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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-K



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

For the Fiscal Year Ended December 31, 2000


OR

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

For the Transition Period from  to


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|Commission File Number: 1-7959                                                                              |  | Commission File Number: 1-6828                                                                             
|                                                                                                           
|STARWOOD HOTELS &
	RESORTS WORLDWIDE, INC.(Exact name of Registrant as specified in its charter)            |  | STARWOOD HOTELS &
	RESORTS(Exact name of Registrant as specified in its charter)                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|Maryland(State or other jurisdiction
	of incorporation or organization)                                     |  | Maryland(State or other jurisdiction
	of incorporation or organization)                                    
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|52-1193298(I.R.S. employer identification no.)                                                              |  | 52-0901263(I.R.S. employer identification no.)                                                             
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|                                                                                                           
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|                                                                                                           
|777 Westchester Avenue
	White Plains, NY 10604(Address of principal executive
	offices, including zip code) |  | 777 Westchester Avenue
	White Plains, NY 10604(Address of principal executive
	offices, including zip code)
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|(914) 640-8100(Registrants telephone number,
	including area code)                                         |  | (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), the
	Class B
	shares of beneficial interest, par value $0.01 per share
	(Class B Shares), of Starwood Hotels &
	Resorts
	(the Trust), and Preferred Stock Purchase Rights
	of the Corporation, all of which are attached
	and trade together as a Share |  | New York Stock Exchange                  

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

None

Indicate by check mark whether the Registrants (1) have
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and
(2) have been subject to such filing requirements for the
past 90 days.
Yes 

  No

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

As of March 23, 2001, the aggregate market value of the
Registrants voting and non-voting common equity held by
non-affiliates (for purposes of this Joint Annual Report only,
includes all shares other than those held by the
Registrants Directors, Trustees and executive officers)
was $6,134,418,023.

As of March 23, 2001, the Corporation had outstanding
197,685,079 Corporation Shares and the Trust had outstanding
197,685,079 Class B Shares and 100 Class A shares of
beneficial interest, par value $0.01 per share
(Class A Shares).

For information concerning ownership of shares, see the Proxy
Statement for the Corporations Annual Meeting of
Stockholders that is currently expected to be held on
May 18, 2001 (the Proxy Statement), which is
incorporated by reference under various Items of this Joint
Annual Report.

Document Incorporated by Reference:

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



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TABLE OF CONTENTS



|         |                                                                                                 |  |  |  |  |  |  | 
|-------- | ----------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  
|         | Forward-Looking Statements                                                                     
|         | Item 1. Business.                                                                              
|         | General                                                                                        
|         | Item 2. Properties.                                                                            
|         | Item 3. Legal Proceedings.                                                                     
|         | Item 4. Submission of Matters to a Vote of Security Holders.                                   
|         | Item 5. Market for Registrants Common Equity and Related Stockholder Matters.                 
|         | Item 6. Selected Financial Data.                                                               
|         | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations. 
|         | Item 7A. Quantitative and Qualitative Disclosures about Market Risk.                           
|         | Item 8. Financial Statements and Supplementary Data.                                           
|         | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.  
|PART III
|         | Item 10. Directors, Trustees and Executive Officers of the Registrants.                        
|         | Item 11. Executive Compensation.                                                               
|         | Item 12. Security Ownership of Certain Beneficial Owners and Management.                       
|         | Item 13. Certain Relationships and Related Transactions.                                       
|PART IV 
|         | Item 14. Exhibits, Financial Statements, Financial Statement Schedules and Reports on Form 8-K.
|EX-10.43
|EX-10.56
|EX-10.57
|EX-10.58
|EX-10.59
|EX-12.1 
|EX-21.1 
|EX-23.1 



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TABLE OF CONTENTS

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|PART I   
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|          |  | Forward-Looking Statements                                                             |  |      | 1  | 
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|Item  1.  |  | Business                                                                               |  |      | 7  | 
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|Item  2.  |  | Properties                                                                             |  |      | 12 | 
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|Item  3.  |  | Legal Proceedings                                                                      |  |      | 14 | 
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|Item  4.  |  | Submission of Matters to a Vote of Security Holders                                    |  |      | 14 | 
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|          |  | Executive Officers of the Registrants                                                  |  |      | 15 | 
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|PART II  
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|Item  5.  |  | Market for Registrants Common Equity and Related
	Stockholder Matters                 |  |      | 15 | 
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|Item  6.  |  | Selected Financial Data                                                                |  |      | 16 | 
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|Item  7.  |  | Managements Discussion and Analysis of Financial Condition
	and Results of Operations |  |      | 17 | 
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|Item  7A. |  | Quantitative and Qualitative Disclosures about Market Risk                             |  |      | 23 | 
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|Item  8.  |  | Financial Statements and Supplementary Data                                            |  |      | 24 | 
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|Item  9.  |  | Changes in and Disagreements with Accountants on Accounting and
	Financial Disclosure  |  |      | 24 | 
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|PART III 
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|Item  10. |  | Directors, Trustees and Executive Officers of the Registrants                          |  |      | 24 | 
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|Item  11. |  | Executive Compensation                                                                 |  |      | 29 | 
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|Item  12. |  | Security Ownership of Certain Beneficial Owners and Management                         |  |      | 30 | 
|         
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|Item  13. |  | Certain Relationships and Related Transactions                                         |  |      | 30 | 
|         
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|PART IV  
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|         
|         
|Item  14. |  | Exhibits, Financial Statements, Financial Statement Schedules
	and Reports on Form 8-K |  |      | 32 | 



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##### Table of Contents



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




PART I




Forward-Looking Statements

This Joint Annual Report contains statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements appear
in a number of places in this Joint Annual Report, including,
without limitation, the section of Item 1,
Business, captioned Business Strategy
and Item 7, Managements Discussion and Analysis
of Financial Condition and Results of Operations. Such
forward-looking statements may include statements regarding the
intent, belief or current expectations of Starwood, its
Directors or Trustees or its officers with respect to the
matters discussed in this Joint Annual Report. All such
forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from those
projected in the forward-looking statements including, without
limitation, the risks and uncertainties set forth below. The
Company undertakes no obligation to publicly update or revise
any forward-looking statements to reflect current or future
events or circumstances.

Risks Relating to Hotel and Resort Operations

We Are Subject to All the Operating Risks Common to the
Hotel and Leisure Industry.Operating risks common to
the hotel and leisure industry include:



| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in general economic conditions;                                                                                                      
|
| |  | decreases in the level of demand for rooms and related services;                                                                             
|
| |  | cyclical over-building in the hotel and leisure industry;                                                                                    
|
| |  | restrictive changes in zoning and similar land use laws and
	regulations or in health, safety and environmental laws, rules
	and regulations;
|
| |  | changes in travel patterns; and                                                                                                              
|
| |  | changes in operating costs including, but not limited to, energy
	and labor costs.                                                           

In addition, our hotel management contracts are typically
long-term arrangements, but most allow the hotel owner to
replace us if certain financial or performance criteria are not
met. Our ability to meet these financial and performance
criteria is subject to, among other things, the risks described
in this section. Additionally, our operating results would be
adversely affected if we could not maintain existing management,
franchise or representation agreements or obtain new agreements
on favorable terms.

1



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We Must Compete for Customers.The hotel and
leisure industry is highly competitive. Our properties compete
for customers with other hotel and resort properties, and, with
respect to our vacation ownership resorts, with owners reselling
their vacation ownership interests (VOIs), in their
geographic markets. Some of our competitors may have
substantially greater marketing and financial resources than we
do, and they may improve their facilities, reduce their prices
or expand or improve their marketing programs in ways that
adversely affect our operating results.

We Must Compete for Properties.We compete with
other hotel and leisure companies for properties. Some of these
competitors may have substantially greater financial resources
than we do and may be able to pay more to acquire properties
than we are able to pay. In addition, competition for properties
may increase the cost of acquiring properties.

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

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

Real Estate Investments Are Subject to Numerous Risks.Because we own and lease hotels and resorts, we are
subject to the risks that generally relate to investments in
real property. The investment returns available from equity
investments in real estate depend in large part on the amount of
income earned and capital appreciation generated by the related
properties, as well as the expenses incurred. In addition, a
variety of other factors affect income from properties and real
estate values, including governmental regulations, real estate,
zoning, tax and eminent domain laws, interest rate levels and
the availability of financing. For example, new or existing real
estate, zoning or tax laws can make it more expensive and/ or
time-consuming to develop real property or expand, modify or
renovate hotels. When interest rates increase, the cost of
acquiring, developing, expanding or renovating real property
increases and real property values may decrease as the number of
potential buyers decreases. Similarly, as financing becomes less
available, it becomes more difficult both to acquire and to sell
real property. Finally, governments can, under eminent domain
laws, take real property. Sometimes this taking is for less
compensation than the owner believes the property is worth. Any
of these factors could have a material adverse impact on our
results of operations or financial condition, as well as on our
ability to make distributions to our shareholders. In addition,
equity real estate investments, such as the investments we hold
and any additional properties that we may acquire, are
relatively difficult to sell quickly. If our properties do not
generate revenue sufficient to meet operating expenses,
including debt service and capital expenditures, our income will
be adversely affected.

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



| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | construction delays or cost overruns that may increase project
	costs;                                               
|
| |  | receipt of zoning, occupancy and other required governmental
	permits and authorizations;                            
|
| |  | 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; and
|
| |  | governmental restrictions on the nature or size of a project.                                                        

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

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Our Vacation Ownership Business Is Subject to Extensive
Regulation and Risk of Default.We market and sell VOIs,
which typically entitle the buyer to ownership of a
fully-furnished resort unit for a one-week period on either an
annual or an alternate-year basis. We also acquire, develop and
operate vacation ownership resorts, and provide financing to
purchasers of VOIs. These activities are all subject to
extensive regulation by the federal government and the states in
which vacation ownership resorts are located and in which VOIs
are marketed and sold. In addition, the laws of most states in
which we sell VOIs grant the purchaser of this type of interest
the right to rescind the purchase contract at any time within a
statutory rescission period. Although we believe that we are in
material compliance with all applicable federal, state, local
and foreign laws and regulations to which vacation ownership
marketing, sales and operations are currently subject, changes
in these requirements or a determination by a regulatory
authority that we were not in compliance could adversely affect
us. Additionally, if the purchaser of a VOI defaults, we may not
have recovered our marketing, selling, and general and
administrative costs related to the sale of the VOI.

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

General Economic Conditions May Negatively Impact Our
Results.Moderate or severe economic downturns or
adverse conditions may negatively affect our operations. These
conditions may be widespread or isolated to one or more
geographic regions. As a result, recessions or other general
economic conditions may have a negative impact on our results of
operations. In addition, a tightening of the labor markets in
one or more geographic regions may result in fewer and/ or less
qualified applicants for job openings in our facilities and
higher wages.

International Operations Are Subject to Special Political
and Monetary Risks.We have significant international
operations which as of December 31, 2000 included 109
owned, managed or franchised properties in Europe (including 30
properties with majority ownership); 35 owned, managed or
franchised properties in Latin America (including 15 properties
with majority ownership); 71 owned, managed or franchised
properties in the Asia Pacific region (including 4 properties
with majority ownership); and 54 managed or franchised
properties in the Africa/ Middle East region (no properties with
majority ownership). International operations generally are
subject to various political and other risks that are not
present in U.S. operations. These risks include the risk of war
or civil unrest, expropriation and nationalization. In addition,
some international jurisdictions restrict the repatriation of
non-U.S. earnings. Various international jurisdictions also have
laws limiting the right and ability of non-U.S. entities to pay
dividends and remit earnings to affiliated companies unless
specified conditions have been met. In addition, sales in
international jurisdictions typically are made in local
currencies, which subject us to risks associated with currency
fluctuations. Currency devaluations and unfavorable changes in
international monetary and tax policies could have a material
adverse effect on our profitability and financing plans, as
could other changes in the international regulatory climate and
international economic conditions. Other than Italy, where our
risks are heightened due to the relatively large number of
properties we own, our international properties are
geographically diversified and are not concentrated in any
particular region.

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We Are Uncertain What Long-Term Effect the Adoption of the
Euro Will Have on Us.On January 1, 1999, 11 of the
15 member countries of the European Union (the
Participating Countries) established fixed
conversion rates between their existing sovereign currencies and
the Euro. Following the introduction of the Euro, the legacy
currencies of the Participating Countries will remain legal
tender during a transition period ending on January 1,
2002. During the transition period, both the legacy currency and
the Euro will be legal tender in the respective Participating
Countries. During the transition period, currency conversions
will be computed by a triangulation with reference to conversion
rates between the respective currencies and the Euro. The
Company currently operates in substantially all of the
Participating Countries. The effect on the Company of the
adoption of the Euro by the Participating Countries in which it
operates is currently uncertain. However, it is possible that
the Euro adoption will result in increased competition within
the European market. In addition, a number of the Companys
information systems are not currently Euro compliant. The
Company is currently in the process of updating its information
systems to make them Euro compliant. As of the date of this
filing, five properties have converted to the Euro without any
significant impact to the properties operations or
information systems; however, there is no assurance that the
Company or third-party vendors of applications used by the
Company will successfully bring all of its systems into
compliance. Failure of the Company to do so could result in
disruptions in the processing of transactions in Euros or
computed by reference to the Euro.

Acquisition Opportunities

We intend to make acquisitions that complement our business.
There can be no assurance, however, that we will be able to
identify acquisition candidates or complete acquisitions on
commercially reasonable terms or at all. If additional
acquisitions are made, there can be no assurance that any
anticipated benefits will actually be realized. Similarly, there
can be no assurance that we will be able to obtain additional
financing for acquisitions, or that the ability to obtain such
financing will not be restricted by the terms of our current
debt agreements.

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

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

Disposition Opportunities

We periodically review our business with the view to identifying
properties or other assets that we believe no longer complement
our business. There can be no assurance, however, that if we
identify such properties that we will be able to complete
dispositions on commercially reasonable terms or at all. In
particular, we have announced our expectation to market our CIGA
S.p.A. (CIGA) portfolio of 22 hotels for sale,
potentially encumbered by our management agreements, in whole or
in part during 2001. There is, however, no guarantee that such a
sale will materialize or be consummated within our projected
time frame, and if consummated, there is no guarantee of the
terms of any such transaction.

Debt Financing

As a result of incurring debt, we are subject to the following
risks associated with debt financing: (i) the risk that
cash flow from operations will be insufficient to meet required
payments of principal and interest; (ii)

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Certain Interests

Barry S. Sternlicht is the Chairman and Chief Executive Officer
the Corporation and the Trust. Mr. Sternlicht also serves
as the President and Chief Executive Officer of, and may be
deemed to control, Starwood Capital Group, L.L.C.
(Starwood Capital), a real estate investment firm.
Madison F. Grose is a member of the board of the
Corporation and the Trust and is also an executive officer of
Starwood Capital. Starwood Capital and the Company have entered
into a non-compete agreement whereby Starwood Capital may not
purchase a hotel property in the United States until such
opportunity is first presented to the Company. See Item 13,
Certain Relationships and Related Transactions.
Although Starwood Capital is free to compete with the Company
for hotel properties outside of the United States, as a matter
of practice, all opportunities to purchase such properties are
also first presented to the Company. In each case, the Audit
Committee of the Board (or other committee of independent
directors) will make a decision as to whether or not the Company
will pursue the opportunity. In addition, certain officers and
directors of the Company have interests in businesses that may,
from time to time, do business with the Company. To the extent
such individuals have a material interest in such businesses,
any agreements relating thereto are subject to Audit Committee
(or other committee of independent directors) approval.

Ability to Manage Rapid Growth

Our future success and our ability to manage future growth
depend in large part upon the efforts of our senior management
and our ability to attract and retain key officers and other
highly qualified personnel. Competition for such personnel is
intense. There can be no assurance that we will continue to be
successful in attracting and retaining qualified personnel.
Accordingly, there can be no assurance that our senior
management will be able to successfully execute and implement
our growth and operating strategies.

Tax Risks

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

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

Risks Relating to Ownership of Our Shares

No Person or Group May Own More Than 8% of Our Shares.Our governing documents provide (subject to certain
exceptions) that no one person or group may own or be deemed to
own more than 8% of our outstanding stock or Shares of
beneficial interest, whether measured by vote, value or number
of Shares. There is an exception for shareholders who owned more
than 8% as of February 1, 1995, who may not own or be
deemed to own more than the lesser of 9.9% or the percentage of
Shares they held on that date, provided, that if the percentage
of Shares beneficially owned by such a holder decreases after
February 1, 1995, such a holder may not own or be deemed to
own more than the greater of 8% or the percentage owned after
giving effect to the decrease. We may waive this limitation if
we are satisfied that such ownership will not jeopardize the
Trusts status as a REIT. In addition, if Shares which
would cause the Trust to be beneficially owned by fewer than 100
persons are issued or transferred to any person, such issuance
or transfer shall be null and void. This ownership limit may
have the effect of precluding a change in control of us by a
third party without the consent of our Board of Directors, even
if such change in control would otherwise give the holders of
Shares or other of our equity securities the opportunity to
realize a premium over then-prevailing market prices, and even
if such change in control would not reasonably jeopardize the
status of the Trust as a REIT.

At Least Two Annual Meetings Must Be Held Before a
Majority of Our Board of Directors Can Be Changed.Our
Board of Directors is divided into three classes. Each class is
elected for a three-year term. At each annual meeting of
shareholders, approximately one-third of the members of the
Board of Directors are elected for a three-year term and the
other directors remain in office until their three-year terms
expire. Furthermore, our governing documents provide that no
director may be removed without cause. Any removal for cause
requires the affirmative vote of the holders of at least
two-thirds of all the votes entitled to be cast for the election
of directors.

Thus, control of the Board of Directors cannot be changed in one
year without removing the directors for cause as described
above. Consequently, at least two annual meetings must be held
before a majority of the members of the Board of Directors can
be changed. Our charter provides that the charter cannot be
amended without the approval of the holders of at least a
majority of the outstanding Shares entitled to vote thereon.

Our Board of Directors May Issue Preferred Stock and
Establish the Preferences and Rights of Any Such Preferred
Stock.Our charter provides that the total number of
Shares of stock of all classes which the Corporation has
authority to issue is 1,350,000,000, initially consisting of one
billion Shares of common stock, 50 million Shares of excess
common stock, 200 million Shares of preferred stock and 100
million Shares of excess preferred stock. Our Board of Directors
has the authority, without a vote of shareholders, to establish
the preferences and rights of any preferred or other class or
series of Shares to be issued and to issue such Shares. The
issuance of preferred shares or other shares having special
preferences or rights could delay or prevent a change in control
even if a change in control would be in the interests of our
shareholders. Because our Board of Directors has the power to
establish the preferences and rights of additional classes or
series of shares without a shareholder vote, our Board of
Directors may give the holders of any class or series
preferences, powers and rights, including voting rights, senior
to the rights of holders of our Shares.

6



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##### Table of Contents



Certain Provisions of Our Charter May Require the Approval
of Two-Thirds of Our Shares and Only Our Directors May Amend Our
Bylaws.Our charter contains provisions relating to
restrictions on transferability of the Corporation Shares, which
may be amended only by the affirmative vote of our shareholders
holding two-thirds of the votes entitled to be cast on the
matter. As permitted under the Maryland General Corporation Law,
our Bylaws provide that directors have the exclusive right to
amend our Bylaws.

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.We adopted a
shareholder rights plan which provides, among other things, that
when specified events occur, our shareholders will be entitled
to purchase from us a newly created series of junior preferred
stock, subject to the ownership limit described above. The
preferred stock purchase rights are triggered by the earlier to
occur of (i) ten days after the date of a public
announcement that a person or group acting in concert has
acquired, or obtained the right to acquire, beneficial ownership
of 15% or more of our outstanding Corporation Shares or
(ii) ten business days after the commencement of or
announcement of an intention to make a tender offer or exchange
offer, the consummation of which would result in the acquiring
person becoming the beneficial owner of 15% or more of our
outstanding Corporation Shares. The preferred stock purchase
rights would cause substantial dilution to a person or group
that attempts to acquire us on terms not approved by our Board
of Directors.

Risks Relating to Acts of God and War

Our financial and operating performance may be adversely
affected by acts of God, such as natural disasters, in locations
where we own and/or operate significant properties and areas of
the world from which we draw a large number of customers. Some
types of losses, such as from earthquake and environmental
hazards may be either uninsurable or too expensive to justify
insuring against. Should an uninsured loss or a loss in excess
of insured limits occur, we could lose all or a portion of the
capital we have invested in a hotel or resort, as well as the
anticipated future revenue from the hotel or resort. In that
event, we might nevertheless remain obligated for any mortgage
debt or other financial obligations related to the property.
Similarly, wars, political unrest and other forms of civil
strife have caused in the past, and may cause in the future, our
results to differ materially from anticipated results.




Item 1.  Business.




General

Starwood is one of the worlds largest hotel and leisure
companies. The Company conducts its hotel and leisure business
both directly and through its subsidiaries. The Companys
brand names include Sheraton®, Westin®, The Luxury
Collection®, St. Regis®, W® and Four Points®
by Sheraton. Through these brands, Starwood is well represented
in most major markets around the world.(1)

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

The Companys hotel and leisure business emphasizes the
global operation of hotels and resorts primarily in the luxury
and upscale segment of the lodging industry. Starwood seeks to
acquire interests in or management rights with respect to
properties in this segment. In the first quarter of 1998,
Starwood completed two major transactions: the acquisition of
Westin Hotels & Resorts Worldwide, Inc. and certain of its
affiliates (Westin) (the Westin Merger)
and the acquisition of ITT Corporation, currently Sheraton
Holding Corporation (Sheraton Holding), (the
ITT Merger). For further discussion of the ITT
Merger and the Westin Merger, see the notes to financial
statements of this Joint Annual Report. At December 31,
2000, the




|    |                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company owns or has rights to various
	trademarks, trade names and service marks used in our business,
	including those listed above, and related logos. This Joint
	Annual Report also includes trademarks, trade names and service
	marks owned by other companies.

7



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##### Table of Contents





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

The Companys principal executive offices are located at
777 Westchester Avenue, White Plains, New York 10604,
and its telephone number is (914) 640-8100.

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

Competitive Strengths

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

Brand Strength.Starwood believes that it has
strong brand leadership in major markets worldwide based on the
global recognition of the Companys lodging brands. The
strength of the Companys brands is evidenced, in part, by
the superior ratings received from the Companys hotel
guests and from industry publications. For example, Starwood was
designated as the Worlds Best Global Hotel
Company by Global Financemagazine in their
September 2000 issue. Also, for the second year in a row,
Westin was named number one in the upper-upscale category of
Business Travel News 2000 Survey of Top Hotel
Chains. With the Companys well known lodging brands,
Starwood benefits from a luxury and upscale branding strategy
that provides strong operating performance from new customer
penetration and customer loyalty. During 2000 and 1999, Starwood
converted five and six, respectively, of its owned hotels, which
had been operated on a non-branded or non-proprietary-branded
basis, to proprietary brands owned by the Company. These
conversions have enhanced and expanded the Companys global
presence and brand recognition. In 2000, the Company also added
an additional 76 hotels with approximately
17,981 rooms to its branded hotel system. In total,
approximately 1,327 rooms were added to its newest brand,
W. The W San Francisco recently won Hospitality Design
Magazines 2000 Gold Key Awardas best in the
Lobby/ Reception category and was a finalist in the
Guestroom category.

