |       |     |  
|------------------------------ | ----------------------- | ----------------------- | ----- | --- | ---- | - | ----- | ---- |  | - | ----- | --- | -
|                               |                         | Year Ended December 31, |      
|                               |                         |                         |      
|                               |                         | 2004                    |       |     | 2003 |   |       | 2002 | 
|                               |                         |                         |       |     |      |   |       |      | 
|Balance at beginning of period |                         | $                       | 2,812 |     |      | $ | 2,637 |      |  | $ | 2,468 |    
|Additions:                     |                         |                         |       |     |      |   |       |      |  |   |       |    
|                               | Accrued
    interest(a) |                         |       | 178 |      |   |       | 175  |  |   |       | 173 |  
|Deductions:                    |                         |                         |       |     |      |   |       |      |  |   |       |    
|                               | Principal repayments    |                         |       | (40 | )    |   |       |     |  |   |       | (4  | )
|                               |                         |                         |       |     |      |   |       |      | 
|Balance at end of period       |                         | $                       | 2,950 |     |      | $ | 2,812 |      |  | $ | 2,637 |    
|                               |                         |                         |       |     |      |   |       |      | 






|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Per the mortgage loan agreements, several of the loans do not
    require monthly interest payments if cash flows are
    insufficient. Thus, the Trust has accrued interest on such loans.

S-5



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##### Table of Contents



EXHIBIT INDEX


|        |   |    |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | - | -- | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |    |                       
|Number  |   |    | Description of Exhibit
|        |   |    |                       
|        | 2 | .1 |                        | Formation Agreement, dated as of November 1, 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 Exchange 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
    filed with the SEC on September 25, 1997, as amended by the
    Form 8-K/A filed with the SEC on December 18, 1997).
|        | 3 | .1 |                        | Amended and Restated Declaration of Trust of the Trust, amended
    and restated through April 16, 1999 (incorporated by
    reference to Exhibit 3.1 of the Trusts and the
    Corporations Joint Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 1999 (the 1999 Form
    10-Q1).                                                                                                                                                                                                                                                                                                                                                                                               
|        | 3 | .2 |                        | Articles of Amendment to the Amended and Restated Declaration of
    Trust of the Trust, dated as of November 15,
    2004.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 3 | .3 |                        | Articles of Restatement of the Corporation, as of May 7,
    2004 (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, 2004
    (the 2004 Form 10-Q2)).                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 3 | .4 |                        | Bylaws of the Trust, as amended and restated through
    November 8,
    2004.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 3 | .5 |                        | Amended and Restated Bylaws of the Corporation, as amended and
    restated through May 7, 2004 (incorporated by reference to
    Exhibit 10.2 to the 2004 Form 10-Q2).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 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
    Trusts and the Corporations Joint Current Report on
    Form 8-K filed with the SEC on March 15, 1999).                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 4 | .3 |                        | First Amendment to Rights Agreement, dated as of October 2,
    2003 (incorporated by reference to Exhibit 4 of Form 8-A/A
    filed on October 7, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 4 | .4 |                        | Second Amendment to Rights Agreement, dated as of
    October 24, 2003 (incorporated by reference to
    Exhibit 4 of Form 8-A/A filed on October 30, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 4 | .5 |                        | 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 Corporations Registration Statement on
    Form S-3 filed November 13, 1996).                                                                                                                                                                                                                                                                                              
|        | 4 | .6 |                        | First Indenture Supplement, dated as of December 31, 1998,
    among ITT Corporation, 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).                                                                                                                                                                                                                                                                                                                                                                                                                              

