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                                                                      Exh. 10.41

                    STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                              ANNUAL INCENTIVE PLAN

1.    DEFINITIONS.  When the following terms are used herein with initial
capital letters, they shall have the following meanings:

      AIP - shall mean the Starwood Hotels & Resorts Worldwide, Inc. Annual
      Incentive Plan as set forth herein and as from time to time amended.

      COMPANY - Starwood Hotels & Resorts Worldwide, Inc., a Maryland
      corporation.

      FAIR MARKET VALUE - shall mean the fair market value of a Unit, as
      determined by the Company, which, unless otherwise specified, shall be the
      closing sale price of a Unit as reported in the New York Stock Exchange
      Composite Transactions on the business day immediately preceding the date
      as of which such value is being determined, or, if there is no such sale
      on the relevant date, then on the next preceding business day on which a
      sale was reported.

      FINANCIAL PERFORMANCE MEASURES - The Financial Performance Measures shall
      be directly and specifically tied to one or more of the following business
      criteria, determined with respect to the Company as a whole or with
      respect to an operating division of the Company: earnings before interest,
      taxes, depreciation and amortization ("EBITDA"), consolidated pre-tax
      earnings, net revenues, net earnings, operating income, earnings before
      interest and taxes, cash flow, return on equity, return on net assets
      employed or earnings per share for the applicable Performance Period, all
      as computed in accordance with generally accepted accounting principles as
      in effect from time to time and as applied by the Company in the
      preparation of its financial statements and subject to such other special
      rules and conditions as the Company may establish.

      INDIVIDUAL OBJECTIVES - The Individual Objectives applicable to a
      Participant for a Performance Period shall be key individual objectives
      that link individual contributions to Corporate/Division/functional
      objectives and major financial/operating goals for such Performance
      Period. The Individual Objectives applicable to a Participant for a
      Performance Period will be developed by the Participant and discussed and
      jointly agreed to by the Participant and the Participant's manager.

      PARTICIPANT - shall mean an employee of the Company or an affiliate of the
      Company who is designated by the Company at any time before the end of the
      ninth month of each Performance Period as a Participant in the AIP for
      such Performance Period. Company associates participating in other
      incentive plans or Corporate Human Resources-approved formal retention
      plans will not be eligible to participate in the AIP, unless an exception
      is approved by Corporate Human Resources.

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      PERFORMANCE PERIOD - shall mean the twelve consecutive month period which
      coincides with the Company's fiscal year.

      RETIREMENT - shall mean termination of employment with the Company and all
      affiliates of the Company with a combined age plus years of service of not
      less than 65, with a minimum age requirement of 55 and a minimum service
      requirement of 5 years (full-time or full-time-equivalent).

      UNIT - shall mean a Unit consisting of one share of common stock, par
      value $.01 per share, of the Company and one Class B share of beneficial
      interest, par value $.01 per share, of Starwood Hotels & Resorts.

2.    ADMINISTRATION.

      2.1   COMPANY.  The AIP shall be administered by the Company.

      2.2   DETERMINATIONS MADE FOR EACH PERFORMANCE PERIOD.  For each
      Performance Period the Company shall:

            (a)   Designate Participants for that Performance Period and
                  their incentive award opportunities;

            (b)   Determine the amount or formula for determining each
                  Participant's bonus payment for the Performance Period;

            (c)   Establish the Financial Performance Measures for the
                  Performance Period; and

            (d)   Establish the Financial Performance Measure targets for the
                  Performance Period.

      The Company reserves the right, exercisable in its sole discretion, to
      change any of the above determinations with respect to a Performance
      Period at any time before, during or after such Performance Period,
      provided that the Financial Performance Measure and the Financial
      Performance Measure targets may not be changed after the ninetieth day of
      the Performance Period.

3.    BONUS PAYMENTS.

      3.1 AMOUNT. Each Participant shall be eligible to receive a bonus payment
      for a Performance Period in an amount determined by the Company based on
      the attainment of the Financial Performance Measure targets and Individual
      Objectives applicable to the Participant for the Performance Period. The
      aggregate amount of the bonus payments for a Performance Period shall be
      subject to the approval of the Compensation and Option Committee of the
      Board of Directors of the Company.

      3.2   TIME AND FORM OF PAYMENTS.


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            (a)   CASH PAYMENTS. Not less than 75% of a Participant's bonus
                  payment for a Performance Period shall be paid to the
                  Participant in cash. The cash portion of a Participant's bonus
                  payment for a Performance Period shall be paid to the
                  Participant as soon as practicable after the amount of the
                  Participant's bonus payment for the Performance Period has
                  been determined by the Company.