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

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

Premier and Distinctive Properties.Starwood
controls a distinguished and diversified group of hotel
properties throughout the world, including The St. Regis in New
York, New York; The Phoenician in Scottsdale, Arizona; the Hotel
Danieli in Venice, Italy; and the Westin Palace in Madrid,
Spain. These are among the leading hotels in the industry and
are at the forefront of providing the highest quality and
service. The Condé Nast Traveler Magazine 2000 Gold List
Readers Choice Pollincluded 33 Starwood properties as

8



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##### Table of Contents



Gold List


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

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

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

Starwood derives its cash flow from multiple sources, including
owned hotels, management and franchise fees, and VOI sales, and
is geographically diverse with operations on six continents. The
following table reflects the Companys properties by
revenue source as of December 31, 2000:

|                              |  |            |     | 
|----------------------------- |  | ---------- | --- | 
|                              |  | Number of 
|                              |  | Properties
|                              |  |           
|Owned hotels(a)               |  |            | 162 | 
|                             
|                             
|                             
|                             
|Managed and franchised hotels |  |            | 526 | 
|                             
|                             
|                             
|                             
|Unconsolidated joint ventures |  |            | 50  | 
|                              |  |            |     | 
|Total hotel properties        |  |            | 738 | 
|                              |  |            |     | 
|Vacation ownership resorts    |  |            | 12  | 
|                              |  |            |     | 






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

The following table shows the Companys geographical
presence by major geographic area for the year ended
December 31, 2000:

|                           |  |            |     | 
|-------------------------- |  | ---------- | --- | 
|                           |  | Number of 
|                           |  | Properties
|                           |  |           
|North America(a)           |  |            | 469 | 
|                          
|                          
|                          
|                          
|Europe                     |  |            | 109 | 
|                          
|                          
|                          
|                          
|Latin America              |  |            | 35  | 
|                          
|                          
|                          
|                          
|Asia Pacific               |  |            | 71  | 
|                          
|                          
|                          
|                          
|Africa and the Middle East |  |            | 54  | 
|                           |  |            |     | 
|Total                      |  |            | 738 | 
|                           |  |            |     | 






|    |                                        
|--- | ---------------------------------------
|(a) | Excludes 12 vacation ownership resorts.

Business Segment and Geographical Information

Incorporated by reference in Note 19, Business Segment and
Geographical Information, in the notes to financial
statements set forth in Part II, Item 8, Financial
Statements and Supplementary Data.

9



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##### Table of Contents



Business Strategy

The Companys primary business objective is to maximize
earnings and cash flow by increasing the profitability of the
Companys existing portfolio; selectively acquiring
interests in additional assets; increasing the number of the
Companys hotel management contracts and franchise
agreements; acquiring, developing and selling VOIs; and
maximizing the value of its owned real estate properties,
including selectively disposing of non-core hotels and
trophy assets that may be sold at significant
premiums. The Company plans to meet these objectives by
leveraging its global assets, broad customer base and other
resources and by taking advantage of the Companys scale to
reduce costs.

Growth Opportunities.Management has identified
several growth opportunities with a goal of enhancing the
Companys operating performance and profitability,
including:



| |   |                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Refining the positioning of the Companys brands to further
	its strategy of strengthening brand identity. By re-branding
	certain owned hotels to one of Starwoods proprietary
	brands, Starwood will seek to further solidify its brand
	reputation and market presence, leading to enhanced revenue per
	available room (REVPAR) performance;
|
| |  | Continuing to expand the Companys role as a third-party
	manager of hotels and resorts. This allows Starwood to expand
	the presence of its lodging brands and gain additional cash flow
	generally with modest capital commitment;                                                                                                               
|
| |  | Franchising the Sheraton, Westin and Four Points by Sheraton
	brands to selected third-party operators, thereby expanding the
	Companys market presence, enhancing the exposure of its
	hotel brands and providing additional income through franchise
	fees;                                                                                     
|
| |  | Expanding the Companys Internet presence and sales
	capabilities to increase revenue and improve customer service;                                                                                                                                                                                                                                
|
| |  | Continuing to grow the Companys frequent guest program,
	thereby increasing occupancy rates while providing the
	Companys customers with benefits based upon loyalty to the
	Companys hotels;                                                                                                                                                   
|
| |  | Enhancing the Companys marketing efforts by integrating
	the Companys proprietary customer databases, so as to sell
	additional products and services to existing customers, improve
	occupancy rates and create additional marketing opportunities;                                                                                             
|
| |  | Optimizing the Companys use of its real estate assets to
	improve ancillary revenue, such as restaurant, beverage and
	parking revenue from the Companys hotels and resorts;                                                                                                                                                                     
|
| |  | Continuing to build the new W hotel brand to appeal
	to upscale business travelers and other customers seeking
	full-service hotels in major markets;                                                                                                                                                                                            
|
| |  | Developing additional vacation ownership resorts near select
	hotel locations, thereby allowing us to leverage our owned hotel
	assets; and                                                                                                                                                                                                        
|
| |  | Becoming the first hospitality company in the world to embrace
	Six Sigma, the internationally recognized program that
	dramatically accelerates and maximizes business performance.
	This initiative is expected to deliver significant long-term
	financial benefits.                                                                            

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



| |   |                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Luxury and upscale 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;

10



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Undervalued hotels whose performance can be increased by
	re-branding to one of the Companys hotel brands, the
	introduction of better and more efficient management techniques
	and practices and/or the injection of capital for renovating,
	expanding or repositioning the property; and
|
| |  | Portfolios of hotels or hotel companies that exhibit some or all
	of the criteria listed above, where the purchase of several
	hotels in one transaction enables Starwood to obtain favorable
	pricing or obtain attractive assets that would otherwise not be
	available.                   

Starwood may also selectively choose to develop and construct
desirable hotels and resorts to help the Company meet its
strategic goals, such as the development of the W Times
Square, the conversion of the Days Inn Chicago to the
W Lakeshore and the conversion of the Midland Hotel to the
W Chicago, all expected to be completed in the second half
of 2001.

Competition

The hotel and leisure industry is highly competitive.
Competition is generally based on quality and consistency of
room, restaurant and meeting facilities and services,
attractiveness of locations, availability of a global
distribution system, price and other factors. Management
believes that Starwood competes favorably in these areas.
Starwoods properties compete with other hotels and
resorts, including facilities owned by local interests and
facilities owned by national and international chains, in their
geographic markets. The principal competitors of Starwood
include other hotel operating companies, ownership companies
(including hotel REITs) and national and international hotel
brands.

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

Environmental Matters

Starwood is subject to certain requirements and potential
liabilities under various federal, state and local environmental
laws, ordinances and regulations (Environmental
Laws). For example, a current or previous owner or
operator of real property may become liable for the costs of
removal or remediation of hazardous or toxic substances on,
under or in such property. Such laws often impose liability
without regard to whether the owner or operator knew of, or was
responsible for, the presence of such hazardous or toxic
substances. The presence of hazardous or toxic substances may
adversely affect the owners ability to sell or rent such
real property or to borrow using such real property as
collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic wastes may be liable for the costs of removal
or remediation of such wastes at the treatment, storage or
disposal facility, regardless of whether such facility is owned
or operated by such person. Starwood uses certain substances and
generates certain wastes that may be deemed hazardous or toxic
under applicable Environmental Laws, and Starwood from time to
time has incurred, and in the future may incur, costs related to
cleaning up contamination resulting from historic uses of
certain of the Companys current or former properties or
the Companys treatment, storage or disposal of wastes at
facilities owned by others. Other Environmental Laws require
abatement or removal of certain asbestos-containing materials
(ACMs) (limited quantities of which are present in
various building materials such as spray-on insulation, floor
coverings, ceiling coverings, tiles, decorative treatments and
piping located at certain of the Companys hotels) in the
event of damage or demolition, or certain renovations or
remodeling. These laws also govern emissions of and exposure to
asbestos fibers in the air. Environmental Laws also regulate
polychlorinated biphenyls (PCBs), which may be
present in electrical equipment. A number of the Companys
hotels have underground storage tanks (USTs) and
equipment containing chlorofluorocarbons (CFCs); the
operation and subsequent removal or upgrading of certain USTs
and the use of equipment containing CFCs also are regulated by
Environmental Laws. In connection with the Companys
ownership, operation and management

11



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##### Table of Contents





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

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

Seasonality and Diversification

The hotel and leisure industry is seasonal in nature; however,
the periods during which the Companys properties
experience higher revenue activities vary from property to
property and depend principally upon location. The
Companys revenues and EBITDA(1) historically
have been lower in the first quarter than in the second, third
or fourth quarters.

Comparability of Owned Hotel Results

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

Employees

At December 31, 2000, Starwood employed approximately
129,000 persons at its corporate offices, owned and managed
hotels and vacation ownership resorts, of whom approximately 47%
were employed in the United States. At December 31, 2000,
approximately 33% of the U.S.-based employees were covered by
various collective bargaining agreements providing, generally,
for basic pay rates, working hours, other conditions of
employment and orderly settlement of labor disputes. Generally,
labor relations have been maintained in a normal and
satisfactory manner, and management believes that the
Companys employee relations are good.




Item 2.Properties.

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

The Companys hotel and leisure business included 738
owned, managed or franchised hotels with approximately 227,000
rooms at December 31, 2000, predominantly under six brands:
St. Regis (luxury full-service hotels and resorts), The Luxury
Collection (luxury full-service hotels and resorts), Westin
(luxury and




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | EBITDA is defined as income before interest
	expense, income tax expense, depreciation and amortization.
	Non-recurring items and gains and losses from sales of real
	estate and investments are also excluded from EBITDA as these
	items do not impact operating results on a recurring basis.
	Management considers EBITDA to be one measure of the cash flows
	from operations of the Company before debt service that provides
	a relevant basis for comparison, and EBITDA is presented to
	assist investors in analyzing the performance of the Company.
	This information should not be considered as an alternative to
	any measure of performance as promulgated under accounting
	principles generally accepted in the United States, nor should
	it be considered as an indicator of the overall financial
	performance of the Company. The Companys calculation of
	EBITDA may be different from the calculation used by other
	companies and, therefore, comparability may be limited.

12



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##### Table of Contents





The following table sets forth the Companys 162 owned,
leased and consolidated joint venture hotels by geographic
region:

|                 |  |        |     |       |  |  |        | 
|---------------- |  | ------ | --- | ----- |  |  | ------ | 
|Region           |  | Hotels |     | Rooms
|                 |  |        |     |      
|North America(a) |  |        | 113 |       |  |  | 40,934 | 
|                
|                
|                
|                
|Europe           |  |        | 30  |       |  |  | 6,924  | 
|                
|                
|                
|                
|Latin America    |  |        | 15  |       |  |  | 5,655  | 
|                
|                
|                
|                
|Asia Pacific     |  |        | 4   |       |  |  | 1,762  | 
|                 |  |        |     |       |  |  |        | 
|Worldwide        |  |        | 162 |       |  |  | 55,275 | 
|                 |  |        |     |       |  |  |        | 






|    |                                        
|--- | ---------------------------------------
|(a) | Excludes 12 vacation ownership resorts.

Hotel Management and Franchising

Hotel and resort properties in the United States are often owned
by entities that neither manage hotels nor own a brand name.
Hotel owners typically enter into management contracts with
hotel management companies to operate their hotels. When a
management company does not offer a brand affiliation, the hotel
owner often chooses to pay separate franchise fees to secure the
benefits of brand marketing, centralized reservations and other
centralized administrative functions, particularly in the sales
and marketing area. Management believes that companies, such as
Starwood, that offer both hotel management services and
well-established worldwide brand names appeal to hotel owners by
providing the full range of management and marketing services.

Managed Hotels.Through its subsidiaries, Starwood
manages hotels worldwide, usually under a long-term agreement
with the hotel owner (including entities in which Starwood has a
minority equity interest). The Companys responsibilities
under hotel management contracts typically include hiring,
training and supervising the managers and employees that operate
these facilities. For additional fees, Starwood provides
reservation services and coordinates national advertising and
certain marketing and promotional services. Starwood prepares
and implements annual budgets for the hotels it manages and is
responsible for allocating property-owner funds for periodic
maintenance and repair of buildings and furnishings. At
December 31, 2000, Starwood managed 263 hotels worldwide
under long-term agreements.

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

Brand Franchising.Through its subsidiaries,
Starwood franchises its Sheraton, Westin and Four Points by
Sheraton brand names and generally derives licensing and other
fees from franchisees based on a fixed percentage of the
franchised hotels room revenue, as well as fees for other
services, including centralized

13



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##### Table of Contents





As of December 31, 2000, there were 302 franchised
properties with approximately 77,000 rooms operating under the
Sheraton, Westin and Four Points by Sheraton brands.

Growth

The following table summarizes average occupancy rates, average
daily rates (ADR) and REVPAR on a year-to-year basis
for the Companys 122 owned, leased and consolidated joint
venture hotels (excluding 36 hotels under significant renovation
in 2000, 4 hotels without prior year results and 12 hotels sold
during 1999 and 2000) (Same-Store Owned Hotels) for
the years ended December 31, 2000 and 1999:

|                                                         |  |                         |        |      |  |          |        |   |  |  |      |   
|-------------------------------------------------------- |  | ----------------------- | ------ | ---- |  | -------- | ------ | - |  |  | ---- | --
|                                                         |  |                         |        |     
|                                                         |  | Year Ended December 31, |        |     
|                                                         |  |                         |        |     
|                                                         |  | 2000                    |        | 1999 |  | Variance
|                                                         |  |                         |        |      |  |         
|Worldwide(122 hotels with approximately 39,000 rooms)    |  |                         |        |      |  |          |        |   |  |  |      |   
|                                                        
|                                                        
|                                                        
|                                                        
|REVPAR                                                   |  | $                       | 114.90 |      |  | $        | 107.09 |   |  |  | 7.3  | % 
|                                                        
|                                                        
|                                                        
|                                                        
|ADR                                                      |  | $                       | 160.55 |      |  | $        | 153.67 |   |  |  | 4.5  | % 
|                                                        
|                                                        
|                                                        
|                                                        
|Occupancy                                                |  |                         | 71.6   | %    |  |          | 69.7   | % |  |  | 1.9  |   
|                                                        
|                                                        
|                                                        
|                                                        
|                                                        
|North America(80 hotels with approximately 27,000 rooms) |  |                         |        |      |  |          |        |   |  |  |      |   
|                                                        
|                                                        
|                                                        
|                                                        
|REVPAR                                                   |  | $                       | 112.97 |      |  | $        | 101.76 |   |  |  | 11.0 | % 
|                                                        
|                                                        
|                                                        
|                                                        
|ADR                                                      |  | $                       | 154.51 |      |  | $        | 144.49 |   |  |  | 6.9  | % 
|                                                        
|                                                        
|                                                        
|                                                        
|Occupancy                                                |  |                         | 73.1   | %    |  |          | 70.4   | % |  |  | 2.7  |   
|                                                        
|                                                        
|                                                        
|                                                        
|                                                        
|International(42 hotels with approximately 12,000 rooms) |  |                         |        |      |  |          |        |   |  |  |      |   
|                                                        
|                                                        
|                                                        
|                                                        
|REVPAR                                                   |  | $                       | 119.53 |      |  | $        | 119.88 |   |  |  | (0.3 | )%
|                                                        
|                                                        
|                                                        
|                                                        
|ADR                                                      |  | $                       | 176.13 |      |  | $        | 176.52 |   |  |  | (0.2 | )%
|                                                        
|                                                        
|                                                        
|                                                        
|Occupancy                                                |  |                         | 67.9   | %    |  |          | 67.9   | % |  |  |     |   

In addition, during the year ended December 31, 2000, the
Company invested approximately $544 million for capital
improvements primarily at owned hotel assets, continuing the
renovation program on its largest brand, Sheraton, and vacation
ownership resort construction. These capital expenditures
included significant new growth investment for the acquisition
of land for vacation ownership project construction adjacent to
the Westin Kierland Resort in Scottsdale, Arizona and 14 acres
on the island of Maui, as well as the acquisition of a second
fully-entitled site adjacent to the San Francisco Museum of
Modern Art. Other major expenditures during 2000 and continuing
into 2001 include the development of the W Times Square, the
conversion of the Days Inn Chicago to the W Lakeshore and the
conversion of the Midland Hotel to the W Chicago. During 2000,
the Company also expanded the Westin Mission Hills Resort and
completed significant renovation work at the Sheraton Bal
Harbour and Westin Maui. Internationally, the 100-room expansion
of the Westin Turnberry Resort in Scotland, including the
addition of a second golf course and the Colin Montgomerie links
golf academy, was completed. In 2000, the Company also signed
management and franchise agreements for 75 hotels with
approximately 16,800 rooms under its brands and began selling
VOIs at four properties.




Item 3.Legal Proceedings.

Incorporated by reference to the description of legal
proceedings in Note 18, Commitments and
Contingencies, in the notes to financial statements set
forth in Part II, Item 8, Financial Statements and
Supplementary Data.




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

Not applicable.

14



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##### Table of Contents



Executive Officers of the Registrants

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

PART II




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

Market Information

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

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

|               |  |      |       |     |  |   |       | 
|-------------- |  | ---- | ----- | --- |  | - | ----- | 
|               |  | High |       | Low
|               |  |      |       |    
|2000           |  |      |       |     |  |   |       | 
|              
|              
|              
|              
|Fourth quarter |  | $    | 37.50 |     |  | $ | 25.56 | 
|              
|              
|              
|              
|Third quarter  |  | $    | 35.18 |     |  | $ | 28.26 | 
|              
|              
|              
|              
|Second quarter |  | $    | 33.14 |     |  | $ | 22.88 | 
|              
|              
|              
|              
|First quarter  |  | $    | 27.11 |     |  | $ | 19.30 | 
|              
|              
|              
|              
|              
|1999           |  |      |       |     |  |   |       | 
|              
|              
|              
|              
|Fourth quarter |  | $    | 24.50 |     |  | $ | 19.50 | 
|              
|              
|              
|              
|Third quarter  |  | $    | 31.00 |     |  | $ | 21.75 | 
|              
|              
|              
|              
|Second quarter |  | $    | 37.75 |     |  | $ | 28.00 | 
|              
|              
|              
|              
|First quarter  |  | $    | 34.19 |     |  | $ | 22.69 | 

Holders

As of March 23, 2001, there were approximately 21,000
holders of record of Shares and one holder of record (the
Corporation) of the Class A Shares.

Distributions Made/ Declared

The following table sets forth the frequency and amount of
distributions made by the Trust to holders of Shares for the
years ended December 31, 2000 and 1999:

|               |  |               |        |    
|-------------- |  | ------------- | ------ | ---
|               |  | Distributions
|               |  | Made         
|               |  |              
|2000           |  |               |        |    
|              
|              
|              
|              
|Fourth quarter |  | $             | 0.1725 | (a)
|              
|              
|              
|              
|Third quarter  |  | $             | 0.1725 |    
|              
|              
|              
|              
|Second quarter |  | $             | 0.1725 |    
|              
|              
|              
|              
|First quarter  |  | $             | 0.1725 |    
|              
|              
|              
|              
|              
|1999           |  |               |        |    
|              
|              
|              
|              
|Fourth quarter |  | $             | 0.15   | (a)
|              
|              
|              
|              
|Third quarter  |  | $             | 0.15   |    
|              
|              
|              
|              
|Second quarter |  | $             | 0.15   |    
|              
|              
|              
|              
|First quarter  |  | $             | 0.15   |    






|    |                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The Trust declared distributions for the fourth
	quarter of 2000 and 1999 to shareholders of record on
	December 31, 2000 and 1999, respectively. The distributions
	were paid in January 2001 and 2000, respectively.

15



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##### Table of Contents



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

As a consequence of the Reorganization, holders of Class B
Shares are entitled, subject to certain conditions, to receive a
non-cumulative annual dividend, which was set at an initial rate
of $0.60 per Share for 1999, to the extent the dividend is
authorized by the Board of Trustees of the Trust. The annual
dividend was increased to an annual rate of $0.69 per Share in
2000. The Company increased the Trust dividend 16% in
February 2001 to an annual rate of $0.80 per Share and
expects to increase the Trust dividend 15% per year thereafter.
Unless dividends for the then current quarterly dividend period
have been paid on the Class B Shares, the Trust is not
permitted to pay a dividend on the Class A Shares (except
in certain circumstances). Under the terms of the Companys
current credit facilities, the Trust may pay unlimited dividends
to the Corporation or any wholly owned subsidiary thereof and
during any period of twelve consecutive calendar months, the
Trust may pay cash dividends to its shareholders (excluding the
Corporation and any wholly owned subsidiary) in an aggregate
initial amount not to exceed the lesser of (a) $150,000,000
(increased to $180,000,000 in 2000 and increasing by 20%
annually thereafter) and (b) 10% of EBITDA.

Conversion of Securities; Sale of Unregistered Securities

During 2000, the Trust consented to the exchange of
approximately 508,000 shares of Class B Exchangeable
Preferred Shares (Class B EPS) by certain
stockholders for an equal number of shares of Class A
Exchangeable Preferred Shares (Class A EPS).
Additionally, the Trust consented to the exchange of
approximately 3.1 million shares of Class A EPS for an
equal number of Shares.

During 2000, the Company exchanged approximately 2.2 million
limited partnership units of the Realty Partnership and the
Operating Partnership held by third parties for Shares on a
one-for-one basis.




Item 6.  Selected Financial Data.

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

|                                                           |  |                                      |       |      |  |      |        |      |  |      |        |     |  |   |       |   |  |   |       |  
|---------------------------------------------------------- |  | ------------------------------------ | ----- | ---- |  | ---- | ------ | ---- |  | ---- | ------ | --- |  | - | ----- | - |  | - | ----- | -
|                                                           |  |                                     
|                                                           |  | Year Ended December 31,             
|                                                           |  |                                     
|                                                           |  | 2000                                 |       | 1999 |  | 1998 |        | 1997 |  | 1996
|                                                           |  |                                      |       |      |  |      |        |      |  |     
|                                                           |  |                                     
|                                                           |  | (In millions, except per Share data)
|                                                          
|                                                          
|                                                          
|                                                          
|Income Statement Data                                      |  |                                      |       |      |  |      |        |      |  |      |        |     |  |   |       |   |  |   |       |  
|                                                          
|                                                          
|                                                          
|                                                          
|Revenues                                                   |  | $                                    | 4,345 |      |  | $    | 3,829  |      |  | $    | 3,281  |     |  | $ | 1,735 |   |  | $ | 1,612 |  
|                                                          
|                                                          
|                                                          
|                                                          
|Income (loss) from continuing operations                   |  | $                                    | 401   |      |  | $    | (638   | )    |  | $    | 220    |     |  | $ | (233  | ) |  | $ | 156   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Basic earnings (loss) per Share from continuing operations |  | $                                    | 2.03  |      |  | $    | (3.41  | )    |  | $    | 1.06   |     |  | $ | (1.85 | ) |  | $ | 1.25  |  
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|Operating Data                                             |  |                                      |       |      |  |      |        |      |  |      |        |     |  |   |       |   |  |   |       |  
|                                                          
|                                                          
|                                                          
|                                                          
|Cash from continuing operations                            |  | $                                    | 851   |      |  | $    | 571    |      |  | $    | 43     |     |  | $ | 8     |   |  | $ | 332   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Cash from/(used for) investing activities                  |  | $                                    | (658  | )    |  | $    | 3,172  |      |  | $    | 2,340  |     |  | $ | 1,132 |   |  | $ | (356  | )
|                                                          
|                                                          
|                                                          
|                                                          
|Cash from/(used for) financing activities                  |  | $                                    | (420  | )    |  | $    | (3,335 | )    |  | $    | (2,056 | )   |  | $ | (425  | ) |  | $ | 259   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Aggregate cash distributions                               |  | $                                    | 134   |      |  | $    | 116    |      |  | $    | 324    | (a) |  | $ |      |   |  | $ |      |  
|                                                          
|                                                          
|                                                          
|                                                          
|Cash distribution per Share                                |  | $                                    | 0.69  |      |  | $    | 0.60   |      |  | $    | 1.71   |     |  | $ |      |   |  | $ |      |  

16



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##### Table of Contents



|                                                                                |  |                 |        |      |  |      |        |      |  |      |        |  |  |   |       |  |  |   |       | 
|------------------------------------------------------------------------------- |  | --------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ----- |  |  | - | ----- | 
|                                                                                |  |                
|                                                                                |  | At December 31,
|                                                                                |  |                
|                                                                                |  | 2000            |        | 1999 |  | 1998 |        | 1997 |  | 1996
|                                                                                |  |                 |        |      |  |      |        |      |  |     
|                                                                                |  |                
|                                                                                |  | (In millions)  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Balance Sheet Data                                                              |  |                 |        |      |  |      |        |      |  |      |        |  |  |   |       |  |  |   |       | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Total assets                                                                    |  | $               | 12,660 |      |  | $    | 12,925 |      |  | $    | 13,417 |  |  | $ | 6,790 |  |  | $ | 7,452 | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Long-term debt, net of current maturities and including
	redeemable Class B EPS |  | $               | 5,074  |      |  | $    | 4,779  |      |  | $    | 5,951  |  |  | $ |      |  |  | $ | 841   | 






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




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

RESULTS OF OPERATIONS

The following discussion presents an analysis of results of our
operations for the years ended December 31, 2000, 1999 and
1998.