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##### Table of Contents



|        |    |     |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | -- | --- | ---------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 4  | .7  |                        | Indenture, dated as of May 25, 2001, by and among the
    Corporation, as Issuer, the guarantors named therein and Firstar
    Bank, N.A., as Trustee (incorporated by reference to
    Exhibit 10.2 to the Corporations and the Trusts
    Joint Quarterly Report on Form 10-Q for the quarterly period
    ended June 30, 2001 (the 2001 Form 10-Q2)).                                                                                                                                                                                                                                           
|        | 4  | .8  |                        | Indenture, dated as of April 19, 2002, among the
    Corporation, the guarantor parties named therein and
    U.S. Bank National Association, as trustee (incorporated by
    reference to Exhibit 4.1 to the Corporations and
    Sheraton Holding Corporations Joint Registration Statement
    on Form S-4 filed on November 19, 2002 the 2002
    Forms S-4)).                                                                                                                                                                                                                                 
|        | 4  | .9  |                        | Indenture dated May 16, 2003 between the Corporation, the
    Trust, the Guarantor and U.S. Bank National Association as
    trustee (incorporated by reference to Exhibit 4.9 to the
    July 8, 2003 Form S-3) (Registration Nos. 333-106888,
    333-106888-01, 333-106888-02) (the Form S-3).
    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 Corporations and the
    Trusts Joint Annual Report on Form 10-K for the fiscal
    year ended December 31, 1998 (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 Lease Agreement, entered into as of February 14,
    1997, between the Trust (or a subsidiary) as Lessor and the
    Corporation (or a subsidiary) as
    Lessee.(2)                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10 | .4  |                        | Form of Amendment of Lease, dated as of June 1, 2002,
    between the Trust (or a subsidiary) as Lessor and the
    Corporation (or a subsidiary) as
    Lessee.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10 | .5  |                        | 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
    Trusts and the Corporations Joint Annual Report on
    Form 10-K for the fiscal year ended December 31, 1997 (the
    1997 Form 10-K)).                                                                                                                                                                                                                                                                                  
|        | 10 | .6  |                        | Credit Agreement, dated October 9, 2002, among the
    Corporation, certain additional alternative currency revolving
    loan borrowers and various lenders, Deutsche Bank, AG, New York
    Branch, as Administrative Agent, JP Morgan Chase Bank, as
    Syndication Agent, Bank of America, N.A., Fleet National Bank
    and Societe Generale, as Co-Documentation Agents, and Deutsche
    Bank Securities Inc. and JP Morgan Securities Inc. as Co-Lead
    Arrangers and joint Book Running Managers (incorporated by
    reference to Exhibit 10.1 of Form 8-K filed on
    October 11, 2002).
|        | 10 | .7  |                        | First Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.5 to the Corporations and the
    Trusts Joint Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 2003 (the 2003
    10-Q1)).                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .8  |                        | Second Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.1 to Form 10-Q for the quarter ended
    June 30, 2003 (the 2003 10-Q2)).                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10 | .9  |                        | Third Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.1 to Form 10-Q for the quarter ended
    September 30, 2004 (the 2004 10-Q3)).                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .10 |                        | Incremental Term Loan Commitment to Credit Agreement
    (incorporated by reference to Exhibit 10.2 to the 2004
    10-Q3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .11 |                        | 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 Bankers Trust
    Company as Collateral Agent (incorporated by reference to
    Exhibit 10.63 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                     

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##### Table of Contents



|        |    |     |                        |                                                                                                                                                                                                                                                                                                                                      
|------- | -- | --- | ---------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .12 |                        | 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 | .13 |                        | First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, Realty Partnership, Sheraton Phoenician
    Corporation, and Starwood Phoenician CMBS I
    LLC.(2)                                                                                               
|        | 10 | .14 |                        | Second Modification, dated as of December 30, 1999, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, Realty Partnership, the Trust and Starwood Hotels
    and Resorts Holdings,
    Inc.(2)                                                                                                         
|        | 10 | .15 |                        | Third Modification, dated as of June 30, 2000, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, the Corporation, Realty Partnership, the Trust and
    Starwood Hotels and Resorts Holdings,
    Inc.(2)                                                                                             
|        | 10 | .16 |                        | 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 | .17 |                        | First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among the
    Corporation, Harbor-Cal S.D., Starwood Sheraton San Diego
    CMBS I LLC and Realty
    Partnership.(2)                                                                                                        
|        | 10 | .18 |                        | 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 | .19 |                        | First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among the
    Corporation, Harbor-Cal S.D., Starwood Sheraton San Diego
    CMBS I LLC and Realty
    Partnership.(2)                                                                                                        
|        | 10 | .20 |                        | Loan Agreement, dated as of January 27, 1999, among the
    Borrowers named therein, as Borrowers, Starwood Operator I LLC,
    as Operator, and Lehman Brothers Holding Inc., d/b/a Lehman
    Capital, a division of Lehman Brothers Holdings Inc.
    (incorporated by reference to Exhibit 10.58 to the 1998
    Form 10-K).     
|        | 10 | .21 |                        | Starwood Hotels & Resorts 1995 Long-Term Incentive Plan
    (the Trust 1995 LTIP) (Amended and Restated as of
    December 3, 1998) (incorporated by reference to
    Annex D to the Trusts and the Corporations
    Joint Proxy Statement dated December 3, 1998 (the
    1998 Proxy
    Statement))(1)                       
|        | 10 | .22 |                        | Second Amendment to the Trust 1995 LTIP (incorporated by
    reference to Exhibit 10.4 to the 2003
    10-Q1).(1)                                                                                                                                                                                                                    
|        | 10 | .23 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    Trust 1995
    LTIP.(1)(2)                                                                                                                                                                                                                                          
|        | 10 | .24 |                        | Starwood Hotels & Resorts Worldwide, Inc. 1995
    Long-Term Incentive Plan (the Corporation 1995 LTIP)
    (Amended and Restated as of December 3, 1998) (incorporated
    by reference to Annex E to the 1998 Proxy
    Statement).(1)                                                                                           
|        | 10 | .25 |                        | Second Amendment to the Corporation 1995 LTIP (incorporated by
    reference to Exhibit 10.3 to the 2003
    10-Q1).(1)                                                                                                                                                                                                              
|        | 10 | .26 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    Corporation 1995
    LTIP.(1)(2)                                                                                                                                                                                                                                    
|        | 10 | .27 |                        | Starwood Hotels & Resorts Worldwide, Inc. 1999
    Long-Term Incentive Compensation Plan (the 1999
    LTIP) (incorporated by reference to Exhibit 10.4 to
    the Corporations and the Trusts Joint Quarterly
    Report on Form 10-Q for the quarterly period ended June 30,
    1999 (the 1999
    Form 10-Q2)).(1)         