            (b)   RESTRICTED STOCK.  For Participants at organizational
                  levels designated by the Company, up to 25% of a
                  Participant's bonus payment for a Performance Period shall
                  be paid to the Participant in the form of Units pursuant to
                  an award of restricted stock under the Starwood Hotels &
                  Resorts, Inc. 1999 Long-Term Incentive Compensation Plan
                  (the "LTIP"). The portion of a Participant's bonus payment
                  for a Performance Period to be so paid as a restricted
                  stock award under the LTIP shall be determined by the
                  Company, or as elected by the Participant in accordance
                  with procedures established by the Company, and shall be
                  subject to such restrictions as determined in accordance
                  with the LTIP by the committee that administers the LTIP.
                  The number of Units representing the restricted stock
                  portion of a Participant's bonus payment for a Performance
                  Period shall be calculated by increasing the dollar amount
                  of such portion by one-third and then converting such
                  amount into Units based on the Fair Market Value of a Unit
                  on the date on which the bonus payment is paid to the
                  Participant and shall be issued to the Participant at the
                  time the cash portion of the Participant's bonus payment
                  for the Performance Period is paid.

      3.3 EMPLOYMENT ON PAYMENT DATE REQUIRED. A Participant's entitlement to a
      bonus payment for a Performance Period is conditioned upon the
      Participant's active employment with the Company or an affiliate of the
      Company on the date on which the bonus payment is to be paid to the
      Participant, unless an exception is approved by Corporate Human Resources.
      Pro-rata awards may be paid in the event of a Participant's death,
      disability (as defined in the applicable long-term disability plan, or, if
      no such plan exists, as determined by the Company) or Retirement.
      Otherwise, no bonus payment shall be earned by or payable to any
      Participant until the date on which the bonus payment is paid to the
      Participant. If a Participant is terminated or resigns from the Company
      before the date on which a bonus payment is to be paid to the Participant,
      such bonus payment is forfeited, unless an exception is approved by
      Corporate Human Resources.

      3.4 NONTRANSFERABILITY. Participants shall not have the right to assign,
      encumber or otherwise anticipate the payments to be made under the AIP,
      and the benefits provided hereunder shall not be subject to seizure for
      payment of any debts or judgments against any Participant.

      3.5 TAX WITHHOLDING. In order to comply with all applicable federal or
      state income tax laws or regulations, the Company may take such action as
      it deems appropriate to ensure that all applicable federal or state
      payroll, withholding, income or other taxes,


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      which are the sole and absolute responsibility of a Participant, are
      withheld or collected from such Participant.

4. AMENDMENT AND TERMINATION. The Company may amend the AIP at any time and for
any reason deemed sufficient by it without notice to any person affected by the
AIP and may likewise terminate or curtail the benefits of the AIP both with
regard to persons expecting to receive benefits hereunder in the future and
persons already receiving benefits at the time of such action.

5.    MISCELLANEOUS.

      5.1 HEADINGS. Headings are given to the Sections and subsections of the
      AIP solely as a convenience to facilitate reference. Such headings shall
      not be deemed in any ways material or relevant to the construction or
      interpretation of the AIP or any provision thereof.

      5.2 APPLICABILITY TO SUCCESSORS. The AIP shall be binding upon and inure
      to the benefit of the Company and each Participant, the successors and
      assigns of the Company, and the personal representatives and heirs of each
      Participant.

      5.3 EMPLOYMENT RIGHTS AND OTHER BENEFITS PROGRAMS. The provisions of the
      AIP shall not give any Participant any right to be retained in the
      employment of the Company. In the absence of any specific agreement to the
      contrary, the AIP shall not affect any right of the Company, or of any
      affiliate of the Company, to terminate, with or without cause, any
      Participant's employment at any time. The AIP shall not replace any
      contract of employment, whether oral, or written, between the Company and
      any Participant, but shall be considered a supplement thereto. The AIP is
      in addition to, and not in lieu of, any other employee benefit plan or
      program in which any Participant may be or become eligible to participate
      by reason of employment with the Company. Receipt of benefits hereunder
      shall have such effect on contributions to and benefits under such other
      plans or programs as the provisions of each such other plan or program may
      specify.

      5.4 NO TRUST FUND CREATED. The AIP shall not create or be construed to
      create a trust or separate fund of any kind or fiduciary relationship
      between the Company or any affiliate and a Participant or any other
      person. To the extent that any person acquires a right to receive payments
      from the Company or any affiliate pursuant to the AIP, such right shall be
      no greater than the right of any unsecured general creditor of the Company
      or of any affiliate.

      5.5 GOVERNING LAW. The place of administration of the AIP shall be in the
      State of New York. The corporate law of the State of Maryland shall govern
      issues relating to the validity and issuance of Units. Otherwise, the AIP
      shall be construed and administered in accordance with the laws of the
      State of New York, without giving effect to principles relating to
      conflict of laws.

5.6   SEVERABILITY. If any provision of the AIP is or becomes or is deemed to be
      invalid, illegal or unenforceable in any jurisdiction such provision shall
      be construed or deemed


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      amended to conform to applicable laws, or if it cannot be so construed or
      deemed amended without, in the determination of the Company, materially
      altering the purpose or intent of the AIP, such provision shall be
      stricken as to such jurisdiction, and the remainder of the AIP shall
      remain in full force and effect.


                                                            Date: June 1, 2001


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