Year Ended December 31, 2000 Compared with Year Ended
December 31, 1999

Continuing Operations

Revenues.Total revenues increased 13.5% to $4.345
billion for the year ended December 31, 2000 when compared
to the corresponding period in 1999. The increase in revenues
was due to the 7.9% increase in revenues for the Companys
owned, leased and consolidated joint venture hotels to $3.659
billion for the year ended December 31, 2000 when compared
to $3.391 billion in the corresponding period of 1999 and the
increase in other hotel and leisure revenues to $686 million for
the year ended December 31, 2000 when compared to $438
million in the corresponding period of 1999.

The increase in revenues from owned, leased and consolidated
joint venture hotels is due primarily to the increased revenues
at the Companys 158 hotels (excluding 16 hotels
sold or without comparable results during 1999 and 2000)
(Comparable Owned Hotels) and the addition of four
hotels, including a full year of operations at the W hotels
in San Francisco, California and Seattle, Washington, which
opened in May 1999 and September 1999, respectively.
These increases were offset by the loss of revenues on
12 hotels sold since April 1999 and the impact of hotels
with rooms out of service due to significant renovations. The
increase in revenues was further offset by currency weaknesses,
primarily in the Euro.

Revenues at the Companys Comparable Owned Hotels increased
6.7% to $3.527 billion for the year ended December 31, 2000
when compared to the same period of 1999 due primarily to an
increase in REVPAR. REVPAR at 122 Same-Store Owned Hotels
increased 7.3% to $114.90 for the year ended December 31,
2000 when compared to the corresponding 1999 period. The
increase in REVPAR at these hotels was attributed to the
increase in ADR of 4.5% to $160.55 for the year ended
December 31, 2000 when compared to the corresponding 1999
period. Occupancy for these 122 Same-Store Owned Hotels rose to
71.6% from 69.7% in the year ended December 31, 2000 when
compared to the same period in 1999. REVPAR at Same-Store Owned
Hotels in North America increased 11.0% for the year ended
December 31, 2000 when compared to the same period of 1999.
REVPAR at the Companys international Same-Store Owned
Hotels, which decreased by 0.3% for the year ended
December 31, 2000 when compared to the same period of 1999,
was impacted primarily by the unfavorable effect of foreign
currency translation.

The increase in other hotel and leisure revenues resulted
primarily from the acquisition of Starwood Vacation Ownership,
Inc. (formerly Vistana, Inc.) (SVO) in
October 1999. The increase is also due to the addition of
hotels to the Companys management and franchise system and
the stronger performance at the Companys existing managed
and franchised hotels.

EBITDA.EBITDA for the Companys owned,
leased and consolidated joint venture hotels increased $148
million or 13.7% to $1.226 billion for the year ended
December 31, 2000 when compared to $1.078 billion in the
corresponding period in 1999. This increase was primarily due to
an increase in EBITDA at the

17



---



##### Table of Contents





Selling, General, Administrative and Other.Selling, general, administrative and other expenses were
$403 million and $220 million for the years ended
December 31, 2000 and 1999, respectively. The increase in
selling, general, administrative and other expenses is due
primarily to a full year of costs associated with the vacation
ownership operations due to the acquisition of SVO in
October 1999.

Depreciation and Amortization.Depreciation and
amortization expense increased to $391 million and $90 million,
respectively, in the year ended December 31, 2000 compared
to $370 million and $82 million, respectively, in the
corresponding period of 1999. The increases in depreciation and
amortization expense for the year ended December 31, 2000
was primarily attributable to the acquisition of SVO in
October 1999, the addition of four new hotels, including a
full year of depreciation on the W hotels in San Francisco,
California and Seattle, Washington, which opened in
May 1999 and September 1999, respectively, and the
additional depreciation resulting from an extensive renovation
program, offset, in part, by the suspension of depreciation on
hotels held for sale and hotels sold during the year.

Net Interest Expense.Interest expense for the
years ended December 31, 2000 and 1999, which is net of
interest income of $19 million and $16 million, respectively,
and discontinued gaming operations allocations of $6 million and
$163 million, respectively, decreased to $420 million from $484
million. This decrease was due primarily to the paydown of debt
with approximately $3.3 billion of cash proceeds from the
Caesars World, Inc. (Caesars) and the Desert Inn
Resort & Casino (the Desert Inn) sales (interest
reflected in discontinued operations and thereby excluded from
net interest expense in 1999 was limited to $2.1 billion of
allocated debt) and cash repatriation from overseas, partially
offset by additional borrowings during 1999 and 2000 for Share
repurchases, capital expenditures and the acquisition of the
CIGA minority interest.

Income Tax Expense.The effective income tax rate
for 2000 was 33%. As a result of the Reorganization, the tax
provision for the year ended December 31, 1999 included a
$936 million one-time charge to establish a deferred tax
liability related to the difference between the book and tax
basis in the assets of the Trust. Excluding this charge, a
one-time tax benefit of $37 million attributable to the
resolution of certain employment related contingencies and other
one-time pro forma comparable adjustments, the Companys
effective tax rate for the year ended December 31, 1999 was
36.5%. The Companys effective income tax rate is
determined by the level and composition of pretax income subject
to varying foreign, state and local taxes and other items.

Minority Equity in Net Income. In June 2000, the
Company completed the acquisition of the minority ownership
interest of CIGA not previously owned by Starwood. The aggregate
purchase price of the incremental shares was approximately $312
million. This acquisition resulted in an increase in net income
of $10 million in 2000 when compared to 1999, excluding the
minority interest in the gain on the sale of CIGAs
investment in Lampsa, SA, a Greek company that owned the Grande
Bretagne Hotel in Athens, Greece.

Discontinued Operations

During the first quarter of 1999, the Company provided for
estimated after-tax losses on the gaming dispositions of $180
million ($158 million pretax), which included anticipated
operating results through the expected closing date. In
addition, the Company recorded, on an after-tax basis, a $173
million gain on the sale of the Companys remaining
interest in Educational Services during the first quarter of
1999.

Due to the sale of Caesars in December 1999 and the Desert
Inn in June 2000, results for the Companys gaming
operations are included in discontinued operations in the years
ended December 31, 1999 and 2000. Results for the Desert
Inn are included in discontinued operations through
June 23, 2000 and for Caesars through December 30,
1999. The gaming operations net loss was $8 million and $27
million for the years

18



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##### Table of Contents





Gaming revenues decreased to $57 million for the year ended
December 31, 2000 when compared to $1.541 billion in the
corresponding period of 1999, and operating income
(loss) for year ended December 31, 2000 decreased to a
loss of $3 million when compared to operating income of $154
million for the same period of 1999. The decreases in 2000 were
due to the sales of Caesars and the Desert Inn in
December 1999 and June 2000, respectively.

Year Ended December 31, 1999 Compared with Year Ended
December 31, 1998

Continuing Operations

Revenues.Revenues increased 16.7% to $3.829
billion for the year ended December 31, 1999 when compared
to the corresponding period in 1998. The increase was primarily
due to the 13.7% increase in revenues for the Companys
owned, leased and consolidated joint venture hotels to $3.391
billion for the year ended December 31, 1999 when compared
to the corresponding period of 1998. The increase resulted
primarily from the 5.3% increase in revenues at the
Companys Comparable Owned Hotels to $3.335 billion for the
year ended December 31, 1999 when compared to $3.167
billion in the same period of 1998. The increase also resulted
from the acquisition, in July 1999, of the Westin hotel in
Maui, Hawaii (the Company previously had a 95% non-controlling
interest in this property), the opening of the 423-room
W hotel in San Francisco, California in May 1999 and
the 426-room W hotel in Seattle, Washington in
September 1999 and the reopening of the W hotel in New
York, New York in December 1998, which was partially closed
during most of 1998 due to significant renovation and conversion
from the former Doral Inn. The increase in revenues for the year
ended December 31, 1999 was offset, in part, by a $39
million decrease in revenues as a result of the sale of nine
hotels in May 1998 and the sales of The Westin Central Park
South in New York, New York in July 1999 and the Ritz
Carlton in Kansas City, Missouri in November 1999. The
increase in revenues at the Same-Store Owned Hotels resulted
from an increase in REVPAR at these hotels of 4.3% to $106 for
the year ended December 31, 1999 when compared to the same
period of 1998. The increase in REVPAR at these hotels was
attributed to an increase in ADR of 3.1% to $150 for the year
ended December 31, 1999 when compared to the corresponding
1998 period. Occupancy for Same-Store Owned Hotels rose to 70.7%
from 69.9% in the year ended December 31, 1999 when
compared to the same period in 1998. REVPAR at Same-Store Owned
Hotels in North America increased 4.9% for the year ended
December 31, 1999 when compared to the same period of 1998.
REVPAR at the Companys international owned, leased and
consolidated joint venture hotels increased 3.0% for the year
ended December 31, 1999 when compared to the same period of
1998.

Other hotel and leisure revenues increased by $140 million for
the year ended December 31, 1999 to $438 million. The
increase was primarily due to the acquisition of SVO on
October 1, 1999. VOI sales in the fourth quarter of 1999
increased 4.9% when compared to VOI sales reported by SVO in the
same period of 1998.

EBITDA.EBITDA at the Companys owned, leased
and consolidated joint venture hotels rose approximately 13.1%
to $1.078 billion for the year ended December 31, 1999 when
compared to the same period in 1998. This increase is due, in
part, to the addition of the Westin hotel in Maui, Hawaii and
the W hotels in San Francisco, California and Seattle,
Washington and the reopening of the W hotel in New York,
New York discussed previously, offset by an approximate $13
million reduction in EBITDA as a result of the sale of nine
hotels in May 1998 and The Westin Central Park South in New
York, New York in July 1999 and the Ritz Carlton in Kansas
City, Missouri in November 1999. EBITDA for the
Companys Same-Store Owned Hotels increased to $924 million
for the year ended December 31, 1999 from $849 million for
the year ended December 31, 1998. The EBITDA improvement at
the Same-Store Owned Hotels was due primarily to the increase in
ADR discussed previously.

Selling, General, Administrative and Other.Selling, general, administrative and other expenses
increased 4.8% to $220 million for the year ended
December 31, 1999 when compared to $210 million in the
corresponding period of 1998, due primarily to the acquisition
of SVO in October 1999.

19



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##### Table of Contents



Depreciation and Amortization.Depreciation and
amortization expense increased to $370 million and $82 million,
respectively, in the year ended December 31, 1999 compared
to $297 million and $81 million, respectively, in the
corresponding period of 1998. The increase in depreciation
expense for the year ended December 31, 1999 was primarily
attributed to the addition of the Westin hotel in Maui, Hawaii
and the opening of the W hotels in San Francisco, California and
Seattle, Washington, offset by a reduction in depreciation
expense as a result of the sale of nine hotels in 1998 and two
hotels in 1999. The increase in depreciation expense for the
year ended December 31, 1999 was also attributed to the
completion, in December 1998, of a significant renovation
of the W hotel in New York, New York.

Net Interest Expense.Interest expense for the
years ended December 31, 1999 and 1998, which is net of
interest income of $16 million and $26 million, respectively,
and discontinued operations allocations of $163 million and $175
million, respectively, was $484 million and $424 million,
respectively. The increase relates primarily to the full year of
interest on debt incurred to finance the ITT Merger and Westin
Merger and the repurchase of Shares and capital expenditures,
offset by the reduction in debt with approximately $6.8 billion
in proceeds from dispositions of non-core assets since
February 1998. In addition, 1998 interest expense included
a $40 million non-recurring charge associated with the
settlement of certain forward interest rate swap agreements.

Discontinued Operations

Results for the Companys gaming operations and former
investments in WD and Educational Services are included in
discontinued operations in the years ended December 31,
1999 and 1998. Net loss from discontinued operations was $0 and
$80 million for the years ended December 31, 1999 and 1998,
respectively. These results include the allocation of pretax
corporate interest expense of $163 million and $175 million in
the years ended December 31, 1999 and 1998, respectively.

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

Capital Expenditures

Starwood incurs capital expenditures for upgrading and, in some
cases, repositioning its owned hotels and for ongoing
maintenance of acquired and existing hotels in accordance with
the Companys standards. During

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Cash Flow from Operating Activities

Cash flow from operating activities is the principal source of
cash to be used to fund the Companys operating expenses,
interest expense, capital expenditures and distributions.
Starwood anticipates that cash flow provided by operating
activities will be sufficient to service short-term
indebtedness, fund maintenance capital expenditures and meet
operating cash requirements, including distributions to
shareholders.

Cash Flow from Investing and Financing Activities

In addition to cash flow from operating activities, Starwood
intends to finance the acquisition of, or investment in,
additional hotels and resorts, hotel renovations and capital
improvements and provide for general corporate purposes through
the Companys credit facilities described below, through
dispositions of certain non-core assets and, when market
conditions warrant, through the issuance of additional equity or
debt securities. The Company has announced the expectation to
market the CIGA portfolio of 22 hotels for sale,
potentially encumbered by the Companys management
agreements, in whole or in part during 2001. Since
February 1998 through the date of this filing, Starwood has
completed over $7.1 billion of asset sales and dispositions, the
proceeds of which were used primarily to reduce debt. During
2000, net cash used for financing activities included the $700
million paydown of the Sheraton Holding public debt.

Loans and Credit Facilities.Following is a
summary of the Companys debt portfolio as of
December 31, 2000:

|                               |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |           | 
|------------------------------ | ------------------------- | --------------------- | ------ | -------------- |  | ---------------- | ------- | ------------ |  |  | ---- | ---- | - |  | ---------- | --------- | 
|                               |                           | Amount                |        |                |  | Interest Rate at |         |             
|                               |                           | Outstanding at        |        |                |  | December 31,     |         | Average     
|                               |                           | December 31, 2000     |        | Interest Terms |  | 2000             |         | Maturity    
|                               |                           |                       |        |                |  |                  |         |             
|                               |                           | (Dollars in millions) |        |                |  |                  |         |             
|                              
|                              
|                              
|                              
|Floating Rate Debt             |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |          
|                              
|                              
|                              
|                              
|Senior Credit Facility:        |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |          
|                              
|                              
|                              
|                              
|                               | Five-Year Term Loan       |                       | $      | 925            |  |                  |         | LIBOR+0.625% |  |  |      | 7.19 | % |  |            | 2.1 years | 
|                              
|                              
|                              
|                              
|                               | Term Loan Add-on          |                       |        | 173            |  |                  |         | LIBOR+1.25%  |  |  |      | 7.81 | % |  |            | 2.1 years | 
|                              
|                              
|                              
|                              
|                               | Revolving Credit Facility |                       |        | 620            |  |                  |         | LIBOR+0.625% |  |  |      | 7.19 | % |  |            | 2.1 years | 
|                              
|                              
|                              
|                              
|Senior Secured Notes Facility: |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |          
|                              
|                              
|                              
|                              
|                               | Tranche II Loans          |                       |        | 1,000          |  |                  |         | LIBOR+2.75%  |  |  |      | 9.31 | % |  |            | 2.1 years | 
|                              
|                              
|                              
|                              
|Mortgages and other            |                           |                       | 613    |                |  |                  | Various |              |  |  | 6.91 | %    |   |  | 2.5 years  |          
|                              
|                              
|                              
|                              
|Interest rate swaps            |                           |                       | (1,052 | )              |  |                  |         |              |  |  | 7.19 | %    |   |  |           |          
|                               |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |          
|Total/average                  |                           | $                     | 2,279  |                |  |                  |         |              |  |  | 8.09 | %    |   |  | 2.2 years  |          
|                               |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |          
|Fixed Rate Debt                |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |          
|                              
|                              
|                              
|                              
|Sheraton Holding public debt   |                           | $                     | 1,296  |                |  |                  |         |              |  |  | 7.08 | %    |   |  | 10.2 years |          
|                              
|                              
|                              
|                              
|Mortgages and other            |                           |                       | 915    |                |  |                  |         |              |  |  | 7.32 | %    |   |  | 11 years   |          
|                              
|                              
|                              
|                              
|Interest rate swaps            |                           |                       | 1,052  |                |  |                  |         |              |  |  | 6.56 | %    |   |  |           |          
|                               |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |          
|Total/average                  |                           | $                     | 3,263  |                |  |                  |         |              |  |  | 6.98 | %    |   |  | 10.5 years |          
|                               |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |          
|Total Debt                     |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |          
|                              
|                              
|                              
|                              
|Total debt and average terms   |                           | $                     | 5,542  |                |  |                  |         |              |  |  | 7.44 | %    |   |  | 5.5 years  |          
|                               |                           |                       |        |                |  |                  |         |              |  |  |      |      |   |  |            |          

In December 2000, the Company increased the amount
available under the Senior Credit Facility by $172.5 million
(Term Loan Add-on). Additionally, in
January 2001, the Company further increased the amount
available under the Senior Credit Facility by an additional $150
million. The proceeds from the Term Loan Add-on were used to
further reduce the amount outstanding under the Companys
Revolving Credit Facility.

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In July 2000, the Company entered into a one-year, Euro 270
million loan (approximately $252 million based on exchange rates
at the time) at an initial average interest rate of Euribor plus
112.5 basis points for the first six months and increasing to
Euribor plus 137.5 basis points for the remaining six months.
The proceeds from this loan were used to reduce the amount
outstanding under the Companys Revolving Credit Facility.

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

On February 23, 1998, Starwood entered into two credit
facilities ($5.6 billion in total) with Lehman Brothers, Bankers
Trust Company, The Chase Manhattan Bank and other financial
institutions to fund the cash portion of the ITT Merger
consideration, to refinance a portion of the Companys
existing indebtedness and to provide funds for general corporate
purposes. The Senior Credit Facility and the Senior Secured
Notes Facility comprise Starwoods primary existing credit
facilities. In September 1998, the Company increased its
borrowings under the Senior Secured Notes Facility with a $1
billion, five-year term borrowing facility (Tranche II
Loans). Starwood completed the sale of Caesars on
December 30, 1999 and completed the sale of the Desert Inn
on June 23, 2000 for aggregate net proceeds of
approximately $3.3 billion. The proceeds from these sales were
used to repay $2.5 billion of the Senior Secured Notes Facility
and to reduce the amount outstanding under the Revolving Credit
Facility.

Starwood has a substantial amount of indebtedness and a working
capital deficiency of $757 million at December 31, 2000,
including $585 million of current maturities of long-term debt.
Based upon the current level of operations, management believes
that the Companys cash flow from operations, together with
available borrowings under the Senior Credit Facility
(approximately $435 million at December 31, 2000) and
capacity with additional borrowings, will be adequate to meet
the Companys anticipated requirements for working capital,
capital expenditures, marketing and advertising expenditures,
program and other discretionary investments, interest payments
and scheduled principal payments for the foreseeable future,
including at least the next three years. There can be no
assurance, however, that the Companys business will
continue to generate cash flow at or above current levels or
that currently anticipated improvements will be achieved. If
Starwood is unable to generate sufficient cash flow from
operations in the future to service the Companys debt, the
Company may be required to sell assets, reduce capital
expenditures, refinance all or a portion of its existing debt or
obtain additional financing. The Companys ability to make
scheduled principal payments, to pay interest or to refinance
the Companys indebtedness depends on its future
performance and financial results, which, to a certain extent,
are subject to general conditions in or affecting the hotel and
leisure industry and to general economic, political, financial,
competitive, legislative and regulatory factors beyond the
Companys control. There can be no assurance that
sufficient funds will be available to enable Starwood to service
its indebtedness or to make necessary capital expenditures,
marketing and advertising expenditures and program and other
discretionary investments. See risk relating to debt financing.

During each of the quarters of 2000, the Trust paid a
distribution of $0.1725 per Share. The Trusts annual
dividend increased 16% in February 2001 to an annual rate
of $0.80 per Share. Total dividends paid in 2000 and 1999 were
$134 million and $116 million, respectively.

Stock Sales and Repurchases

At December 31, 2000, Starwood had approximately 194
million Shares, 7.7 million partnership units and 3.6 million
exchangeable preferred shares outstanding.

In 1998, the Board of Directors of the Company approved the
repurchase of up to $1 billion of Shares under a Share
repurchase program (the Share Repurchase Program).
Pursuant to the Share Repurchase Program, in 2000, Starwood
repurchased 2.5 million Shares in the open market for an
aggregate cost of $69 million. As of December 31, 2000,
approximately $230 million remains available under the Share
Repurchase Program.

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During 2000, the Trust consented to the exchange of
approximately 508,000 shares of Class B EPS into an equal
number of shares of Class A EPS. Additionally, the Trust
consented to the exchange of approximately 3.1 million shares of
Class A EPS for an equal number of Shares.

OTHER MATTERS

European Union Currency Conversions

On January 1, 1999, the Participating Countries established
fixed conversion rates between their existing sovereign
currencies and the Euro. Following the introduction of the Euro,
the legacy currencies of the Participating Countries will remain
legal tender during a transition period ending on
January 1, 2002. During the transition period, both the
legacy currency and the Euro will be legal tender in the
respective Participating Countries. During the transition
period, currency conversions will be computed by a triangulation
with reference to conversion rates between the respective
currencies and the Euro. The Company currently operates in
substantially all of the Participating Countries. The effect on
the Company of the adoption of the Euro by the Participating
Countries in which it operates is currently uncertain. However,
it is possible that the Euro adoption will result in increased
competition within the European market. In addition, a number of
the Companys information systems are not currently Euro
compliant. The Company is currently in the process of updating
its information systems to make them Euro compliant. As of the
date of this filing, five properties have converted to the Euro
without any significant impact to the properties
operations or information systems; however, there is no
assurance that the Company or third-party vendors of
applications used by the Company will successfully bring all of
its systems into compliance. Failure of the Company to do so
could result in disruptions in the processing of transactions in
Euros or computed by reference to the Euro.