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##### Table of Contents



|        |    |     |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- | -- | --- | ---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .28 |                        | First Amendment to the 1999 LTIP, dated as of August 1,
    2001 (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,
    2001).
    (1)                                                                                                                                                                          
|        | 10 | .29 |                        | Second Amendment to the 1999 LTIP (incorporated by reference to
    Exhibit 10.2 to the 2003
    10-Q1).(1)                                                                                                                                                                                                                                                                                                                           
|        | 10 | .30 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    1999
    LTIP.(1)(2)                                                                                                                                                                                                                                                                                                                                                 
|        | 10 | .31 |                        | Form of Restricted Stock Agreement pursuant to the 1999
    LTIP.(1)(2)                                                                                                                                                                                                                                                                                                                                                               
|        | 10 | .32 |                        | Starwood Hotels & Resorts Worldwide, Inc. 2002
    Long-Term Incentive Compensation Plan (the 2002
    LTIP) (incorporated by reference to Annex B of the
    Corporations 2002 Proxy
    Statement).(1)                                                                                                                                                                                                                           
|        | 10 | .33 |                        | First Amendment to the 2002 LTIP (incorporated by reference to
    Exhibit 10.1 to the 2003
    10-Q1).(1)                                                                                                                                                                                                                                                                                                                            
|        | 10 | .34 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    2002 LTIP (incorporated by reference to Exhibit 10.49 to
    the 2002 Form 10-K filed on February 28, 2003 (the
    2002
    10-K)).(1)                                                                                                                                                                                                                            
|        | 10 | .35 |                        | Form of Restricted Stock Agreement pursuant to the 2002
    LTIP.(1)(2)                                                                                                                                                                                                                                                                                                                                                               
|        | 10 | .36 |                        | 2004 Long-Term Incentive Compensation Plan (2004
    LTIP) (incorporated by reference to the Corporations
    2004 Notice of Annual Meeting of Stockholders and Proxy
    Statement, pages A-1 through
    A-20).(1)                                                                                                                                                                                                               
|        | 10 | .37 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    2004 LTIP (incorporated by reference to Exhibit 10.4 to the
    2004 10-Q2).(1)                                                                                                                                                                                                                                                                                      
|        | 10 | .38 |                        | Form of Restricted Stock Agreement pursuant to the 2004 LTIP
    (incorporated by reference to Exhibit 99.1 to the
    Corporation and the Trusts Joint Current Report on Form
    8-K filed with the SEC on February 16, 2005 (the
    February 2005
    8-K)).(1)                                                                                                                                                                
|        | 10 | .39 |                        | Starwood Hotels & Resorts Worldwide, Inc. 1999 Annual
    Incentive Plan for Certain Executives (the 1999 AIP)
    (incorporated by reference to Exhibit 10.5 to the 1999 Form
    10-Q2).(1)                                                                                                                                                                                                                                       
|        | 10 | .40 |                        | First Amendment to the 1999 AIP, dated as of December 17,
    2003 (incorporated by reference to Exhibit 10.65 to the
    Corporations and the Trusts Joint Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003 (the
    2003
    10-K)).(1)                                                                                                                                                               
|        | 10 | .41 |                        | Starwood Hotels & Resorts Worldwide, Inc. Annual
    Incentive Plan, dated June 1,
    2001.(1)(2)                                                                                                                                                                                                                                                                                                                                    
|        | 10 | .42 |                        | Starwood Hotels & Resorts Worldwide, Inc. Deferred
    Compensation Plan, effective as of January 1, 2001
    (incorporated by reference to Exhibit 10.1 to the 2001 Form
    10-Q2).(1)                                                                                                                                                                                                                                              
|        | 10 | .43 |                        | Form of Indemnification Agreement between the Corporation, the
    Trust and each of its Directors/Trustees and executive officers
    (incorporated by reference to Exhibit 10.10 to the 2003
    10-K).(1)                                                                                                                                                                                                                          
|        | 10 | .44 |                        | Registration Rights Agreement, dated May 16, 2003, among
    the Corporation, the Guarantor and the Initial Purchasers
    (incorporated by reference to Exhibit 4.10 to the
    Form S-3).                                                                                                                                                                                                                                           
|        | 10 | .45 |                        | 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 | .46 |                        | 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 | .47 |                        | 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)).