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

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

Interest rate swap agreements are the primary instruments used
to manage interest rate fluctuation affecting the Companys
variable rate debt. The Company currently has five outstanding
long-term interest rate swap agreements under which the Company
pays a fixed interest rate and receives variable interest rates.
The following table sets forth the scheduled maturities and the
total fair value of the Companys debt portfolio:

|                                          |  |                 |     |      |  |              |     |              |  |      |       |            |  |      |    |      |  |   |     |  |  |   |       |  |  |   |       |   |  |   |       | 
|----------------------------------------- |  | --------------- | --- | ---- |  | ------------ | --- | ------------ |  | ---- | ----- | ---------- |  | ---- | -- | ---- |  | - | --- |  |  | - | ----- |  |  | - | ----- | - |  | - | ----- | 
|                                          |  |                 |     |      |  |              |     | Total Fair  
|                                          |  | At December 31, |     |      |  | Total at     |     | Value at    
|                                          |  |                 |     |      |  | December 31, |     | December 31,
|                                          |  | 2001            |     | 2002 |  | 2003         |     | 2004         |  | 2005 |       | Thereafter |  | 2000 |    | 2000
|                                          |  |                 |     |      |  |              |     |              |  |      |       |            |  |      |    |     
|Liabilities                               |  |                 |     |      |  |              |     |              |  |      |       |            |  |      |    |      |  |   |     |  |  |   |       |  |  |   |       |   |  |   |       | 
|                                         
|                                         
|                                         
|                                         
|Fixed rate (in millions)                  |  | $               | 77  |      |  | $            | 39  |              |  | $    | 285   |            |  | $    | 35 |      |  | $ | 503 |  |  | $ | 1,272 |  |  | $ | 2,211 |   |  | $ | 2,101 | 
|                                         
|                                         
|                                         
|                                         
|Average interest rate                     |  |                 |     |      |  |              |     |              |  |      |       |            |  |      |    |      |  |   |     |  |  |   |       |  |  |   | 7.19  | % |  |   |       | 
|                                         
|                                         
|                                         
|                                         
|Floating rate (in millions)               |  | $               | 508 |      |  | $            | 257 |              |  | $    | 2,438 |            |  | $    | 24 |      |  | $ | 41  |  |  | $ | 63    |  |  | $ | 3,331 |   |  | $ | 3,331 | 
|                                         
|                                         
|                                         
|                                         
|Average interest rate                     |  |                 |     |      |  |              |     |              |  |      |       |            |  |      |    |      |  |   |     |  |  |   |       |  |  |   | 7.80  | % |  |   |       | 
|                                         
|                                         
|                                         
|                                         
|Interest Rate Swaps                       |  |                 |     |      |  |              |     |              |  |      |       |            |  |      |    |      |  |   |     |  |  |   |       |  |  |   |       |   |  |   |       | 
|                                         
|                                         
|                                         
|                                         
|Long-term variable to fixed (in millions) |  | $               | 152 |      |  | $            | 200 |              |  | $    | 700   |            |  |      |    |      |  |   |     |  |  |   |       |  |  | $ | 1,052 |   |  |   |       | 
|                                         
|                                         
|                                         
|                                         
|Average pay rate                          |  |                 |     |      |  |              |     |              |  |      |       |            |  |      |    |      |  |   |     |  |  |   |       |  |  |   | 5.90  | % |  |   |       | 
|                                         
|                                         
|                                         
|                                         
|Average receive rate                      |  |                 |     |      |  |              |     |              |  |      |       |            |  |      |    |      |  |   |     |  |  |   |       |  |  |   | LIBOR |   |  |   |       | 

Foreign currency forward transactions are used by the Company to
hedge exposure to foreign currency exchange rate fluctuations.
The gains or losses on the forward contracts are largely offset
by the gains or losses of the underlying transactions, and
consequently, a sudden significant change in foreign currency
exchange

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

See Notes 13 and 16 in the notes to financial statements filed
as part of this Joint Annual Report and incorporated herein by
reference for further description of derivative financial
instruments.




Item 8.  Financial Statements and
Supplementary Data.

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




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

Not applicable.




PART III




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

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

Directors and Trustees Whose Terms Expire at the 2003 Annual
Meeting

|                      |  |                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                            
|--------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------
|Name (Age)            |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                            |  | Service Period                                                                             
|                      |  |                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                            
|Jean-Marc Chapus (41) |  | Managing Director and Portfolio Manager of Trust Company of the
	West, an investment consulting firm, and President of TCW/
	Crescent Mezzanine L.L.C., a private investment fund, since
	March 1995. Mr.  Chapus is currently a member of the
	Board of Directors of Magnequench International, Inc., Auto
	Town, Inc. and Petco Animal Supplies, Inc. |  | Director from August 1995 to November 1997; since
	April  1999
	Trustee since November 1997

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|                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                          
|--------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------
|Name (Age)                                                            |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Service Period                                           
|                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                          
|Barry S. Sternlicht (40)                                              |  | Chairman and Chief Executive Officer of the Corporation 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) from September 1996 to
	November 1997 and served as the Chairman of the Board of
	Directors (previously the Board of Trustees) of iStar from
	September 1996 to April 2000. Mr.  Sternlicht has
	been a Director (or Trustee, as applicable) of iStar since
	September 1996. Mr.  Sternlicht is a member of the Urban
	Land Institute and of the National Multi-Family Housing Council.
	Mr. Sternlicht is a member of the Board of Directors of the
	Juvenile Diabetes Foundation International and the Council for
	Christian and Jewish Understanding, is a member of the Young
	Presidents Organization and is on the Board of Directors of
	Junior Achievement for Fairfield County, Connecticut. |  | Director since December 1994
	Trustee since December 1994
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Directors and Trustees Whose Terms Expire at the 2002 Annual
	Meeting |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Bruce W. Duncan (49)                                                  |  | 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. Mr. Duncan is a trustee of
	Amresco Capital Trust and a member of the Partnership Committee
	of the Rubenstein Company, L.P., a real estate operating company
	focused on office properties in the mid-Atlantic region. In
	addition, Mr. Duncan is a member of the Urban Land
	Institute and a member and past trustee of the International
	Council of Shopping Centres.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Director since April 1999
	Trustee since August 1995     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Stephen R. Quazzo (41)                                                |  | 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. Mr. Quazzo is an advisory board member of City
	Year Chicago and a Trustee of the Latin School of Chicago.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Director since April 1999
	Trustee since August 1995     

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|                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                                                                                          
|--------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------
|Name (Age)                                                            |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Service Period                                                                           
|                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                                                                                          
|Daniel H. Stern (40)                                                  |  | President of Reservoir Capital Group, L.L.C., a New York-based
	investment management firm, since July  1997. From
	December 1992 to July 1997, Mr. Stern was
	President of Ziff Brothers Investments, L.L.C., a diversified
	investment management firm. Mr.  Stern is also a Trustee of
	the Big Apple Circus and the Lincoln Center Film Society.                                                                                                                                                                          |  | Director since November 1997
	Trustee from August 1995 to November 1997; since April 1999
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Raymond S. Troubh (74)                                                |  | Financial consultant and a former Governor of the American Stock
	Exchange. He was also a general partner of Lazard Frères
	& Co., an investment banking firm. Mr. Troubh is a
	director of ARIAD Pharmaceuticals, Inc., Diamond Offshore
	Drilling, Inc., General American Investors Co., Inc., Gentiva
	Health Services, Inc., Health Net, Inc., Triarc Companies, Inc.
	and WHX Corp. and is a Trustee of Corporate Renaissance Group
	Liquidating Trust, MicroCap Liquidating Trust and Petrie Stores
	Liquidating Trust. |  | Director since April 1999
	Trustee since April 1998                                      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Directors and Trustees Whose Terms Expire at the 2001 Annual
	Meeting |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Madison F. Grose (47)                                                 |  | Managing Director or Senior Managing Director and General
	Counsel or Co-General Counsel of Starwood Capital, a real estate
	investment firm, and its predecessor entities since
	July 1992. From November 1983 through June 1992,
	he was a Partner in the law firm of Pircher, Nichols &
	Meeks. Mr.  Grose is a director of iStar Financial, Inc.                                                                                                                                                                          |  | Director since April 1999
	Trustee since December 1994                                   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Eric Hippeau (49)                                                     |  | President and Executive Managing Director of Softbank
	International Ventures since March 2000. Mr. Hippeau
	served as Chairman and Chief Executive Officer of Ziff-Davis
	Inc. from 1993 to March  2000. Mr. Hippeau is a member
	of the board of directors of CNET Networks, Inc., Global
	Crossing Ltd., Key3Media Group, Inc., Asia Global Crossing Ltd.
	and Yahoo! Inc.                                                                                                                                                 |  | Director since April 1999
	Trustee since April 1999                                      

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|                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                         
|----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------
|Name (Age)              |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Service Period                                          
|                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                         
|Earle F. Jones (74)     |  | Co-Chairman since 1988 of Mississippi Management, Inc., d/b/a
	MMI Hotel Group, a hotel company, and is the Co-Chairman of MMI
	Dining Systems. Mr.  Jones is also President of MM
	Louisiana Inc. (a wholly owned subsidiary of Mississippi
	Management, Inc.), Inn of Lake City, Inc., Seas, Inc., Orlando
	Plaza Hotel Corp. and Cabot Lodge, Inc. He is a general partner
	of Gainesville Cabot Lodge, Ltd., Jackson North Cabot Lodge Ltd.
	and Hattiesburg Cabot Lodge, Ltd. Mr. Jones is also a
	general partner of Orlando Plaza Suite Hotel, Ltd-A, which filed
	a petition under Chapter 11 of the U.S.  Bankruptcy
	Code in May 1996. An order confirming the debtors
	plan of restructuring was issued by the court on
	January 27, 1997. Mr. Jones is a member of the board
	of trustees or directors for each of the Jackson Municipal
	Airport Authority, Greater Jackson Foundation, Public Education
	Forum of Mississippi, Millsaps College, First American Bank
	(Jackson, MS) and Jackson 2000, and is Co-Chairman of the
	Mississippi Olympic Committee. He was the Chairman of the Board
	of Directors of the Corporation from February 1989 to
	September  1997. |  | Director since September  1985
	Trustee since April 1999
|                       
|                       
|                       
|                       
|George J. Mitchell (67) |  | Special Counsel to the law firm of Verner, Liipfert, Bernhard,
	McPherson and Hand since January 1995. He served as a
	United States Senator from January 1980 to
	January 1995, and was the Senate Majority Leader from 1989
	to 1995. From 1995 to 1997, Senator Mitchell served as the
	Special Advisor to the President of the United States on
	economic initiatives in Ireland. At the request of the British
	and Irish Governments, he served as Chairman of the peace
	negotiations in Northern Ireland. Senator Mitchell serves as a
	director of The Walt Disney Company, Federal Express
	Corporation, Xerox Corporation UNUMProvident Corp., Casella
	Waste Systems, Inc., Unilever N.V., and Staples, Inc. In
	addition, Senator Mitchell serves as President of the Economic
	Club of Washington.                                                                                                                                                                                                                                                                                                                                                                         |  | Director since April 1999
	Trustee since November 1997  

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|                   |  |                                                                                                                                                                                                                                                                                                                                                                       |  |                                                     
|------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------
|Name (Age)         |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                          |  | Service Period                                      
|                   |  |                                                                                                                                                                                                                                                                                                                                                                       |  |                                                     
|Daniel W. Yih (42) |  | PrincipalPortfolio Management with GTCR Golder Rauner,
	LLC, a venture capital firm, and interim Chief Financial Officer
	of U.S. Aggregates, Inc. From June 1995 until
	March 2000, Mr. Yih was a general partner of Chilmark
	Partners, L.P., an investment advisory firm. Mr. Yih has
	been a director of U.S. Aggregates, Inc. and Esquire
	Communications, Ltd. |  | Director since August 1995
	Trustee since April 1999

Executive Officers of the Registrants

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

|                    |  |     |    |             |  |                                                                                                                                                                
|------------------- |  | --- | -- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                |  | Age |    | Position(s)
|                    |  |     |    |            
|Barry S. Sternlicht |  |     | 40 |             |  | Chairman, Chief Executive Officer and a Director of the
	Corporation and Chairman, Chief Executive Officer and a Trustee
	of the Trust                         
|                   
|                   
|                   
|                   
|Robert F. Cotter    |  |     | 49 |             |  | Chief Operating Officer of the Corporation and a Vice President
	of the Trust                                                                                  
|                   
|                   
|                   
|                   
|Ronald C. Brown     |  |     | 46 |             |  | 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   |  |     | 45 |             |  | Executive Vice President, General Counsel and Secretary of the
	Corporation and Vice President, General Counsel and Secretary of
	the Trust                    
|                   
|                   
|                   
|                   
|David K. Norton     |  |     | 45 |             |  | Executive Vice PresidentHuman Resources of the Corporation
	and Vice PresidentHuman Resources of the Trust                                                   
|                   
|                   
|                   
|                   
|Steven R. Goldman   |  |     | 39 |             |  | Executive Vice President, Acquisitions and Development, of the
	Corporation and a Vice President of the Trust                                                  

Barry S. Sternlicht.Mr. Sternlicht has been
Chairman and Chief Executive Officer of the Corporation 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 from September 1996 to
November 1997 and served as the Chairman of the Board of
Directors (previously the Board of Trustees) of iStar from
September 1996 to April 2000. Mr. Sternlicht has
been a Director (or Trustee, as applicable) of iStar since
September 1996.

Robert F. Cotter.Mr. Cotter has been the
Chief Operating Officer of the Corporation since
February 2000 and a Vice President of the Trust since
August 2000. From December 1999 to February 2000, he
was President, International Operations, and from
March 1998 to December 1999, he served as President,
Europe, of the Company. Prior to joining the Company,
Mr. Cotter was President, Sheraton Europe Division, from
June 1994 to March 1998 and previously held various
other positions with Sheraton including President, Sheraton
Asia-Pacific Divisions, and numerous sales and marketing
positions in the United States and Asia.

Ronald C. Brown.Mr. Brown has been the
Executive Vice President and Chief Financial Officer of the
Corporation since March 1998 and has served as Vice
President, Chief Financial Officer and Chief Accounting Officer
of the Trust since January 1999. From July 1995 to
March 1998, he was the Senior Vice

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Kenneth S. Siegel.Mr. Siegel has been the
Executive Vice President and General Counsel of the Corporation
and Vice President and General Counsel of the Trust since
November 2000. In February 2001, he was also appointed
as the Secretary to both the Corporation and the Trust.
Mr. Siegel was formerly the Senior Vice President and
General Counsel of Gartner, Inc. from January 2000 to
November 2000. Prior to that time, he served as Senior Vice
President, General Counsel and Corporate Secretary of IMS Health
Incorporated, an information services company, and its
predecessors from February 1997 to December 1999. Prior to
that time, Mr. Siegel was a Partner at Baker & Botts,
LLP.

David K. Norton.Mr. Norton has been the
Executive Vice PresidentHuman Resources of the Corporation
and Vice PresidentHuman Resources of the Trust since
May 2000. Prior to joining the Company, Mr. Norton
held various positions with PepsiCo, Inc. from
September 1990 to April 2000 including Senior Vice
President, Human Resources, of Frito-Lay, a division of PepsiCo,
and Senior Vice President, Human Resources, of PepsiCo Food
Systems from December 1994 to October 1995.

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

Section 16(a) Beneficial Ownership Reporting
Compliance

Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires that Directors and executive officers of the
Company, and persons who own more than 10 percent of the
outstanding Shares, file with the Securities and Exchange
Commission (the SEC) (and provide a copy to the
Company) certain reports relating to their ownership of Shares
and other equity securities of the Company.

To the Companys knowledge, based solely on a review of the
copies of these reports furnished to the Company for the fiscal
year ended December 31, 2000, and written representations
that no other reports were required, all Section 16(a)
filing requirements applicable to its Directors, executive
officers and greater than 10 percent beneficial owners were
complied with for the most recent fiscal year, except that
Messrs. Eilian (a former Director of the Company) and Grose
each failed to timely file one Form 4 with respect to one
transaction; Mr. Goldman failed to timely file two Forms 4
with respect to two transactions; and Mr. Cotter failed to
timely file a Form 3 and one Form 4 with respect to
one transaction. The Directors who have elected to defer receipt
of their directors fees failed to report on Forms 5
receipt of phantom stock units as a result of such elections.
The number of such late filings were three for each of
Messrs. Duncan and Mitchell, two for Mr. Troubh and
one for each of Messrs. Eilian, Hippeau and Yih.




Item 11.  Executive Compensation.

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

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

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




Item 13.  Certain Relationships and Related
Transactions.

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

The policy of the Board of Directors of the Corporation and the
Board of Trustees of the Trust provides that any contract or
transaction between the Corporation or the Trust, as the case
may be, and any other entity in which one or more of its
Directors, Trustees or officers are directors or officers, or
have a financial interest, must be approved or ratified by the
Audit Committee or by a majority of the disinterested Directors
or Trustees in either case after the material facts as to the
relationship or interest and as to the contract or transaction
are disclosed or are known to them.

Starwood Capital

General.Barry S. Sternlicht, Chairman, Chief
Executive Officer and a Director of the Corporation, and
Chairman, Chief Executive Officer and a Trustee of the Trust,
controls and has been the President and Chief Executive Officer
of Starwood Capital since its formation in 1991. In addition,
Madison F. Grose is a Senior Managing Director of, and holds
direct and indirect interests in, Starwood Capital and Jonathan
D. Eilian (a former Director of the Corporation and Trustee of
the Trust) holds direct and indirect interests in Starwood
Capital. Prior to joining Starwood, Steven R. Goldman was an
employee of Starwood Capital, and he continues to own an
interest in certain portfolio investments of Starwood Capital.

Trademark License.An affiliate of Starwood
Capital has granted to Starwood, subject to Starwood
Capitals unrestricted right to use such name, an
exclusive, non-transferable, royalty-free license to use the
Starwood name and trademarks in connection with the
acquisition, ownership, leasing, management, merchandising,
operation and disposition of hotels worldwide, and to use the
Starwood name in its corporate name worldwide, in
perpetuity.

Starwood Capital Noncompete.In connection with
the Restructuring, Starwood Capital agreed that, with certain
exceptions, Starwood Capital would not compete directly or
indirectly with the Company within the United States and would
present to the Company all opportunities presented to Starwood
Capital to acquire fee interests in hotels in the United States
and debt interests in hotels in the United States where it is
anticipated that the equity will be acquired by the debt holder
within one year from the acquisition of such debt (the
Starwood Capital Noncompete). During the term of the
Starwood Capital Noncompete, neither Starwood Capital nor any of
its affiliates is permitted to acquire any such interest, or any
ground lease interest or other equity interest, in hotels in the
United States. The Starwood Capital Noncompete continues until
no officer, director, general partner or employee of Starwood
Capital is on either the Board of Directors of the Corporation
or the Board of Trustees of the Trust (subject to exceptions for
certain restructurings, mergers or other combination
transactions with unaffiliated parties). Several properties
managed by the Company, including the Westin Innisbrook Resort
(the Innisbrook), the Westin Savannah Harbor Resort
and the Turnberry Hotel, were opportunities presented to the
Company by Starwood Capital. With the approval in each case of
the Audit Committee of the Board of Directors of the Corporation
and the Board of Trustees of the Trust, from time to time the
Company has waived the restrictions of the Starwood Capital
Noncompete in whole or in part with respect to particular
acquisition opportunities in which the Company had no interest.

Portfolio Investments.An affiliate of Starwood
Capital holds an approximately 25% non-controlling interest in a
golf course management company that currently manages over 40
golf courses, including seven golf courses that are amenities to
resorts that the Company manages. An entity in which
Messrs. Sternlicht, Eilian and Grose have indirect
interests owns the common area of the Sheraton Tamarron Resort
which the Company manages. In addition, an affiliate of Starwood
Capital has an indirect interest of approximately 50% in an
entity that manages over 40 health clubs, including health club
and spa space in a hotel owned by the

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Other Management-Related Investments.Individuals
affiliated with Starwood Capital, including
Messrs. Sternlicht, Eilian and Grose, own indirect
interests in an entity (the Innisbrook Entity) that
owns the common area facilities and certain undeveloped land at
the Innisbrook. In May 1997, the Innisbrook Entity entered
into a management agreement for the Innisbrook property with
Westin, which was then a privately held company partly owned by
Starwood Capital and Goldman, Sachs & Co. When the Company
acquired Westin in January 1998, it acquired Westins
rights and obligations under this management agreement. The
Company is currently attempting to resolve a disagreement with
the Innisbrook Entity relating to various payment and other
provisions of the management agreement.

Aircraft Lease.In February 1998, the Company
leased a Gulfstream III Aircraft from Star Flight LLC, an
affiliate of Starwood Capital. The term of the lease was one
year and automatically renews for one-year terms until either
party terminates the lease upon 90 days written
notice. The rent for the aircraft, which was set at
approximately 90% of fair market value (based on two estimates
from unrelated third parties), is (i) a monthly payment of
1.25% of the lessors total costs relating to the aircraft
(approximately $123,000 at the beginning of the lease with this
amount increasing as additional costs are incurred by the
lessor), plus (ii) $300 for each hour that the aircraft is in
use.

Other

Starwood has made non-interest-bearing loans to Steven R.
Goldman, Executive Vice President, Acquisitions and Development,
and Ronald C. Brown, Executive Vice President and Chief
Financial Officer, during 1999 and to David K. Norton,
Executive Vice President of Human Resources, during 2000. Each
of these loans was made in connection with such executives
employment and is secured by a second mortgage on such
executives home. These loans had initial principal amounts
of $525,000, $600,000 and $500,000, respectively, all of which
are currently outstanding. These loans are due five years from
the date of issuance or, generally, upon the individuals
termination.

In 2000, Starwood retained the law firm Verner, Liipfert,
Bernhard, McPherson and Hand, of which Senator George J.
Mitchell, a Director of the Corporation and Trustee of the
Trust, is Special Counsel. Such firm was paid approximately
$370,000 for services rendered during 2000. We expect that this
firm will provide services to the Company in 2001.

During 2000, the Company retained the services of Waveland
International (Waveland), an executive search firm,
of which the husband of Susan Bolger, a former executive officer
of the Company, is an employee. The Company paid Waveland
$70,000 for such services.

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PART IV






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

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



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

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

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|        |      |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | ---- | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                       
|Number  |      | Description of Exhibit
|        |      |                       
|        | 3.3  |                        |  | Bylaws of the Trust, as amended through April 16, 1999
	(incorporated by reference to Exhibit 3.3 to the
	Corporations and the Trusts Joint Quarterly Report
	on Form 10-Q for the quarterly period ended March 31,
	1999 (the 1999 Form 10-Q1)).                                                                                                                                           
|        | 3.4  |                        |  | Bylaws of the Corporation, as amended through March 15,
	1999 (incorporated by reference to Exhibit 3 to the
	Corporations and the Trusts Joint Current Report on
	Form 8-K dated March 15, 1999 (the March 15
	Form 8-K)).                                                                                                                                                                 
|        | 4.1  |                        |  | Amended and Restated Intercompany Agreement, dated as of
	January 6, 1999, between the Corporation and the Trust
	(incorporated by reference to Exhibit 3 to the Trust Form
	8-A, except that on January 6, 1999, the Intercompany
	Agreement was executed and dated as of January 6, 1999).                                                                                                    
|        | 4.2  |                        |  | Rights Agreement, dated as of March 15, 1999, between the
	Corporation and Chase Mellon Shareholder Services, L.L.C., as
	Rights Agent (incorporated by reference to Exhibit 4 to the
	March 15 Form 8-K).                                                                                                                                                                                      
|        | 4.3  |                        |  | Amended and Restated Indenture, dated as of November 15,
	1995, as Amended and Restated as of December 15, 1995
	between ITT Corporation (formerly known as ITT Destinations,
	Inc.) and the First National Bank of Chicago, as trustee
	(incorporated by reference to Exhibit 4.A.IV to the First
	Amendment to ITT Corporations Registration Statement on
	Form S-3 filed November 13, 1996).
|        | 4.4  |                        |  | 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).                                                                                                                          
|        | 4.5  |                        |  | The Registrants hereby agree to file with the Commission a copy
	of any instrument, including indentures, defining the rights of
	long-term debt holders of the Registrants and their consolidated
	subsidiaries upon the request of the Commission.                                                                                                                                            
|        | 10.1 |                        |  | Third Amended and Restated Limited Partnership Agreement for
	Realty Partnership, dated January 6, 1999, among the Trust
	and the limited partners of Realty Partnership (incorporated by
	reference to Exhibit 10.1 to the 1998 Form 10-K).                                                                                                                                                    
|        | 10.2 |                        |  | Third Amended and Restated Limited Partnership Agreement for
	Operating Partnership, dated January 6, 1999, among the
	Corporation and the limited partners of Operating Partnership
	(incorporated by reference to Exhibit 10.2 to the 1998
	Form 10-K).                                                                                                                                       
|        | 10.3 |                        |  | Form of Amended and Restated Lease Agreement, entered into as of
	January 1, 1993, between the Trust as Lessor and the
	Corporation (or a subsidiary) as Lessee (incorporated by
	reference to Exhibit 10.19 to the Trusts and the
	Corporations Joint Annual Report on Form 10-K for the
	year ended December 31, 1992).                                                                     
|        | 10.4 |                        |  | Employment Agreement, dated May 24, 1999, between the
	Corporation and Ronald C. Brown. (incorporated by reference to
	Exhibit 10.4 to the Corporations and the Trusts
	Joint Annual Report on Form 10-K for the year ended
	December 31, 1999 (the 1999
	Form 10-K)).(1)                                                                                                                   
|        | 10.5 |                        |  | Employment Agreement, dated March 25, 1998, between the
	Trust and Steven R. Goldman (incorporated by reference to
	Exhibit 10.11 to the 1997 Form 10-K).(1)                                                                                                                                                                                                                                    
|        | 10.6 |                        |  | Starwood Hotels & Resorts 1995 Long-Term Incentive Plan
	(Amended and Restated as of December 3, 1998) (incorporated
	by reference to Annex D to the 1998 Proxy
	Statement).(1)                                                                                                                                                                                                                 
|        | 10.7 |                        |  | Starwood Hotels & Resorts Worldwide, Inc. 1995 Long-Term
	Incentive Plan (Amended and Restated as of December 3,
	1998) (incorporated by reference to Annex E to the 1998 Proxy
	Statement).(1)                                                                                                                                                                                                 
|        | 10.8 |                        |  | Incentive and Non-Qualified Share Option Plan (1986) of the
	Trust (incorporated by reference to Exhibit 10.8 to the
	Trusts and the Corporations Joint Annual Report on
	Form  10-K for the year ended August 31, 1986 (the
	1986 Form  10-K)).(1)                                                                                                                                         
|        | 10.9 |                        |  | Corporation Stock Non-Qualified Stock Option Plan (1986) of the
	Trust (incorporated by reference to Exhibit 10.9 to the
	1986 Form 10-K).(1)                                                                                                                                                                                                                                                   

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|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | ----- | ---------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.10 |                        |  | Stock Option Plan (1986) of the Corporation (incorporated
	by reference to Exhibit 10.10 to the 1986
	Form 10-K).(1)                                                                                                                                                                                                                                                                                             
|        | 10.11 |                        |  | Trust Shares Option Plan (1986) of the Corporation
	(incorporated by reference to Exhibit 10.11 to the 1986
	Form 10-K).(1)                                                                                                                                                                                                                                                                                      
|        | 10.12 |                        |  | Form of Indemnification Agreement and Amendment No. 1 to
	Indemnification Agreement between the Trust and each of its
	Trustees and executive officers (incorporated by reference to
	Exhibit 10.7 to the Trusts and the Corporations
	Joint Annual Report on Form 10-K for the year ended
	December 31, 1995 (the 1995
	Form 10-K)).(1)                                                                     
|        | 10.13 |                        |  | Form of Indemnification Agreement and Amendment No. 1 to
	Indemnification Agreement between the Corporation and each of
	its Directors and executive officers (incorporated by reference
	to Exhibit 10.8 to the 1995 Form 10-K).(1)                                                                                                                                                                             
|        | 10.14 |                        |  | Form of Amendment No. 2 to Indemnification Agreement, dated
	June 26, 1997, between the Trust and each of its Trustees
	and executive officers (incorporated by reference to
	Exhibit 10.1 to the Trusts and the Corporations
	Joint Quarterly Report on Form 10-Q for the quarterly
	period ended June 30, 1997 (the 1997
	Form 10-Q2)).(1)                                                                 
|        | 10.15 |                        |  | Form of Amendment No. 2 to Indemnification Agreement, dated
	June 26, 1997, between the Corporation and each of its
	Directors and executive officers (incorporated by reference to
	Exhibit 10.2 to the 1997 Form 10-Q2).(1)                                                                                                                                                                                    
|        | 10.16 |                        |  | Form of Trademark License Agreement, dated as of December 10,
	1997, between Starwood Capital and the Trust (incorporated by
	reference to Exhibit 10.22 to the 1997 Form 10-K).                                                                                                                                                                                                                                 
|        | 10.17 |                        |  | 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)).                                                                            
|        | 10.18 |                        |  | 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).                                                                                                                                                                                                                        
|        | 10.19 |                        |  | 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)).
|        | 10.20 |                        |  | 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).                                                                                                                                                                                                        
|        | 10.21 |                        |  | 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).                                                                                                                                               
|        | 10.22 |                        |  | 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).                                                                                                                                                                  
|        | 10.23 |                        |  | Exchange Rights Agreement, dated as of March 11, 1997,
	among the Corporation, the Trust, Realty Partnership, Operating
	Partnership and the Hermitage, L.P. (incorporated by reference
	to Exhibit 10.41 to the 1997 Form 10-K).                                                                                                                                                                                
|        | 10.24 |                        |  | Registration Rights Agreement, dated as of March 11, 1997,
	among the Corporation, the Trust, Realty Partnership, Operating
	Partnership and the Hermitage, L.P. (incorporated by reference
	to Exhibit 10.42 to the 1997 Form 10-K).                                                                                                                                                                            

34



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##### Table of Contents



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | ----- | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.25 |                        |  | Credit Agreement, dated as of September 10, 1997, between
	Realty Partnership and the Trust and Bankers Trust Company
	(BTC), Lehman Brothers Holdings Inc. d/b/a Lehman
	Capital, a division of Lehman Brothers Holdings Inc.
	(Lehman Capital), BankBoston, N.A., and Bank of
	Montreal (incorporated by reference to Exhibit 10.1 to the
	Trusts and the Corporations Joint Quarterly Report
	on Form 10-Q for the quarterly period ended
	September 30, 1997, as amended by the Form 10-Q/ A
	dated November 10, 1997).                              
|        | 10.26 |                        |  | 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).                                                                                                                                                                                                                                                                                                                                                                   
|        | 10.27 |                        |  | 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).                                                                                                                                                                                                                                                                                                                                                          
|        | 10.28 |                        |  | Registration Rights Agreement, dated as of January 2, 1998,
	among, inter alia, the Trust, the Corporation, and
	Woodstar (incorporated by reference to Exhibit 10.52 to the
	1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                 
|        | 10.29 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the
	Trust and New Remington Partners (incorporated by reference to
	Exhibit 10.54 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                
|        | 10.30 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the
	Trust and Savannah Limited Partnership (incorporated by
	reference to Exhibit 10.56 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                          
|        | 10.31 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the
	Trust and N.Y. Overnight Partners, L.P. (incorporated by
	reference to Exhibit 10.58 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                         
|        | 10.32 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the
	Trust and D.C. Overnight Partners, L.P. (incorporated by
	reference to Exhibit 10.60 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                         
|        | 10.33 |                        |  | Credit Agreement, dated as of February 23, 1998, among the
	Trust, Realty Partnership, the Corporation, Chess (and ITT
	Corporation as its successor by merger), certain additional
	borrowers, various lenders, BTC and The Chase Manhattan Bank
	(Chase Bank), as Administrative Agents, and Lehman
	Commercial Paper Inc. (Lehman Paper) and Bank of
	Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.1 to the Trusts and the Corporations
	Joint Current Report on Form 8-K dated February 23,
	1998 (the ITT Form 8-K)).
|        | 10.34 |                        |  | First Amendment to the Credit Agreement, dated as of March 3,
	1998, among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, and Lehman Paper and Bank
	of Montreal, as Syndication Agents, and the new lenders
	(incorporated by reference to Exhibit 10.2 to the ITT
	Form 8-K).                                                                                                                                                                   
|        | 10.35 |                        |  | Second Amendment to the Credit Agreement, dated as of
	April  30, 1998, among the Trust, Realty Partnership, the
	Corporation, ITT Corporation, the lenders party to the Credit
	Agreement, BTC and Chase Bank, as Administrative Agents, and
	Lehman Paper and Bank of Montreal, as Syndication Agents
	(incorporated by reference to Exhibit 10.2 to the Trusts
	and the Corporations Joint Quarterly Report on
	Form 10-Q for the quarterly period ended June 30, 1998 (the
	1998 Form 10-Q2)).                                                         
|        | 10.36 |                        |  | Third Amendment to the Credit Agreement, dated as of June 15,
	1998, among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, and Lehman Paper and Bank
	of Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.3 to the 1998 Form 10-Q2).                                                                                                                                                                                      
|        | 10.37 |                        |  | Fourth Amendment to the Credit Agreement, dated as of July 15,
	1998, among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, and Lehman Paper and Bank
	of Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.4 to the 1998 Form 10-Q2).                                                                                                                                                                                     

35



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##### Table of Contents



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- | ----- | ---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.38 |                        |  | Fifth Amendment to the Credit Agreement, dated as of
	August  26, 1998, among the Trust, Realty Partnership, the
	Corporation, ITT Corporation, the lenders party to the Credit
	Agreement, BTC and Chase Bank, as Administrative Agents, and
	Lehman Paper and Bank of Montreal, as Syndication Agents
	(incorporated by reference to Exhibit 10.2 to the 1998
	Form 10-Q3).                                                                                                                                                                                                                                                                                 
|        | 10.39 |                        |  | Sixth Amendment to the Credit Agreement, dated as of
	December 15, 1998, among the Trust, Realty Partnership, the
	Corporation, ITT Corporation, the lenders party to the Credit
	Agreement, BTC and Chase Bank, as Administrative Agents, and
	Lehman Paper and Bank of Montreal, as Syndication Agents
	(incorporated by reference to Exhibit 10.50 to the 1998
	Form 10-K).                                                                                                                                                                                                                                                                                
|        | 10.40 |                        |  | Seventh Amendment to the Credit Agreement, dated as of
	February 1999, among the Trust, Realty Partnership, the
	Corporation, ITT Corporation, the lenders party to the Credit
	Agreement, BTC and Chase Bank, as Administrative Agents, and
	Lehman Paper and Bank of Montreal, as Syndication Agents
	(incorporated by reference to Exhibit 10.51 to the 1998
	Form 10-K).                                                                                                                                                                                                                                                                                  
|        | 10.41 |                        |  | Eighth Amendment to the Credit Agreement and Modification to
	Pledge and Security Agreement, dated as of July 2, 1999,
	among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, Lehman Paper and Bank of
	Montreal, as Syndication Agents, and BTC, as Collateral Agent
	(incorporated by reference to Exhibit 10.1 to the
	Corporations and the Trusts Joint Quarterly Report
	on Form 10-Q for the quarterly period ended
	September 30, 1999, as amended by the Form 10-Q/ A
	filed November 16, 1999 (as so amended, the 1999
	Form 10-Q3)).
|        | 10.42 |                        |  | Ninth Amendment to the Credit Agreement and Modification to
	Pledge and Security Agreement, dated as of September 20, 1999,
	among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, Lehman Paper and Bank of
	Montreal, as Syndication Agents, and BTC, as Collateral Agent
	(incorporated by reference to Exhibit 10.2 to the 1999
	Form 10-Q3).                                                                                                                                                                                                  
|        | 10.43 |                        |  | Tenth Amendment to the Credit Agreement and Modification to
	Pledge and Security Agreement, dated as of June 12, 2000,
	among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, Lehman Paper and Bank of
	Montreal, as Syndication Agents, and BTC, as Collateral
	Agent.(2)                                                                                                                                                                                                                                                                        
|        | 10.44 |                        |  | Pledge and Security Agreement, dated as of February 23,
	1998, executed and delivered by the Trust, the Corporation and
	the other Pledgors party thereto, in favor of BTC as Collateral
	Agent (incorporated by reference to Exhibit 10.63 to the 1997
	Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10.45 |                        |  | Second Amended and Restated Senior Secured Note Agreement, dated
	December 30, 1999, among the Corporation, the Trust, the
	guarantors listed therein, the lenders listed therein, Lehman
	Paper, as Arranger and Administrative Agent, and Alex Brown and
	Chase Securities Inc., as Syndication Agents (incorporated by
	reference to Exhibit 10.46 to the 1999 Form 10-K).                                                                                                                                                                                                                                                                                 
|        | 10.46 |                        |  | 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).                                                                                                                                                                                                                                                                                                                                        
|        | 10.47 |                        |  | Loan Agreement, dated as of February 23, 1998, between the
	Trust and the Corporation, together with Promissory Note
	executed in connection therewith, by the Corporation to the
	order of the Trust, in the principal amount of $100,000,000
	(incorporated by reference to Exhibit 10.66 to the 1997
	Form 10-K).                                                                                                                                                                                                                                                                                                                                          
|        | 10.48 |                        |  | Loan Agreement, dated as of February 23, 1998, between the
	Trust and the Corporation, together with Promissory Note
	executed in connection therewith, by the Corporation to the
	order of the Trust, in the principal amount of $50,000,000
	(incorporated by reference to Exhibit 10.67 to the 1997
	Form 10-K).                                                                                                                                                                                                                                                                                                                                           

36



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##### Table of Contents



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                  
|------- | ----- | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.49 |                        |  | Loan Agreement, dated as of January 27, 1999, among the
	Borrowers named therein, as Borrowers, Starwood Operator I
	LLC, as Operator, and Lehman Capital (incorporated by reference
	to Exhibit 10.58 to the 1998 Form 10-K).                                                                                                   
|        | 10.50 |                        |  | Aircraft Dry Lease Agreement, entered into as of February 
	6, 1998, between Star Flight, L.L.C. and ITT Flight Operation,
	Inc., as amended by First Amendment thereto, dated as of
	August 25, 1998 (incorporated by reference to
	Exhibit 10.4 to the 1998 Form 10-Q3).                                                       
|        | 10.51 |                        |  | Form of Severance Agreement, dated December 1999, between
	the Corporation and each of Barry S. Sternlicht,
	Ronald C. Brown and Steve R. Goldman (incorporated by
	reference to Exhibit 10.52 to the 1999
	Form 10-K).(1)                                                                                                       
|        | 10.52 |                        |  | Separation Agreement, dated as of February 10, 2000, by and
	between the Corporation and Susan R. Bolger (incorporated
	by reference to Exhibit 10.53 to the 1999
	Form 10-K).(1)                                                                                                                                                
|        | 10.53 |                        |  | Amended and Restated Employment Agreement, effective as of
	January 1, 2000, between Barry S. Sternlicht and the
	Company (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 March 31,
	2000). (1)                             
|        | 10.54 |                        |  | Employment Agreement, dated as of April 7, 2000, between
	the Corporation and David K. Norton (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 June 30, 2000).(1)                                                           
|        | 10.55 |                        |  | 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)                                                     
|        | 10.56 |                        |  | Form of Severance Agreement, dated as of August 14, 2000,
	between the Corporation and Robert F. Cotter.(1)(2)                                                                                                                                                                                                                   
|        | 10.57 |                        |  | Employment Agreement, dated as of September 25, 2000,
	between the Corporation and Kenneth S. Siegel.(1)(2)                                                                                                                                                                                                                      
|        | 10.58 |                        |  | Form of Severance Agreement, dated as of September 26,
	2000, between the Corporation and Kenneth S.
	Siegel.(1)(2)                                                                                                                                                                                                              
|        | 10.59 |                        |  | Form of Severance Agreement, dated as of June 9, 2000,
	between the Corporation and David K.
	Norton.(1)(2)                                                                                                                                                                                                                      
|        | 10.60 |                        |  | Stock Purchase Agreement, dated as of April 27, 1999, among
	the Corporation, ITT Sheraton Corporation, Starwood Canada
	Corp., Caesars World, Inc., Sheraton Desert Inn Corporation,
	Sheraton Tunica Corporation and Park Place Entertainment
	Corporation (incorporated by reference to Exhibit 10.5 to
	the 1999 Form 10-Q1).
|        | 10.61 |                        |  | Starwood Hotels & Resorts Worldwide, Inc. 1999 Long-Term
	Incentive Compensation Plan (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)                                          
|        | 10.62 |                        |  | Starwood Hotels & Resorts Worldwide, Inc. 1999 Annual
	Incentive Plan for Certain Executives (incorporated by reference
	to Exhibit 10.5 to the 1999 Form 10-Q2).(1)                                                                                                                                                             
|        | 12.1  |                        |  | Calculation of Ratio of Earnings to Total Fixed Charges.
	(2)                                                                                                                                                                                                                                                                    
|        | 21.1  |                        |  | Subsidiaries of the Registrants.(2)                                                                                                                                                                                                                                                                                              
|        | 23.1  |                        |  | Consent of Arthur Andersen LLP.(2)                                                                                                                                                                                                                                                                                               






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



|    |                     
|--- | --------------------
|(b) | Reports on Form 8-K.

No reports on Form 8-K were filed during the fourth quarter
of 2000.

37



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##### Table of Contents



SIGNATURES

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



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

Date: March 29, 2001

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

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

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

|                                           |  |                                                                                                    |  |               
|------------------------------------------ |  | -------------------------------------------------------------------------------------------------- |  | --------------
|Signature                                  |  | Title                                                                                              |  | Date          
|                                           |  |                                                                                                    |  |               
|/s/ BARRY S. STERNLICHTBarry S. Sternlicht |  | Chairman, Chief Executive Officer and Director (Principal
	Executive Officer)                      |  | March 29, 2001
|                                          
|/s/ RONALD C. BROWNRonald C. Brown         |  | Executive Vice President and Chief Financial Officer (Principal
	Financial and Accounting Officer) |  | March 29, 2001
|                                          
|/s/ JEAN-MARC CHAPUSJean-Marc Chapus       |  | Director                                                                                           |  | March 29, 2001
|                                          
|/s/ BRUCE W. DUNCANBruce W. Duncan         |  | Director                                                                                           |  | March 29, 2001
|                                          
|/s/ MADISON F. GROSEMadison F. Grose       |  | Director                                                                                           |  | March 29, 2001
|                                          
|/s/ ERIC HIPPEAUEric Hippeau               |  | Director                                                                                           |  | March 29, 2001
|                                          
|/s/ EARLE F. JONESEarle F. Jones           |  | Director                                                                                           |  | March 29, 2001
|                                          
|/s/ GEORGE J. MITCHELLGeorge J. Mitchell   |  | Director                                                                                           |  | March 29, 2001
|                                          
|/s/ STEPHEN R. QUAZZOStephen R. Quazzo     |  | Director                                                                                           |  | March 29, 2001
|                                          
|/s/ DANIEL H. STERNDaniel H. Stern         |  | Director                                                                                           |  | March 29, 2001

38



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##### Table of Contents



|                                       |  |          |  |               
|-------------------------------------- |  | -------- |  | --------------
|Signature                              |  | Title    |  | Date          
|                                       |  |          |  |               
|/s/ RAYMOND S. TROUBHRaymond S. Troubh |  | Director |  | March 29, 2001
|                                      
|/s/ DANIEL W. YIHDaniel W. Yih         |  | Director |  | March 29, 2001

39



---



##### Table of Contents



SIGNATURES

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



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

Date: March 29, 2001

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

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

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

|                                           |  |                                                                                                                    |  |               
|------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------ |  | --------------
|Signature                                  |  | Title                                                                                                              |  | Date          
|                                           |  |                                                                                                                    |  |               
|/s/ BARRY S. STERNLICHTBarry S. Sternlicht |  | Chairman, Chief Executive Officer and Trustee (Principal
	Executive Officer)                                       |  | March 29, 2001
|                                          
|/s/ RONALD C. BROWNRonald C. Brown         |  | Vice President, Chief Financial Officer and Chief Accounting
	Officer (Principal Financial and Accounting Officer) |  | March 29, 2001
|                                          
|/s/ JEAN-MARC CHAPUSJean-Marc Chapus       |  | Trustee                                                                                                            |  | March 29, 2001
|                                          
|/s/ BRUCE W. DUNCANBruce W. Duncan         |  | Trustee                                                                                                            |  | March 29, 2001
|                                          
|/s/ MADISON F. GROSEMadison F. Grose       |  | Trustee                                                                                                            |  | March 29, 2001
|                                          
|/s/ ERIC HIPPEAUEric Hippeau               |  | Trustee                                                                                                            |  | March 29, 2001
|                                          
|/s/ EARLE F. JONESEarle F. Jones           |  | Trustee                                                                                                            |  | March 29, 2001
|                                          
|/s/ GEORGE J. MITCHELLGeorge J. Mitchell   |  | Trustee                                                                                                            |  | March 29, 2001
|                                          
|/s/ STEPHEN R. QUAZZOStephen R. Quazzo     |  | Trustee                                                                                                            |  | March 29, 2001
|                                          
|/s/ DANIEL H. STERNDaniel H. Stern         |  | Trustee                                                                                                            |  | March 29, 2001

40



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##### Table of Contents



|                                       |  |         |  |               
|-------------------------------------- |  | ------- |  | --------------
|Signature                              |  | Title   |  | Date          
|                                       |  |         |  |               
|/s/ RAYMOND S. TROUBHRaymond S. Troubh |  | Trustee |  | March 29, 2001
|                                      
|/s/ DANIEL W. YIHDaniel W. Yih         |  | Trustee |  | March 29, 2001

41



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

AND STARWOOD HOTELS & RESORTS


INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

|                                           |                                                                                                                                                    |      |      |      | 
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ---- | ---- | 
|                                           |                                                                                                                                                    | Page
|                                           |                                                                                                                                                    |     
|Report of Independent Public Accountants   |                                                                                                                                                    |      | F-2  |     
|                                          
|                                          
|                                          
|                                          
|Starwood Hotels & Resorts Worldwide, Inc.: |                                                                                                                                                    |      |      |     
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Balance Sheets as of December 31, 2000 and 1999                                                                                       |      |      | F-3  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Operations for the Years Ended
	December 31, 2000, 1999 and 1998                                                        |      |      | F-4  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Comprehensive Income for the Years
	Ended December 31, 2000, 1999 and 1998                                              |      |      | F-5  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Equity for the Years Ended
	December 31, 2000, 1999 and 1998                                                            |      |      | F-6  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Cash Flows for the Years Ended
	December 31, 2000, 1999 and 1998                                                        |      |      | F-7  | 
|                                          
|                                          
|                                          
|                                          
|Starwood Hotels & Resorts:                 |                                                                                                                                                    |      |      |     
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Balance Sheets as of December 31, 2000 and 1999                                                                                       |      |      | F-8  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Operations for the Years Ended
	December 31, 2000 and 1999 and the Period from
	February  23, 1998 to December 31, 1998 |      |      | F-9  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Consolidated Statements of Cash Flows for the Years Ended
	December 31, 2000 and 1999 and the Period from
	February  23, 1998 to December 31, 1998 |      |      | F-10 | 
|                                          
|                                          
|                                          
|                                          
|Notes to Financial Statements              |                                                                                                                                                    |      | F-11 |     
|                                          
|                                          
|                                          
|                                          
|Schedules:                                 |                                                                                                                                                    |      |      |     
|                                          
|                                          
|                                          
|                                          
|                                           | Schedule II   Valuation and Qualifying
	Accounts                                                                                                  |      |      | S-1  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Schedule III  Real Estate and Accumulated
	Depreciation                                                                                           |      |      | S-2  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Schedule IV   Mortgage Loans on Real
	Estate                                                                                                      |      |      | S-4  | 

F-1



---



##### Table of Contents



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

We have audited the accompanying consolidated balance sheets of
Starwood Hotels & Resorts Worldwide, Inc. (a Maryland
corporation) and its subsidiaries (the Company) and
Starwood Hotels & Resorts (a Maryland real estate investment
trust) and its subsidiaries (the Trust) as of
December 31, 2000 and 1999, and the related consolidated
statements of operations, comprehensive income, equity and cash
flows for each of the three years in the period ended
December 31, 2000 of the Company and the consolidated
statements of operations and cash flows for the years ended
December 31, 2000 and 1999 and the period from
February 23, 1998 to December 31, 1998 of the Trust as
set forth in the accompanying Index to Financial Statements and
Schedules. These financial statements and schedules are the
responsibility of the Companys and Trusts
management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of the Company and the Trust at December 31, 2000 and 1999,
and the results of the Companys operations and cash flows
for each of the three years in the period ended
December 31, 2000 and the Trusts operations and cash
flows for the years ended December 31, 2000 and 1999 and
the period from February 23, 1998 to December 31, 1998
in conformity with accounting principles generally accepted in
the United States.