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##### Table of Contents



|        |    |     |                        |                                                                                                                                                                                                                                                                                                       
|------- | -- | --- | ---------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .48 |                        | 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 | .49 |                        | 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 | .50 |                        | 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 | .51 |                        | 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 | .52 |                        | Amendment to Exchange Rights Agreement (Class A Realty
    Partnership Units), dated as of October 10, 2002, among the
    Trust, Realty Partnership and certain limited partners of the
    Realty Partnership (incorporated by reference to
    Exhibit 10.53 to the 2002 Form 10-K).               
|        | 10 | .53 |                        | Amendment to Exchange Rights Agreement, dated as of
    December 17, 2003 for the Class A Realty Partnership
    Units (incorporated by reference to Exhibit 10.67 to the
    2003 10-K).                                                                                                             
|        | 10 | .54 |                        | 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 | .55 |                        | Amendment to Exchange Rights Agreement (Class B Operating
    Partnership Units), dated as of October 10, 2002, among the
    Corporation, Operating Partnership and certain limited partners
    of the Operating Partnership (incorporated by reference to
    Exhibit 10.54 to the 2002 form 10-K).
|        | 10 | .56 |                        | Amendment to Exchange Rights Agreement, dated as of
    December 17, 2003 for the Class B Operating
    Partnership Units (incorporated by reference to
    Exhibit 10.66 to the 2003 10-K).                                                                                                          
|        | 10 | .57 |                        | Second Amended and Restated Employment Agreement, dated as of
    January 1, 2003, between Barry S. Sternlicht and the
    Company (incorporated by reference to Exhibit 10.69 to the
    2003
    10-K).(1)                                                                                          
|        | 10 | .58 |                        | Form of Severance Agreement, dated December 1999, between the
    Corporation and Barry S. Sternlicht (incorporated by reference
    to Exhibit 10.52 to the 1999 Form
    10-K).(1)                                                                                                                  
|        | 10 | .59 |                        | Starwood Hotels & Resorts Amended and Restated
    Non-Qualified Stock Option Agreement by and between the Trust
    and Barry S. Sternlicht, dated as of May 22, 2002 relating
    to a grant made on June 29, 1995 (incorporated by reference
    to Exhibit 10.3 to the 2002
    Form 10-Q2).(1)   
|        | 10 | .60 |                        | Starwood Hotels & Resorts Amended and Restated
    Non-Qualified Stock Option Agreement by and between the Trust
    and Barry S. Sternlicht, dated as of May 22, 2002 relating
    to a grant made on August 12, 1996 (incorporated by
    reference to Exhibit 10.4 to the 2002
    Form 10-Q2).(1) 
|        | 10 | .61 |                        | Starwood Hotels & Resorts Amended and Restated
    Non-Qualified Stock Option Agreement by and between the Trust
    and Barry S. Sternlicht, dated as of May 22, 2002 relating
    to a grant made on August 12, 1996 (incorporated by
    reference to Exhibit 10.5 to the 2002
    Form 10-Q2).(1) 
|        | 10 | .62 |                        | Employment Agreement, dated as of June 27, 2000, between
    the Corporation and Robert F. Cotter (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,
    2000).(1)          
|        | 10 | .63 |                        | Addendum to Robert F. Cotter Offer Letter, effective as of
    February 16, 2002 (incorporated by reference to
    Exhibit 10.1 to the Corporations and Trusts
    Joint Quarterly Report on Form 10-Q for the quarter ended
    March 31, 2002).
    (1)                                           
|        | 10 | .64 |                        | Form of Severance Agreement, dated as of August 14, 2000,
    between the Corporation and Robert F. Cotter (incorporated by
    reference to Exhibit 10.56 to the 2000 Form
    10-K).(1)                                                                                                             