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



| |                    
| | -------------------
| | ARTHUR ANDERSEN LLP

New York, New York



F-2



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |       |       | 
|---------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------ | ----- | ----- | - | ------ | ----- | ----- | 
|                                                                                   |                                                                                                                                                                                              |                           
|                                                                                   |                                                                                                                                                                                              | December 31,              
|                                                                                   |                                                                                                                                                                                              |                           
|                                                                                   |                                                                                                                                                                                              | 2000                       |        | 1999 
|                                                                                   |                                                                                                                                                                                              |                            |        |      
|ASSETS                                                                            
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Current assets:                                                                    |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Cash and cash equivalents                                                                                                                                                                    |                            | $      | 189   |       |   | $      | 436   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accounts receivable, net of allowance for doubtful accounts of
	$45 and $62                                                                                                                  |                            |        | 502   |       |   |        | 468   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Inventories                                                                                                                                                                                  |                            |        | 238   |       |   |        | 167   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Prepaid expenses and other                                                                                                                                                                   |                            |        | 119   |       |   |        | 92    |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              | Total current assets       |        |       | 1,048 |   |        |       | 1,163 | 
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Investments                                                                        |                                                                                                                                                                                              |                            | 412    |       |       |   | 442    |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Plant, property and equipment, net                                                 |                                                                                                                                                                                              |                            | 7,889  |       |       |   | 7,787  |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Goodwill and intangible assets, net                                                |                                                                                                                                                                                              |                            | 2,881  |       |       |   | 2,872  |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Other assets                                                                       |                                                                                                                                                                                              |                            | 430    |       |       |   | 557    |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Net assets of discontinued operations                                              |                                                                                                                                                                                              |                            |       |       |       |   | 104    |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              | $                          | 12,660 |       |       | $ | 12,925 |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|LIABILITIES AND STOCKHOLDERS EQUITY                                              
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Current liabilities:                                                               |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Short-term borrowings and current maturities of long-term debt                                                                                                                               |                            | $      | 585   |       |   | $      | 988   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accounts payable                                                                                                                                                                             |                            |        | 186   |       |   |        | 205   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accrued expenses                                                                                                                                                                             |                            |        | 544   |       |   |        | 655   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accrued salaries, wages and benefits                                                                                                                                                         |                            |        | 164   |       |   |        | 157   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accrued taxes and other                                                                                                                                                                      |                            |        | 326   |       |   |        | 300   |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              | Total current liabilities  |        |       | 1,805 |   |        |       | 2,305 | 
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|Long-term debt                                                                     |                                                                                                                                                                                              |                            | 4,957  |       |       |   | 4,643  |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Deferred income taxes                                                              |                                                                                                                                                                                              |                            | 1,444  |       |       |   | 1,470  |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Other liabilities                                                                  |                                                                                                                                                                                              |                            | 438    |       |       |   | 434    |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              |                            | 8,644  |       |       |   | 8,852  |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|Minority interest                                                                  |                                                                                                                                                                                              |                            | 48     |       |       |   | 228    |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|Equity put options                                                                 |                                                                                                                                                                                              |                            |       |       |       |   | 19     |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|Class B exchangeable preferred shares of the Trust, at
	redemption value of $38.50 |                                                                                                                                                                                              |                            | 117    |       |       |   | 136    |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|Commitments and contingencies                                                      |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Stockholders equity:                                                              |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Class A exchangeable preferred shares of the Trust; $0.01
	par value; authorized 30,000,000 shares; outstanding 609,576 and
	3,669,546 shares at December 31, 2000 and 1999, respectively    |                            |        |      |       |   |        |      |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Corporation common stock; $0.01 par value; authorized
	1,050,000,000 shares; outstanding 194,485,448 and 189,271,522
	shares at December 31, 2000 and 1999, respectively                     |                            |        | 2     |       |   |        | 2     |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Trust Class B shares of beneficial interest; $0.01 par
	value; authorized 1,000,000,000 shares; outstanding 194,485,448
	and 189,271,522 shares at December 31, 2000 and 1999,
	respectively |                            |        | 2     |       |   |        | 2     |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Additional paid-in capital                                                                                                                                                                   |                            |        | 4,796 |       |   |        | 4,785 |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Deferred compensation                                                                                                                                                                        |                            |        | (4    | )     |   |        | (5    | )    
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Cumulative translation and marketable securities adjustments                                                                                                                                 |                            |        | (353  | )     |   |        | (238  | )    
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accumulated deficit                                                                                                                                                                          |                            |        | (592  | )     |   |        | (856  | )    
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              | Total stockholders equity |        |       | 3,851 |   |        |       | 3,690 | 
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      
|                                                                                   |                                                                                                                                                                                              | $                          | 12,660 |       |       | $ | 12,925 |      
|                                                                                   |                                                                                                                                                                                              |                            |        |       |       |   |        |      

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

F-3



---



##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per Share data)


|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |       |  
|------------------------------------------------------------ | ----------------------------------------------------------------------------------- | ----------------------- | ----- | ---- |  | ---- | ------ | --- | - | - | ----- | ----- | -
|                                                             |                                                                                     |                        
|                                                             |                                                                                     | Year Ended December 31,
|                                                             |                                                                                     |                        
|                                                             |                                                                                     | 2000                    |       | 1999 |  | 1998
|                                                             |                                                                                     |                         |       |      |  |     
|Revenues                                                     |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|                                                            
|                                                            
|                                                            
|                                                            
|Owned, leased and consolidated joint venture hotels          |                                                                                     | $                       | 3,659 |      |  | $    | 3,391  |     |   | $ | 2,983 |      
|                                                            
|                                                            
|                                                            
|                                                            
|Other hotel and leisure                                      |                                                                                     |                         | 686   |      |  |      | 438    |     |   |   | 298   |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|                                                             |                                                                                     |                         | 4,345 |      |  |      | 3,829  |     |   |   | 3,281 |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|Costs and Expenses                                           |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|                                                            
|                                                            
|                                                            
|                                                            
|Owned, leased and consolidated joint venture hotels          |                                                                                     |                         | 2,433 |      |  |      | 2,313  |     |   |   | 2,030 |      
|                                                            
|                                                            
|                                                            
|                                                            
|Selling, general, administrative and other                   |                                                                                     |                         | 403   |      |  |      | 220    |     |   |   | 210   |      
|                                                            
|                                                            
|                                                            
|                                                            
|Restructuring and other special charges                      |                                                                                     |                         |      |      |  |      | 3      |     |   |   | 149   |      
|                                                            
|                                                            
|                                                            
|                                                            
|Depreciation                                                 |                                                                                     |                         | 391   |      |  |      | 370    |     |   |   | 297   |      
|                                                            
|                                                            
|                                                            
|                                                            
|Amortization                                                 |                                                                                     |                         | 90    |      |  |      | 82     |     |   |   | 81    |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|                                                             |                                                                                     |                         | 3,317 |      |  |      | 2,988  |     |   |   | 2,767 |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|Operating income                                             |                                                                                     |                         | 1,028 |      |  |      | 841    |     |   |   | 514   |      
|                                                            
|                                                            
|                                                            
|                                                            
|Interest expense, net of interest income of $19, $16 and $26 |                                                                                     |                         | (420  | )    |  |      | (484   | )   |   |   | (424  | )    
|                                                            
|                                                            
|                                                            
|                                                            
|Gain on sales of real estate and investments, net            |                                                                                     |                         | 2     |      |  |      | 191    |     |   |   | 55    |      
|                                                            
|                                                            
|                                                            
|                                                            
|Miscellaneous expense                                        |                                                                                     |                         |      |      |  |      | (15    | )   |   |   |      |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|                                                             |                                                                                     |                         | 610   |      |  |      | 533    |     |   |   | 145   |      
|                                                            
|                                                            
|                                                            
|                                                            
|Income tax benefit (expense)                                 |                                                                                     |                         | (201  | )    |  |      | (1,076 | )   |   |   | 89    |      
|                                                            
|                                                            
|                                                            
|                                                            
|Minority equity in net income                                |                                                                                     |                         | (8    | )    |  |      | (95    | )   |   |   | (14   | )    
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|Income (loss) from continuing operations                     |                                                                                     |                         | 401   |      |  |      | (638   | )   |   |   | 220   |      
|                                                            
|                                                            
|                                                            
|                                                            
|Discontinued operations:                                     |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Loss from operations, net of tax benefit (expense) of $0,
	$0 and $31               |                         |       |     |  |      |        |    |   |   |       | (80   | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Gain (loss) on dispositions, net of tax and minority
	interest of $2, $125 and $621 |                         |       | 5    |  |      |        | (71 | ) |   |       | 1,162 |  
|                                                            
|                                                            
|                                                            
|                                                            
|Extraordinary item, net of tax benefit                       |                                                                                     |                         | (3    | )    |  |      | (32    | )   |   |   |      |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|Net income (loss)                                            |                                                                                     | $                       | 403   |      |  | $    | (741   | )   |   | $ | 1,302 |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|Earnings Per Share  Basic                                   |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|                                                            
|                                                            
|                                                            
|                                                            
|Continuing operations                                        |                                                                                     | $                       | 2.03  |      |  | $    | (3.41  | )   |   | $ | 1.06  |      
|                                                            
|                                                            
|                                                            
|                                                            
|Discontinued operations                                      |                                                                                     |                         | 0.02  |      |  |      | (0.38  | )   |   |   | 5.64  |      
|                                                            
|                                                            
|                                                            
|                                                            
|Extraordinary item                                           |                                                                                     |                         | (0.01 | )    |  |      | (0.17  | )   |   |   |      |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|Net income (loss)                                            |                                                                                     | $                       | 2.04  |      |  | $    | (3.96  | )   |   | $ | 6.70  |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|Earnings Per Share  Diluted                                 |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|                                                            
|                                                            
|                                                            
|                                                            
|Continuing operations                                        |                                                                                     | $                       | 1.96  |      |  | $    | (3.41  | )   |   | $ | 1.05  |      
|                                                            
|                                                            
|                                                            
|                                                            
|Discontinued operations                                      |                                                                                     |                         | 0.02  |      |  |      | (0.38  | )   |   |   | 5.58  |      
|                                                            
|                                                            
|                                                            
|                                                            
|Extraordinary item                                           |                                                                                     |                         | (0.01 | )    |  |      | (0.17  | )   |   |   |      |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|Net income (loss)                                            |                                                                                     | $                       | 1.97  |      |  | $    | (3.96  | )   |   | $ | 6.63  |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|Weighted average number of Shares                            |                                                                                     |                         | 196   |      |  |      | 189    |     |   |   | 192   |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      
|Weighted average number of Shares assuming dilution          |                                                                                     |                         | 205   |      |  |      | 189    |     |   |   | 194   |      
|                                                             |                                                                                     |                         |       |      |  |      |        |     |   |   |       |      

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

F-4



---



##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)


|                                               |                                                                       |                         |      |      |   |      |      |      |   |   |       |     |  
|---------------------------------------------- | --------------------------------------------------------------------- | ----------------------- | ---- | ---- | - | ---- | ---- | ---- | - | - | ----- | --- | -
|                                               |                                                                       |                        
|                                               |                                                                       | Year Ended December 31,
|                                               |                                                                       |                        
|                                               |                                                                       | 2000                    |      | 1999 |   | 1998
|                                               |                                                                       |                         |      |      |   |     
|Net income (loss)                              |                                                                       | $                       | 403  |      |   | $    | (741 | )    |   | $ | 1,302 |    
|                                              
|                                              
|                                              
|                                              
|Other comprehensive income (loss):             |                                                                       |                         |      |      |   |      |      |      |   |   |       |    
|Foreign currency translation adjustments      |                                                                       |                         |      |      |   |      |      |      |   |   |       |    
|                                              
|                                              
|                                              
|                                              
|                                               | Foreign currency translation arising during the period                |                         |      | (104 | ) |      |      | (128 | ) |   |       | (18 | )
|                                              
|                                              
|                                              
|                                              
|                                               | Reclassification adjustment for losses included in net income
	(loss) |                         |      |     |   |      |      | 1    |   |   |       | 32  |  
|Unrealized gains (losses) on securities, net  |                                                                       |                         |      |      |   |      |      |      |   |   |       |    
|                                              
|                                              
|                                              
|                                              
|                                               | Unrealized holding gains (losses) arising during the period           |                         |      | (11  | ) |      |      | 9    |   |   |       | 1   |  
|                                               |                                                                       |                         |      |      |   |      |      |      |   |   |       |    
|                                               |                                                                       |                         | (115 | )    |   |      | (118 | )    |   |   | 15    |    
|                                               |                                                                       |                         |      |      |   |      |      |      |   |   |       |    
|Comprehensive income (loss)                    |                                                                       | $                       | 288  |      |   | $    | (859 | )    |   | $ | 1,317 |    
|                                               |                                                                       |                         |      |      |   |      |      |      |   |   |       |    

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

F-5



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In millions)


|                              |                                                                                 |                |    |             |   |             |   |           |   |            |     |          |   |        |   |         |   |              |   |   |  |  |     |     |   |   |   |   |  |   |       |        |   |   |    |    |  
|----------------------------- | ------------------------------------------------------------------------------- | -------------- | -- | ----------- | - | ----------- | - | --------- | - | ---------- | --- | -------- | - | ------ | - | ------- | - | ------------ | - | - |  |  | --- | --- | - | - | - | - |  | - | ----- | ------ | - | - | -- | -- | -
|                              |                                                                                 | Forward Equity |    |             |   |             |   |           |   |            |     |         
|                              |                                                                                 | Contracts      |    | Class B EPS |   | Class A EPS |   | Shares(a) |   | Additional |     |         
|                              |                                                                                 | and Equity     |    |             |   |             |   |           |   | Paid-in    |     | Deferred
|                              |                                                                                 | Put Options    |    | Shares      |   | Amount      |   | Shares    |   | Amount     |     | Shares   |   | Amount |   | Capital |   | Compensation
|                              |                                                                                 |                |    |             |   |             |   |           |   |            |     |          |   |        |   |         |   |             
|Balance at December  31, 1997 |                                                                                 | $              |   |             |   |             |  |           |   | $          |    |          |   |        |  |         |   | $            |  |   |  |  | 127 |     |   | $ | 2 |   |  | $ | 2,934 |        |   | $ |   |   
|                             
|                             
|                             
|                             
|                              | Net income                                                                      |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Sheraton Holding reverse purchase                                               |                |    | 125         |   |             |   | 5         |   |            |     | 212      |   |        |   | 6       |   |              |   |  |  |  |     | 57  |   |   |   | 2 |  |   |       | 4,022  |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Cash dividend to Sheraton Holding stockholders                                  |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       | (2,144 | ) |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Stock option and restricted stock award transactions, net                       |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     | 1   |   |   |   |  |  |   |       | 32     |   |   |    | (1 | )
|                             
|                             
|                             
|                             
|                              | Share repurchases                                                               |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     | (10 | ) |   |   |  |  |   |       | (371   | ) |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Issuance of forward equity contracts                                            |                |    | 245         |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     | 8   |   |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Settlement of forward equity contracts                                          |                |    | (370        | ) |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     | (10 | ) |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Issuance of equity put options                                                  |                |    | 32          |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       | (30    | ) |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Conversion and cancellation of Class A EPS, Class  B
	EPS and Partnership Units |                |    |            |   |             |   | (1        | ) |            |     | (63      | ) |        |   | (2      | ) |              |   |  |  |  |     | 3   |   |   |   |  |  |   |       | 50     |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Change in minority interest                                                     |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       | 78     |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Foreign currency translation                                                    |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Unrealized gain on securities, net                                              |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Dividends declared                                                              |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                              |                                                                                 |                |    |             |   |             |   |           |   |            |     |          |   |        |   |         |   |              |   |   |  |  |     |     |   |   |   |   |  |   |       |        |   |   |    |   
|Balance at December  31, 1998 |                                                                                 |                | 32 |             |   |             | 4 |           |   |            | 149 |          |   |        | 4 |         |   |              |  |   |  |  | 176 |     |   |   | 4 |   |  |   | 4,571 |        |   |   | (1 | ) 
|                             
|                             
|                             
|                             
|                              | Net loss                                                                        |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Stock option and restricted stock award transactions, net                       |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     | 1   |   |   |   |  |  |   |       | 12     |   |   |    | (4 | )
|                             
|                             
|                             
|                             
|                              | Issuance of equity put options                                                  |                |    | 19          |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       | (13    | ) |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Settlement of equity put options                                                |                |    | (32         | ) |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       | 17     |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Share repurchases                                                               |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     | (3  | ) |   |   |  |  |   |       | (64    | ) |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Conversion and cancellation of Class A EPS, Class  B
	EPS and Partnership Units |                |    |            |   |             |   |          |   |            |     | (13      | ) |        |   |        |   |              |   |  |  |  |     | 5   |   |   |   |  |  |   |       | 14     |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | SVO acquisition                                                                 |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     | 10  |   |   |   |  |  |   |       | 248    |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Foreign currency translation                                                    |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Unrealized gain on securities, net                                              |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Dividends declared                                                              |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                              |                                                                                 |                |    |             |   |             |   |           |   |            |     |          |   |        |   |         |   |              |   |   |  |  |     |     |   |   |   |   |  |   |       |        |   |   |    |   
|Balance at December  31, 1999 |                                                                                 |                | 19 |             |   |             | 4 |           |   |            | 136 |          |   |        | 4 |         |   |              |  |   |  |  | 189 |     |   |   | 4 |   |  |   | 4,785 |        |   |   | (5 | ) 
|                             
|                             
|                             
|                             
|                              | Net income                                                                      |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Stock option and restricted stock award transactions, net                       |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     | 2   |   |   |   |  |  |   |       | 47     |   |   |    | 1  |  
|                             
|                             
|                             
|                             
|                              | Settlement of equity put options                                                |                |    | (19         | ) |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       | 13     |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Share repurchases                                                               |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     | (3  | ) |   |   |  |  |   |       | (69    | ) |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Conversion and cancellation of Class A EPS, Class  B
	EPS and Partnership Units |                |    |            |   |             |   | (1        | ) |            |     | (19      | ) |        |   | (3      | ) |              |   |  |  |  |     | 6   |   |   |   |  |  |   |       | 20     |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Foreign currency translation                                                    |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Unrealized loss on securities, net                                              |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                             
|                             
|                             
|                             
|                              | Dividends declared                                                              |                |    |            |   |             |   |          |   |            |     |         |   |        |   |        |   |              |   |  |  |  |     |    |   |   |   |  |  |   |       |       |   |   |    |   |  
|                              |                                                                                 |                |    |             |   |             |   |           |   |            |     |          |   |        |   |         |   |              |   |   |  |  |     |     |   |   |   |   |  |   |       |        |   |   |    |   
|Balance at December  31, 2000 |                                                                                 | $              |   |             |   |             | 3 |           |   | $          | 117 |          |   |        | 1 |         |   | $            |  |   |  |  | 194 |     |   | $ | 4 |   |  | $ | 4,796 |        |   | $ | (4 | ) 
|                              |                                                                                 |                |    |             |   |             |   |           |   |            |     |          |   |        |   |         |   |              |   |   |  |  |     |     |   |   |   |   |  |   |       |        |   |   |    |   

[Additional columns below]