E-5



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##### Table of Contents



|        |    |     |                        |                                                                                                                                                                                                                                                                                     
|------- | -- | --- | ---------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .65 |                        | Letter Agreement, dated March 9, 2004 between the
    Corporation and Robert Cotter (incorporated by reference to the
    Trusts and the Corporations Joint Quarterly Report
    on Form 10-Q for the quarterly period ended March 31,
    2004).
    (1)                         
|        | 10 | .66 |                        | Employment Agreement, dated March 25, 1998, between
    Theodore Darnall and the Corporation (incorporated by reference
    to Exhibit 10.61 to the 2002 Form
    10-K).(1)                                                                                                         
|        | 10 | .67 |                        | Severance Agreement, dated December 1999, between the
    Corporation and Theodore Darnall (incorporated by reference to
    Exhibit 10.55 to the 2002 Form
    10-K).(1)                                                                                                           
|        | 10 | .68 |                        | Employment Agreement, dated as of November 13, 2003,
    between the Corporation and Vasant Prabhu (incorporated by
    reference to Exhibit 10.68 to the 2003
    10-K).(1)                                                                                                        
|        | 10 | .69 |                        | Employment Agreement, dated as of September 20, 2004,
    between the Corporation and Steven J. Heyer (incorporated by
    reference to Exhibit 10.1 to the Trusts and the
    Corporations Joint Current Report on Form 8-K filed with
    the SEC on September 24,
    2004).(1)
|        | 10 | .70 |                        | Form of Non-Qualified Stock Option Agreement between the
    Corporation and Steven J. Heyer pursuant to the 2004 LTIP.
    (1)(2)                                                                                                                                                  
|        | 10 | .71 |                        | Form of Restricted Stock Unit Agreement between the Corporation
    and Steven J. Heyer pursuant to the 2004 LTIP (incorporated by
    reference to Exhibit 99.2 to the February 2005
    8-K.(1)                                                                                   
|        | 10 | .72 |                        | Employment Agreement, dated as of September 25, 2000,
    between the Corporation and Kenneth Siegel (incorporated by
    reference to Exhibit 10.57 to the Corporations and
    Trusts Joint Annual Report on Form 10-K for the
    fiscal year ended December 31,
    2000).(1) 
|        | 10 | .73 |                        | Letter Agreement, dated July 22, 2004 between the
    Corporation and Kenneth
    Siegel.(1)(2)                                                                                                                                                                                     
|        | 12 | .1  |                        | Calculation of Ratio of Earnings to Total Fixed Charges.
    (2)                                                                                                                                                                                                                    
|        | 21 | .1  |                        | Subsidiaries of the
    Registrants.(2)                                                                                                                                                                                                                                             
|        | 23 | .1  |                        | Consent of Ernst & Young
    LLP.(2)                                                                                                                                                                                                                                                
|        | 31 | .1  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Executive
    Officer 
    Corporation.(2)                                                                                                                                             
|        | 31 | .2  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Financial
    Officer 
    Corporation.(2)                                                                                                                                             
|        | 31 | .3  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Executive
    Officer  Trust.
    (2)                                                                                                                                                  
|        | 31 | .4  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Financial and Accounting
    Officer 
    Trust.(2)                                                                                                                                    
|        | 32 | .1  |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Executive Officer 
    Corporation.(2)                                                                                                                                  
|        | 32 | .2  |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Financial Officer 
    Corporation.(2)                                                                                                                                  
|        | 32 | .3  |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Executive Officer 
    Trust.(2)                                                                                                                                        
|        | 32 | .4  |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Financial and Accounting Officer 
    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.                                                                                                                        

E-6