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

|                              |                                                                                 |                 |      |              |   |   |      |       |  
|----------------------------- | ------------------------------------------------------------------------------- | --------------- | ---- | ------------ | - | - | ---- | ----- | -
|                              |                                                                                 | Cumulative      |      |             
|                              |                                                                                 | Translation and |      | Retained    
|                              |                                                                                 | Marketable      |      | Earnings    
|                              |                                                                                 | Securities      |      | (Accumulated
|                              |                                                                                 | Adjustments     |      | Deficit)    
|                              |                                                                                 |                 |      |             
|Balance at December  31, 1997 |                                                                                 | $               | (135 | )            |   | $ | (57  | )    
|                             
|                             
|                             
|                             
|                              | Net income                                                                      |                 |      |             |   |   |      | 1,302 |  
|                             
|                             
|                             
|                             
|                              | Sheraton Holding reverse purchase                                               |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Cash dividend to Sheraton Holding stockholders                                  |                 |      |             |   |   |      | (890  | )
|                             
|                             
|                             
|                             
|                              | Stock option and restricted stock award transactions, net                       |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Share repurchases                                                               |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Issuance of forward equity contracts                                            |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Settlement of forward equity contracts                                          |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Issuance of equity put options                                                  |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Conversion and cancellation of Class A EPS, Class  B
	EPS and Partnership Units |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Change in minority interest                                                     |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Foreign currency translation                                                    |                 |      | 14           |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Unrealized gain on securities, net                                              |                 |      | 1            |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Dividends declared                                                              |                 |      |             |   |   |      | (353  | )
|                              |                                                                                 |                 |      |              |   |   |      |      
|Balance at December  31, 1998 |                                                                                 |                 | (120 | )            |   |   | 2    |      
|                             
|                             
|                             
|                             
|                              | Net loss                                                                        |                 |      |             |   |   |      | (741  | )
|                             
|                             
|                             
|                             
|                              | Stock option and restricted stock award transactions, net                       |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Issuance of equity put options                                                  |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Settlement of equity put options                                                |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Share repurchases                                                               |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Conversion and cancellation of Class A EPS, Class  B
	EPS and Partnership Units |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | SVO acquisition                                                                 |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Foreign currency translation                                                    |                 |      | (127         | ) |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Unrealized gain on securities, net                                              |                 |      | 9            |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Dividends declared                                                              |                 |      |             |   |   |      | (117  | )
|                              |                                                                                 |                 |      |              |   |   |      |      
|Balance at December  31, 1999 |                                                                                 |                 | (238 | )            |   |   | (856 | )    
|                             
|                             
|                             
|                             
|                              | Net income                                                                      |                 |      |             |   |   |      | 403   |  
|                             
|                             
|                             
|                             
|                              | Stock option and restricted stock award transactions, net                       |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Settlement of equity put options                                                |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Share repurchases                                                               |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Conversion and cancellation of Class A EPS, Class  B
	EPS and Partnership Units |                 |      |             |   |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Foreign currency translation                                                    |                 |      | (104         | ) |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Unrealized loss on securities, net                                              |                 |      | (11          | ) |   |      |      |  
|                             
|                             
|                             
|                             
|                              | Dividends declared                                                              |                 |      |             |   |   |      | (139  | )
|                              |                                                                                 |                 |      |              |   |   |      |      
|Balance at December  31, 2000 |                                                                                 | $               | (353 | )            |   | $ | (592 | )    
|                              |                                                                                 |                 |      |              |   |   |      |      






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

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

F-6



---



##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |        |  
|-------------------------------------------------------- | ----------------------------------------------------------- | ----------------------- | ------ | ---- | - | ---- | ------ | ------ | - | - | ------ | ------ | -
|                                                         |                                                             |                        
|                                                         |                                                             | Year Ended December 31,
|                                                         |                                                             |                        
|                                                         |                                                             | 2000                    |        | 1999 |   | 1998
|                                                         |                                                             |                         |        |      |   |     
|Operating Activities                                     |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                        
|                                                        
|                                                        
|                                                        
|Net income (loss)                                        |                                                             | $                       | 403    |      |   | $    | (741   | )      |   | $ | 1,302  |       
|                                                        
|                                                        
|                                                        
|                                                        
|Exclude:                                                 |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                        
|                                                        
|                                                        
|                                                        
|Discontinued operations, net                             |                                                             |                         | (5     | )    |   |      | 71     |        |   |   | (1,082 | )     
|                                                        
|                                                        
|                                                        
|                                                        
|Extraordinary item, net                                  |                                                             |                         | 3      |      |   |      | 32     |        |   |   |       |       
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|Income (loss) from continuing operations                 |                                                             |                         | 401    |      |   |      | (638   | )      |   |   | 220    |       
|                                                        
|                                                        
|                                                        
|                                                        
|Adjustments to income (loss) from continuing operations: |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Depreciation and amortization                               |                         |        | 481  |   |      |        | 452    |   |   |        | 378    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Amortization of deferred loan costs                         |                         |        | 11   |   |      |        | 16     |   |   |        | 22     |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Non-cash portion of restructuring and other special charges |                         |        |     |   |      |        | 7      |   |   |        | 85     |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Non-cash portion of Reorganization                          |                         |        |     |   |      |        | 936    |   |   |        |       |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Provision for doubtful accounts                             |                         |        | 19   |   |      |        | 9      |   |   |        | 13     |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Minority equity in net income                               |                         |        | 8    |   |      |        | 95     |   |   |        | 14     |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Equity income, net of dividends received                    |                         |        | 13   |   |      |        | (6     | ) |   |        | 13     |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Gain on sales of real estate and investments, net           |                         |        | (2   | ) |      |        | (191   | ) |   |        | (55    | )
|                                                        
|                                                        
|                                                        
|                                                        
|Changes in working capital:                              |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Accounts receivable                                         |                         |        | 10   |   |      |        | 21     |   |   |        | (36    | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Inventories                                                 |                         |        | (62  | ) |      |        | (17    | ) |   |        | (4     | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Accounts payable                                            |                         |        | (15  | ) |      |        | 37     |   |   |        | (2     | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Accrued expenses                                            |                         |        | (10  | ) |      |        | (65    | ) |   |        | (641   | )
|                                                        
|                                                        
|                                                        
|                                                        
|Accrued and deferred income taxes                        |                                                             |                         | 22     |      |   |      | 8      |        |   |   | (50    | )     
|                                                        
|                                                        
|                                                        
|                                                        
|Other, net                                               |                                                             |                         | (25    | )    |   |      | (93    | )      |   |   | 86     |       
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                         | Cash from continuing operations                             |                         |        | 851  |   |      |        | 571    |   |   |        | 43     |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Cash from (used for) discontinued operations                |                         |        | 3    |   |      |        | (114   | ) |   |        | (296   | )
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                         | Cash from (used for) operating activities                   |                         |        | 854  |   |      |        | 457    |   |   |        | (253   | )
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|Investing Activities                                     |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                        
|                                                        
|                                                        
|                                                        
|Purchases of plant, property and equipment               |                                                             |                         | (544   | )    |   |      | (521   | )      |   |   | (427   | )     
|                                                        
|                                                        
|                                                        
|                                                        
|Proceeds from asset sales, net                           |                                                             |                         | 261    |      |   |      | 3,853  |        |   |   | 2,854  |       
|                                                        
|                                                        
|                                                        
|                                                        
|Issuance/collection of notes receivable, net             |                                                             |                         | (12    | )    |   |      | 78     |        |   |   | 156    |       
|                                                        
|                                                        
|                                                        
|                                                        
|Acquisitions, net of acquired cash                       |                                                             |                         | (284   | )    |   |      | (111   | )      |   |   | (60    | )     
|                                                        
|                                                        
|                                                        
|                                                        
|Investments                                              |                                                             |                         | (45    | )    |   |      | (107   | )      |   |   |       |       
|                                                        
|                                                        
|                                                        
|                                                        
|Other, net                                               |                                                             |                         | (34    | )    |   |      | (20    | )      |   |   | (183   | )     
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                         | Cash from (used for) investing activities                   |                         |        | (658 | ) |      |        | 3,172  |   |   |        | 2,340  |  
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|Financing Activities                                     |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                        
|                                                        
|                                                        
|                                                        
|Revolving credit facility and short-term borrowings, net |                                                             |                         | 547    |      |   |      | (620   | )      |   |   | 487    |       
|                                                        
|                                                        
|                                                        
|                                                        
|Long-term debt issued                                    |                                                             |                         | 231    |      |   |      | 681    |        |   |   | 4,143  |       
|                                                        
|                                                        
|                                                        
|                                                        
|Long-term debt repaid                                    |                                                             |                         | (1,015 | )    |   |      | (3,165 | )      |   |   | (2,785 | )     
|                                                        
|                                                        
|                                                        
|                                                        
|Settlement of forward equity contracts                   |                                                             |                         | (6     | )    |   |      | (16    | )      |   |   | (125   | )     
|                                                        
|                                                        
|                                                        
|                                                        
|Dividends paid                                           |                                                             |                         | (134   | )    |   |      | (116   | )      |   |   | (3,357 | )     
|                                                        
|                                                        
|                                                        
|                                                        
|Share repurchases                                        |                                                             |                         | (69    | )    |   |      | (64    | )      |   |   | (371   | )     
|                                                        
|                                                        
|                                                        
|                                                        
|Other, net                                               |                                                             |                         | 26     |      |   |      | (35    | )      |   |   | (48    | )     
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                         | Cash used for financing activities                          |                         |        | (420 | ) |      |        | (3,335 | ) |   |        | (2,056 | )
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|Exchange rate effect on cash and cash equivalents        |                                                             |                         | (23    | )    |   |      | (15    | )      |   |   |       |       
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|Increase (decrease) in cash and cash equivalents         |                                                             |                         | (247   | )    |   |      | 279    |        |   |   | 31     |       
|                                                        
|                                                        
|                                                        
|                                                        
|Cash and cash equivalents beginning of period           |                                                             |                         | 436    |      |   |      | 157    |        |   |   | 126    |       
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|Cash and cash equivalents end of period                 |                                                             | $                       | 189    |      |   | $    | 436    |        |   | $ | 157    |       
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|Supplemental Disclosures of Cash Flow Information        |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                        
|                                                        
|                                                        
|                                                        
|Cash paid during the period for:                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Interest                                                    |                         | $      | 403  |   |      | $      | 651    |   |   | $      | 445    |  
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       
|                                                         | Income taxes, net of refunds                                |                         | $      | 179  |   |      | $      | 132    |   |   | $      | 63     |  
|                                                         |                                                             |                         |        |      |   |      |        |        |   |   |        |       

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

F-7



---



##### Table of Contents



STARWOOD HOTELS & RESORTS

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |        |       | 
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ----- | ------ | ----- | - | ----- | ------ | ----- | 
|                                                                      |                                                                                                                                                                                              |                           
|                                                                      |                                                                                                                                                                                              | December 31,              
|                                                                      |                                                                                                                                                                                              |                           
|                                                                      |                                                                                                                                                                                              | 2000                       |       | 1999  
|                                                                      |                                                                                                                                                                                              |                            |       |       
|ASSETS                                                               
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Current assets:                                                       |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cash and cash equivalents                                                                                                                                                                    |                            | $     | 9      |       |   | $     | 1      |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Receivable, Corporation                                                                                                                                                                      |                            |       | 34     |       |   |       | 34     |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Prepaid expenses and other                                                                                                                                                                   |                            |       | 4      |       |   |       | 7      |      
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                      |                                                                                                                                                                                              | Total current assets       |       |        | 47    |   |       |        | 42    | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Investments, Corporation                                              |                                                                                                                                                                                              |                            | 848   |        |       |   | 848   |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Investments                                                           |                                                                                                                                                                                              |                            | 35    |        |       |   | 47    |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Plant, property and equipment, net                                    |                                                                                                                                                                                              |                            | 4,260 |        |       |   | 4,293 |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Long-term receivables, net, Corporation                               |                                                                                                                                                                                              |                            | 1,604 |        |       |   | 1,658 |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Goodwill and intangible assets, net                                   |                                                                                                                                                                                              |                            | 239   |        |       |   | 246   |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Other assets                                                          |                                                                                                                                                                                              |                            | 15    |        |       |   | 16    |       
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                      |                                                                                                                                                                                              | $                          | 7,048 |        |       | $ | 7,150 |       
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|LIABILITIES AND STOCKHOLDERS EQUITY                                 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Current liabilities:                                                  |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accounts payable                                                                                                                                                                             |                            | $     | 5      |       |   | $     | 5      |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accrued expenses                                                                                                                                                                             |                            |       | 57     |       |   |       | 65     |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Short-term borrowings and current maturities of long-term debt                                                                                                                               |                            |       | 35     |       |   |       | 105    |      
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                      |                                                                                                                                                                                              | Total current liabilities  |       |        | 97    |   |       |        | 175   | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Long-term debt                                                        |                                                                                                                                                                                              |                            | 483   |        |       |   | 496   |       
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                      |                                                                                                                                                                                              |                            | 580   |        |       |   | 671   |       
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|Minority interest                                                     |                                                                                                                                                                                              |                            | 39    |        |       |   | 32    |       
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|Class B exchangeable preferred shares, at redemption value
	of $38.50 |                                                                                                                                                                                              |                            | 117   |        |       |   | 136   |       
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|Commitments and contingencies                                         |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Stockholders equity:                                                 |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Class A exchangeable preferred shares; $0.01 par value;
	authorized 30,000,000 shares; outstanding 609,576 and 3,669,546
	shares at December 31, 2000 and 1999, respectively                 |                            |       |       |       |   |       |       |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Class A shares of beneficial interest; $0.01 par value;
	authorized 5,000 shares; outstanding 100 shares at
	December  31, 2000 and 1999.                                                    |                            |       |       |       |   |       |       |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Trust Class B shares of beneficial interest; $0.01 par
	value; authorized 1,000,000,000 shares; outstanding 194,485,448
	and 189,271,522 shares at December 31, 2000 and 1999,
	respectively |                            |       | 2      |       |   |       | 2      |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Additional paid-in capital                                                                                                                                                                   |                            |       | 7,630  |       |   |       | 7,612  |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accumulated deficit                                                                                                                                                                          |                            |       | (1,320 | )     |   |       | (1,303 | )    
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                      |                                                                                                                                                                                              | Total stockholders equity |       |        | 6,312 |   |       |        | 6,311 | 
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       
|                                                                      |                                                                                                                                                                                              | $                          | 7,048 |        |       | $ | 7,150 |       
|                                                                      |                                                                                                                                                                                              |                            |       |        |       |   |       |       

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

F-8



---



##### Table of Contents



STARWOOD HOTELS & RESORTS

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions)


|                                                          |  |              |     |                   |  |                      |      |   |  |   |     |  
|--------------------------------------------------------- |  | ------------ | --- | ----------------- |  | -------------------- | ---- | - |  | - | --- | -
|                                                          |  |              |     |                  
|                                                          |  | Year Ended   |     |                  
|                                                          |  | December 31, |     | Period from      
|                                                          |  |              |     | February 23, 1998
|                                                          |  | 2000         |     | 1999              |  | to December 31, 1998
|                                                          |  |              |     |                   |  |                     
|Revenues                                                  |  |              |     |                   |  |                      |      |   |  |   |     |  
|                                                         
|                                                         
|                                                         
|                                                         
|Unconsolidated joint ventures and other                   |  | $            | 3   |                   |  | $                    | 4    |   |  | $ | 3   |  
|                                                         
|                                                         
|                                                         
|                                                         
|Rent and interest, Corporation                            |  |              | 692 |                   |  |                      | 787  |   |  |   | 590 |  
|                                                          |  |              |     |                   |  |                      |      |   |  |   |     |  
|                                                          |  |              | 695 |                   |  |                      | 791  |   |  |   | 593 |  
|                                                          |  |              |     |                   |  |                      |      |   |  |   |     |  
|                                                         
|Costs and Expenses                                        |  |              |     |                   |  |                      |      |   |  |   |     |  
|                                                         
|                                                         
|                                                         
|                                                         
|Selling, general and administrative                       |  |              | 3   |                   |  |                      | 5    |   |  |   | 22  |  
|                                                         
|                                                         
|                                                         
|                                                         
|Depreciation                                              |  |              | 183 |                   |  |                      | 169  |   |  |   | 123 |  
|                                                         
|                                                         
|                                                         
|                                                         
|Amortization                                              |  |              | 7   |                   |  |                      | 6    |   |  |   | 5   |  
|                                                          |  |              |     |                   |  |                      |      |   |  |   |     |  
|                                                          |  |              | 193 |                   |  |                      | 180  |   |  |   | 150 |  
|                                                          |  |              |     |                   |  |                      |      |   |  |   |     |  
|                                                          |  |              | 502 |                   |  |                      | 611  |   |  |   | 443 |  
|                                                         
|                                                         
|                                                         
|                                                         
|Interest expense, net of interest income of $0, $0 and $6 |  |              | (39 | )                 |  |                      | (47  | ) |  |   | (20 | )
|                                                         
|                                                         
|                                                         
|                                                         
|Gain (loss) on sales of real estate and investments       |  |              | 1   |                   |  |                      | (137 | ) |  |   |    |  
|                                                         
|                                                         
|                                                         
|                                                         
|Income tax expense                                        |  |              | (1  | )                 |  |                      | (2   | ) |  |   | (1  | )
|                                                         
|                                                         
|                                                         
|                                                         
|Minority equity in net income                             |  |              | (3  | )                 |  |                      | (2   | ) |  |   | (10 | )
|                                                          |  |              |     |                   |  |                      |      |   |  |   |     |  
|Net income                                                |  | $            | 460 |                   |  | $                    | 423  |   |  | $ | 412 |  
|                                                          |  |              |     |                   |  |                      |      |   |  |   |     |  

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

F-9



---



##### Table of Contents



STARWOOD HOTELS & RESORTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |      |  
|-------------------------------------------------------- | --------------------------------------------------- | ------------ | ---- | ----------------- | - | -------------------- | ---- | ---- | - | - | ---- | ---- | -
|                                                         |                                                     |              |      |                  
|                                                         |                                                     | Year Ended   |      |                  
|                                                         |                                                     | December 31, |      | Period from      
|                                                         |                                                     |              |      | February 23, 1998
|                                                         |                                                     | 2000         |      | 1999              |   | to December 31, 1998
|                                                         |                                                     |              |      |                   |   |                     
|Operating Activities                                     |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                        
|                                                        
|                                                        
|                                                        
|Net income                                               |                                                     | $            | 460  |                   |   | $                    | 423  |      |   | $ | 412  |     
|                                                        
|                                                        
|                                                        
|                                                        
|Adjustments to net income:                               |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Depreciation and amortization                       |              |      | 190               |   |                      |      | 175  |   |   |      | 128  |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Minority equity in net income                       |              |      | 3                 |   |                      |      | 2    |   |   |      | 10   |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Equity income, net of dividends received            |              |      | 3                 |   |                      |      | 1    |   |   |      | 5    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | (Gain) loss on sales of real estate and investments |              |      | (1                | ) |                      |      | 137  |   |   |      |     |  
|                                                        
|                                                        
|                                                        
|                                                        
|Changes in working capital:                              |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Receivable, Corporation                             |              |      |                  |   |                      |      | 2    |   |   |      | (8   | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Accounts payable                                    |              |      |                  |   |                      |      | (2   | ) |   |      | 1    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Accrued expenses                                    |              |      | (14               | ) |                      |      | 33   |   |   |      | (17  | )
|                                                        
|                                                        
|                                                        
|                                                        
|Other, net                                               |                                                     |              |     |                   |   |                      | 1    |      |   |   | 72   |     
|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                         | Cash from operating activities                      |              |      | 641               |   |                      |      | 772  |   |   |      | 603  |  
|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|Investing Activities                                     |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                        
|                                                        
|                                                        
|                                                        
|Additions to plant, property and equipment               |                                                     |              | (204 | )                 |   |                      | (271 | )    |   |   | (177 | )   
|                                                        
|                                                        
|                                                        
|                                                        
|Proceeds from asset sales, net                           |                                                     |              | 54   |                   |   |                      | 126  |      |   |   | 282  |     
|                                                        
|                                                        
|                                                        
|                                                        
|Acquisitions, net of cash acquired                       |                                                     |              |     |                   |   |                      |     |      |   |   | (13  | )   
|                                                        
|                                                        
|                                                        
|                                                        
|Investments                                              |                                                     |              | (1   | )                 |   |                      | (6   | )    |   |   |     |     
|                                                        
|                                                        
|                                                        
|                                                        
|Collections on notes receivable                          |                                                     |              |     |                   |   |                      | 56   |      |   |   |     |     
|                                                        
|                                                        
|                                                        
|                                                        
|Long-term receivables, Corporation                       |                                                     |              | 73   |                   |   |                      | 60   |      |   |   | 488  |     
|                                                        
|                                                        
|                                                        
|                                                        
|Other, net                                               |                                                     |              | 10   |                   |   |                      | (1   | )    |   |   | (325 | )   
|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                         | Cash from (used for) investing activities           |              |      | (68               | ) |                      |      | (36  | ) |   |      | 255  |  
|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|Financing Activities                                     |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                        
|                                                        
|                                                        
|                                                        
|Revolving credit facility and short-term borrowings, net |                                                     |              |     |                   |   |                      | (421 | )    |   |   | 1    |     
|                                                        
|                                                        
|                                                        
|                                                        
|Long-term debt issued                                    |                                                     |              | 23   |                   |   |                      | 291  |      |   |   | 319  |     
|                                                        
|                                                        
|                                                        
|                                                        
|Long-term debt repaid                                    |                                                     |              | (106 | )                 |   |                      | (7   | )    |   |   | (546 | )   
|                                                        
|                                                        
|                                                        
|                                                        
|Settlement of forward equity contracts                   |                                                     |              |     |                   |   |                      |     |      |   |   | (88  | )   
|                                                        
|                                                        
|                                                        
|                                                        
|Dividends paid                                           |                                                     |              | (134 | )                 |   |                      | (116 | )    |   |   | (278 | )   
|                                                        
|                                                        
|                                                        
|                                                        
|Dividends paid to Corporation                            |                                                     |              | (338 | )                 |   |                      | (470 | )    |   |   |     |     
|                                                        
|                                                        
|                                                        
|                                                        
|Other, net                                               |                                                     |              | (10  | )                 |   |                      | (24  | )    |   |   | (254 | )   
|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                         | Cash used for financing activities                  |              |      | (565              | ) |                      |      | (747 | ) |   |      | (846 | )
|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|Increase (decrease) in cash and cash equivalents         |                                                     |              | 8    |                   |   |                      | (11  | )    |   |   | 12   |     
|                                                        
|                                                        
|                                                        
|                                                        
|Cash and cash equivalentsbeginning of period            |                                                     |              | 1    |                   |   |                      | 12   |      |   |   |     |     
|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|Cash and cash equivalentsend of period                  |                                                     | $            | 9    |                   |   | $                    | 1    |      |   | $ | 12   |     
|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|Supplemental Disclosures of Cash Flow Information        |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                        
|                                                        
|                                                        
|                                                        
|Cash paid during the period for:                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Interest                                            |              | $    | 35                |   |                      | $    | 36   |   |   | $    | 21   |  
|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     
|                                                         | Income taxes                                        |              | $    | 1                 |   |                      | $    | 2    |   |   | $    | 1    |  
|                                                         |                                                     |              |      |                   |   |                      |      |      |   |   |      |     

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

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

The accompanying consolidated balance sheets as of
December 31, 2000 and 1999 and the consolidated statements
of operations, comprehensive income, equity and cash flows for
the years ended December 31, 2000, 1999 and 1998 represent
(i) Starwood Hotels & Resorts Worldwide, Inc. (the
Corporation) and its subsidiaries, including
Sheraton Holding Corporation and its subsidiaries
(Sheraton Holding) (formerly ITT Corporation) and
Starwood Hotels & Resorts and its subsidiaries (the
Trust and, together with the Corporation,
Starwood or the Company), and
(ii) the Trust. Because the Companys acquisition of
Sheraton Holding (the ITT Merger) was treated as a
reverse purchase for financial accounting purposes, the
statements of operations, comprehensive income, equity and cash
flows for the year ended December 31, 1998 include the
accounts of the Company and the Trust for the period from the
closing of the ITT Merger on February 23, 1998 through
December 31, 1998 and the accounts of Sheraton Holding for
the year ended December 31, 1998.

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

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

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

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

The Corporation, through its subsidiaries, is the general
partner of, and held, as of December 31, 2000, an aggregate
95.3% partnership interest in, SLC Operating Limited Partnership
(the Operating Partnership). The Trust, through its
subsidiaries, is the general partner of, and held an aggregate
96.3% partnership interest

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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

in, SLT Realty Limited Partnership (the Realty
Partnership and, together with the Operating Partnership,
the Partnerships) as of December 31, 2000. The
units of the Partnerships (LP Units) held by the
limited partners of the respective Partnerships are exchangeable
on a one-for-one basis for Shares. At December 31, 2000,
there were approximately 7.7 million LP Units outstanding
(including 4.3 million LP Units held by the Corporation). For
all periods presented, the LP Units are assumed to have been
converted to Shares for purposes of calculating basic and
diluted weighted average Shares outstanding.

Note 2.  Significant Accounting Policies

Principles of Consolidation.The accompanying
consolidated financial statements of the Company and the Trust
and their subsidiaries include the assets, liabilities, revenues
and expenses of majority-owned subsidiaries over which the
Company and/or the Trust exercise control, and for which control
is other than temporary. Intercompany transactions and balances
have been eliminated in consolidation.

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

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

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

Equity in earnings of unconsolidated subsidiaries accounted for
on the equity basis were $37 million, $32 million and $20
million in 2000, 1999 and 1998, respectively.

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

Plant, Property and Equipment.Plant, property and
equipment, including capitalized interest of $3 million, $8
million and $14 million in 2000, 1999 and 1998, respectively,
applicable to major project expenditures, are recorded at cost.
Depreciation is provided on a straight-line basis over the
estimated useful economic lives of 15 to 40 years for
buildings and improvements; 3 to 10 years for furniture,
fixtures and equipment; and the lesser of the leasehold term or
40 years for leasehold improvements. Gains or losses on the
sale or retirement of assets are included in income when the
assets are sold provided there is reasonable assurance of the
collectibility of the sales price and any future activities to
be performed by the Company relating to the hotel assets sold
are insignificant.

The Company evaluates the carrying value of each of the
Companys assets for impairment. For assets in use, the
expected undiscounted future cash flows of the assets are
compared to the net book value of the assets. If the expected
undiscounted future cash flows are less than the net book value
of the assets, the excess of the net book value over the
estimated fair value is charged to current earnings. When assets
are identified by management as held for sale, the Company
discontinues depreciating the assets and estimates the fair
value of such assets. If, in managements opinion, the fair
value of the assets which have been identified for sale is less
than the net book value of the assets, a loss reserve is
established. Fair value is determined based upon

F-12



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

discounted cash flows of the assets at rates deemed reasonable
for the type of property and prevailing market conditions,
appraisals and, if appropriate, current estimated net sales
proceeds from pending offers.

Goodwill and Intangible Assets.Goodwill and
intangible assets arose in connection with acquisitions,
including the acquisition of management contracts, and are
amortized using the straight-line method over 2 to
40 years. Accumulated amortization was $249 million and
$154 million at December 31, 2000 and 1999, respectively.
The Company continually reviews the carrying value of goodwill
and intangible assets to assess recoverability from future
operations using undiscounted cash flows. Impairments would be
recognized in operating results if a permanent diminution in
value is deemed to have occurred.

Frequent Guest Program.The Company accrues for
the cost of redeeming points awarded to members of the frequent
guest program at the time the points are awarded. This accrual
is based on the discounted expected costs of redemption. The
liability for this program is included in other long-term
liabilities and accrued expenses in the accompanying
consolidated balance sheets. Revenue is recognized by
participating hotels and resorts when the points are redeemed
for hotel stays.

Derivative Financial Instruments.The Company
enters into interest rate swap agreements to manage interest
rate exposure. The differential to be paid or received under
these agreements is accrued consistent with the terms of the
agreements and is recognized in interest expense over the term
of the related debt using a method that approximates the
effective interest method (the accrual accounting method). The
related amounts payable to or receivable from counterparties are
included in other liabilities or assets.

The Company enters into foreign currency forward contracts and
foreign currency swaps as a means of hedging exposure to foreign
currency fluctuations. All foreign currency forward contracts
have an inverse correlation to the hedged items and are
designated as, and considered effective as, hedges of the
underlying assets or liabilities. Changes in the value of the
derivative instruments designated as hedges of foreign currency
denominated assets and liabilities are classified in the same
manner as the classification of the changes in the underlying
assets and liabilities. Discounts or premiums related to the
contracts are recognized into income over the life of the
contract.

The Company does not enter into these derivative financial
instruments for trading or speculative purposes and closely
monitors the financial stability and credit standing of its
counterparties.

Foreign Currency Translation.Balance sheet
accounts are translated at the exchange rates in effect at each
year-end and income and expense accounts are translated at the
average rates of exchange prevailing during the year. The
national currencies of foreign operations are generally the
functional currencies. Gains and losses from foreign currency
translation and the effect of exchange rate changes on
intercompany transactions of a long-term investment nature are
generally included as a separate component of stockholders
equity. Gains and losses from foreign currency transactions are
reported currently in costs and expenses and were insignificant
for all periods presented.

Income Taxes.Under the asset and liability method
of accounting for income taxes, deferred tax assets and
liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets, including net
operating loss carryforwards, and liabilities and their
respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in earnings in the period when
the new rate is enacted.

The Trust has elected to be treated as a REIT under the
provisions of the Code beginning with the 1995 calendar year. As
a result, the Trust will not be subject to federal income tax on
its taxable income at

F-13



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

corporate rates provided it distributes annually 100% of its
taxable income to its shareholders and complies with certain
other requirements.

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

|                                         |                             |                         |     |        |  |       |     |          |  |        |      |       |  |          |      |        |  |       |     |   |  |   |       |   |  |   |     |   |  |  |     |   |  |   |      |  | 
|---------------------------------------- | --------------------------- | ----------------------- | --- | ------ |  | ----- | --- | -------- |  | ------ | ---- | ----- |  | -------- | ---- | ------ |  | ----- | --- | - |  | - | ----- | - |  | - | --- | - |  |  | --- | - |  | - | ---- |  | 
|                                         |                             |                        
|                                         |                             | Year Ended December 31,
|                                         |                             |                        
|                                         |                             |                         |     |        |  |      
|                                         |                             | 2000                    |     | 1999   |  | 1998 
|                                         |                             |                         |     |        |  |      
|                                         |                             |                         |     | Per    |  |       |     | Per      |  |        |      | Per  
|                                         |                             | Earnings                |     | Shares |  | Share |     | Earnings |  | Shares |      | Share |  | Earnings |      | Shares |  | Share
|                                         |                             |                         |     |        |  |       |     |          |  |        |      |       |  |          |      |        |  |      
|Income (loss) from continuing operations |                             | $                       | 401 |        |  |       |     |          |  |        |      |       |  | $        | (638 | )      |  |       |     |   |  |   |       |   |  | $ | 220 |   |  |  |     |   |  |   |      | 
|                                        
|                                        
|                                        
|                                        
|Dividends on Class A EPS and Class B EPS |                             |                         | (4  | )      |  |       |     |          |  |        |      |       |  |          | (5   | )      |  |       |     |   |  |   |       |   |  |   | (17 | ) |  |  |     |   |  |   |      | 
|                                         |                             |                         |     |        |  |       |     |          |  |        |      |       |  |          |      |        |  |       |     |   |  |   |       |   |  |   |     |   |  |  |     |   |  |   |      | 
|Basic earnings (loss)                    |                             |                         | 397 |        |  |       | 196 |          |  | $      | 2.03 |       |  |          | (643 | )      |  |       | 189 |   |  | $ | (3.41 | ) |  |   | 203 |   |  |  | 192 |   |  | $ | 1.06 | 
|                                        
|                                        
|                                        
|                                        
|Effect of dilutive securities:           |                             |                         |     |        |  |       |     |          |  |        |      |       |  |          |      |        |  |       |     |   |  |   |       |   |  |   |     |   |  |  |     |   |  |   |      | 
|                                        
|                                        
|                                        
|                                        
|                                         | Employee stock options      |                         |     |       |  |       |     | 3        |  |        |      |       |  |          |      |       |  |       |     |  |  |   |       |   |  |   |     |  |  |  |     | 2 |  |   |      |  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Class A EPS and Class B EPS |                         |     | 4      |  |       |     | 6        |  |        |      |       |  |          |      |       |  |       |     |  |  |   |       |   |  |   |     |  |  |  |     |  |  |   |      |  | 
|                                         |                             |                         |     |        |  |       |     |          |  |        |      |       |  |          |      |        |  |       |     |   |  |   |       |   |  |   |     |   |  |  |     |   |  |   |      | 
|Diluted earnings (loss)                  |                             | $                       | 401 |        |  |       | 205 |          |  | $      | 1.96 |       |  | $        | (643 | )      |  |       | 189 |   |  | $ | (3.41 | ) |  | $ | 203 |   |  |  | 194 |   |  | $ | 1.05 | 
|                                         |                             |                         |     |        |  |       |     |          |  |        |      |       |  |          |      |        |  |       |     |   |  |   |       |   |  |   |     |   |  |  |     |   |  |   |      | 

Employee stock options totaling approximately 1 million Shares
were not included in the computation of diluted earnings per
Share for the year ended December 31, 1999 as the effects
were antidilutive. Class A Exchangeable Preferred Shares
(Class A EPS) and Class B Exchangeable
Preferred Shares (Class B EPS) of the Trust
totaling approximately 8 million Shares were not included in the
computation of diluted earnings per Share for the years ended
December 31, 1999 and 1998 as the effects were
antidilutive. Additionally, equity put options totaling
approximately 1 million Shares were not included in the
computation of diluted earnings per Share for the year ended
December 31, 1998 as the effects were antidilutive.

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



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Owned, Leased and Consolidated Joint VenturesRepresents
	revenue primarily derived from hotel and leisure operations,
	including the rental of rooms and food and beverage sales, from
	a worldwide network of owned, leased or consolidated joint
	venture hotels and resorts operated primarily under the
	Companys proprietary brand names including Sheraton,
	Westin, St. Regis, The Luxury Collection, Four Points by
	Sheraton and W.                                      
|
| |  | Management and Franchise FeesRepresents fees earned on
	hotels managed worldwide, usually under long-term contracts with
	the hotel owner, and franchise fees received in connection with
	the franchise of the Companys Sheraton, Westin and Four
	Points by Sheraton brand names. Management fees are generally
	based on a combination of a percentage of gross revenues and an
	incentive fee, and franchise fees are generally based on a
	percentage of hotel room revenues.
|
| |  | OtherRepresents primarily the Companys interest in
	unconsolidated joint ventures and the sale and financing of
	VOIs. VOI sales are included in revenue when minimum down
	payment requirements (at least 10%) have been met.                                                                                                                                                                                                                                                    

The Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) 101, Revenue
Recognition in Financial Statements, in
December 1999. SAB 101 summarizes certain of the SEC
staffs views in applying accounting principles generally
accepted in the United States to revenue recognition in
financial statements. The Company adopted SAB 101, as amended,
in the fourth quarter of 2000 and

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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

determined that it did not have a material impact on annual
earnings or the timing of revenue and profit recognition between
quarters during the year.

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

Reclassifications.Certain reclassifications have
been made to the prior years financial statements to
conform to the current year presentation, including the
reclassification of equity earnings from joint ventures in
accordance with Emerging Issues Task Force (EITF)
Issue No. 00-1, Investor Balance Sheet and Income
Statement Display under the Equity Method for Investments in
Certain Partnerships and Other Ventures.

Impact of Recently Issued Accounting Standards.In
June 1998, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. In
June 1999, the FASB issued SFAS No. 137, which
deferred the effective date of SFAS No. 133. This was
followed in June 2000 by the issuance of SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain
Hedging Activities, which amends SFAS No. 133. SFAS
No. 133 and SFAS No. 138 establish new accounting
rules and disclosure requirements for most derivative
instruments and hedging activities. SFAS No. 133 and SFAS
No. 138 require all derivatives to be recognized as assets
or liabilities at fair value. Fair value adjustments are made
either through earnings or equity, depending upon the exposure
being hedged and the effectiveness of the hedge. The Company has
adopted these standards effective January 1, 2001. The
initial adoption of these standards will result in a reduction
of other comprehensive income of approximately $6.2 million. The
adoption will also impact asset and liabilities recorded on the
balance sheet; however, it will not impact earnings.

Note 3.  Acquisitions

Acquisition of CIGA S.p.A.In June 2000, the
Company completed the acquisition of the minority ownership
interest of CIGA S.p.A. (CIGA) not previously owned
by Starwood. The aggregate purchase price of the incremental
shares was approximately $312 million. The Company accounted for
the acquisition of the outstanding CIGA shares as a step
acquisition in accordance with Accounting Principles Board
(APB) Opinion No. 16, Business
Combinations, resulting in a preliminary allocation to
property and goodwill of approximately $102 million.

Acquisition of Starwood Vacation Ownership, Inc.On October 1, 1999, the Company completed the
acquisition of Starwood Vacation Ownership, Inc. (formerly
Vistana, Inc.) (SVO), whereby SVO merged with and
into a subsidiary of the Corporation and thereby became a wholly
owned subsidiary of the Corporation. The Company financed the
acquisition of SVO with cash of approximately $110 million, the
assumption of approximately $280 million of debt and the
issuance of approximately 10.1 million Shares. SVOs
principal operations include the acquisition, development and
operation of vacation ownership resorts; marketing and selling
VOIs in the resorts; and providing financing to customers who
purchase such interests. The Company accounted for the
acquisition of SVO as a purchase in accordance with APB Opinion
No. 16. As such, the carrying values of the assets acquired
(including net cash of approximately $35 million) and
liabilities assumed were recorded at fair market value,
resulting in goodwill of approximately $256 million. The results
of SVOs operations have been included in the accompanying
financial statements since the acquisition date. The pro forma
effect on the Companys revenues, net income and earnings
per Share for 1999 and 1998, as though the acquisitions occurred
as of January 1 of each year, was not material.

F-15



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

ITT and Westin Mergers.On January 2, 1998,
Starwood acquired Westin Hotels & Resorts Worldwide, Inc.
and certain of its affiliates (Westin) for
approximately $2.0 billion in cash and debt assumed (the
Westin Merger). On February 23, 1998, pursuant
to an Amended and Restated Agreement and Plan of Merger dated as
of November 12, 1997, the Company acquired Sheraton
Holding. The aggregate value of the Sheraton Holding acquisition
in cash, Shares and assumed debt was approximately $14.6 billion.

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

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

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

|                                                           |  |              |       |      |  |   |       | 
|---------------------------------------------------------- |  | ------------ | ----- | ---- |  | - | ----- | 
|                                                           |  |             
|                                                           |  | Year Ended  
|                                                           |  | December 31,
|                                                           |  |             
|                                                           |  | 1999         |       | 1998
|                                                           |  |              |       |     
|Revenues                                                   |  | $            | 3,829 |      |  | $ | 3,542 | 
|                                                          
|                                                          
|                                                          
|                                                          
|Income (loss) from continuing operations                   |  | $            | (550  | )    |  | $ | 164   | 
|                                                          
|                                                          
|                                                          
|                                                          
|Net income (loss)                                          |  | $            | (653  | )    |  | $ | 1,246 | 
|                                                          
|                                                          
|                                                          
|                                                          
|Basic income (loss) from continuing operations per Share   |  | $            | (2.94 | )    |  | $ | 0.76  | 
|                                                          
|                                                          
|                                                          
|                                                          
|Diluted income (loss) from continuing operations per Share |  | $            | (2.94 | )    |  | $ | 0.75  | 

Note 4.  Dispositions

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

F-16



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 5.  Discontinued Operations

Gaming.On December 30, 1999, the sale of
Caesars World, Inc. (Caesars) was completed. On
June 23, 2000, the sale of the Desert Inn Resort &
Casino (the Desert Inn) was completed (together with
the sale of Caesars, the Gaming Dispositions). The
Company received approximately $3.3 billion in proceeds from the
Gaming Dispositions which was used to pay off $2.5 billion of
increasing rate notes and to reduce its bank revolver. These
sales constituted the disposition of Starwoods gaming
operations.

As a result of the Gaming Dispositions, the accompanying
consolidated financial statements have been restated to reflect
the results of operations and net assets of the gaming segment
as a discontinued operation. This restatement includes the
allocation of long-term debt of $165 million and $2.1 billion
for the years ended December 31, 1999 and 1998,
respectively, and the related interest expense of $6 million,
$163 million and $161 million, for the years ended
December 31, 2000, 1999 and 1998, respectively, to the
discontinued gaming operations. These allocations were based
upon the ratio of net gaming segment assets to the
Companys total capitalization. During the first quarter of
1999, the Company provided for estimated after-tax losses on the
disposal of the discontinued gaming operations of $180 million
($158 million pretax), which included anticipated operating
income of approximately $50 million prior to the disposal. In
the fourth quarter of 1999, the Company provided for additional
losses on the sale of its gaming operations in the amount of $55
million (including tax of $9 million), primarily due to the
delay in the closing of the sale, lower than estimated operating
profits prior to the sale and certain adjustments to the sale
price made at closing. Additionally, the Company provided for
additional losses on the disposal of the Desert Inn of $9
million (net of a $5 million tax benefit), primarily as a result
of additional anticipated operating losses prior to the sale.
Summary financial information of the discontinued gaming
operations is as follows (in millions):

|                                                        |  |              |      |  
|------------------------------------------------------- |  | ------------ | ---- | -
|                                                        |  | December 31,
|                                                        |  | 1999        
|                                                        |  |             
|Balance Sheet Data                                      |  |              |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Total assets                                            |  | $            | 269  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Total liabilities                                       |  |              |     |  
|                                                       
|                                                       
|                                                       
|                                                       
|Debt allocated or attributed to discontinued operations |  |              | (165 | )
|                                                        |  |              |      |  
|Net assets of discontinued operations                   |  | $            | 104  |  
|                                                        |  |              |      |  

|                                               |  |                  |    |              |  |      |       |   |  |   |       |  
|---------------------------------------------- |  | ---------------- | -- | ------------ |  | ---- | ----- | - |  | - | ----- | -
|                                               |  |                  |    |             
|                                               |  |                  |    | Year Ended  
|                                               |  | Period from      |    | December 31,
|                                               |  | January 1, 2000  |    |             
|                                               |  | to June 23, 2000 |    | 1999         |  | 1998
|                                               |  |                  |    |              |  |     
|Income Statement Data                          |  |                  |    |              |  |      |       |   |  |   |       |  
|                                              
|                                              
|                                              
|                                              
|Revenues                                       |  | $                | 57 |              |  | $    | 1,541 |   |  | $ | 1,377 |  
|                                              
|                                              
|                                              
|                                              
|Restructuring and other special charges        |  | $                |   |              |  | $    |      |   |  | $ | (55   | )
|                                              
|                                              
|                                              
|                                              
|Operating income (loss)                        |  | $                | (3 | )            |  | $    | 154   |   |  | $ | 64    |  
|                                              
|                                              
|                                              
|                                              
|Interest expense, including allocated interest |  | $                | (6 | )            |  | $    | (174  | ) |  | $ | (166  | )
|                                              
|                                              
|                                              
|                                              
|Income tax benefit (expense)                   |  | $                | 1  |              |  | $    | (11   | ) |  | $ | 19    |  
|                                              
|                                              
|                                              
|                                              
|Minority equity in net loss                    |  | $                |   |              |  | $    | 4     |   |  | $ | 11    |  
|                                              
|                                              
|                                              
|                                              
|Loss from discontinued operations              |  | $                | (8 | )            |  | $    | (27   | ) |  | $ | (72   | )

ITT Educational Services, Inc.In June 1998,
the Company sold approximately 13.0 million shares of ITT
Educational Services, Inc. (Educational Services) in
a public offering for net proceeds of approximately $304
million. The Company recorded a gain of $253 million before
income taxes of $93 million. Subsequent to this sale, the
Company was a minority holder in Educational Services and, as
such, accounted for its remaining interest under the equity
method by recording its proportionate share of net losses
totaling

F-17



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

$1 million for the period from June 1, 1998 to
December 31, 1998. Summary financial information of
Educational Services is as follows (in millions):

|                                    |  |              |     |  
|----------------------------------- |  | ------------ | --- | -
|                                    |  | Five Months 
|                                    |  | Ended       
|                                    |  | May 31, 1998
|                                    |  |             
|Income Statement Data               |  |              |     |  
|                                   
|                                   
|                                   
|                                   
|Revenues                            |  | $            | 114 |  
|                                   
|                                   
|                                   
|                                   
|Operating income                    |  | $            | 12  |  
|                                   
|                                   
|                                   
|                                   
|Interest income                     |  | $            | 2   |  
|                                   
|                                   
|                                   
|                                   
|Income tax expense                  |  | $            | (6  | )
|                                   
|                                   
|                                   
|                                   
|Minority equity in net income       |  | $            | (1  | )
|                                   
|                                   
|                                   
|                                   
|Income from discontinued operations |  | $            | 7   |  

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

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

|                                               |  |                    |     |  
|---------------------------------------------- |  | ------------------ | --- | -
|                                               |  | Period from       
|                                               |  | January 1, 1998 to
|                                               |  | February 19, 1998 
|                                               |  |                   
|Income Statement Data                          |  |                    |     |  
|                                              
|                                              
|                                              
|                                              
|Revenues                                       |  | $                  | 8   |  
|                                              
|                                              
|                                              
|                                              
|Operating loss                                 |  | $                  | (8  | )
|                                              
|                                              
|                                              
|                                              
|Interest expense, including allocated interest |  | $                  | (14 | )
|                                              
|                                              
|                                              
|                                              
|Income tax benefit                             |  | $                  | 7   |  
|                                              
|                                              
|                                              
|                                              
|Minority equity in net income                  |  | $                  | 1   |  
|                                              
|                                              
|                                              
|                                              
|Loss from discontinued operations              |  | $                  | (14 | )

Note 6.  Extraordinary Item

During the first quarter of 2000, the Company prepaid $28.4
million on a mortgage loan resulting in an extraordinary loss on
the early extinguishment of debt of $3 million (pretax).

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

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

F-18



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 7.  Restructuring and Other Special Charges

At December 31, 2000, the Company has remaining accruals
related to restructuring and other special charges, described
below, of $100 million, $22 million of which is included in
other long-term liabilities in the accompanying balance sheet.
These accruals consist of $72 million for certain litigation
costs and $28 million primarily related to remaining lease
commitments which expire through 2006.

1999 Restructuring and Other Special Charges (Credits).During 1999, the Company recorded restructuring charges
of $5 million (pretax) attributed to the rationalization of one
of its technology centers. In addition, the Company recorded
other special charges of $13 million attributed to severance
benefits for the former President and Chief Operating Officer of
the Corporation and $75 million attributed primarily to an
accrual for certain litigation costs related to an unfavorable
judgment in a matter involving the former Sheraton hotel in
Washington, D.C. (see Note 18).

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

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

During 1997, Sheraton Holding recorded special charges as a
result of the ITT Merger for conversion of the accounting of
Sheraton Holdings stock option plan to variable accounting
due to limited stock appreciation rights subject to exercise and
related charges for tax reimbursements to employees of $404
million. During 1998 and 1999, the Company reversed
approximately $23 million and $50 million, respectively, in
accruals related to the resolution of certain employment related
contingencies.

Other Sheraton Holding Restructuring and Other Special
Charges (Credits). During 1997, Sheraton Holding
recorded pretax charges totaling $236 million to restructure and
rationalize operations at its World Headquarters and the
headquarters of its field operations. During 1999, the Company
reversed $32 million of these charges as the costs were less
than anticipated.

Note 8.  Plant, Property and Equipment

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

|                                               |  |              |        |      |  |   |        |  
|---------------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                                               |  |             
|                                               |  | December 31,
|                                               |  |             
|                                               |  | 2000         |        | 1999
|                                               |  |              |        |     
|Land and improvements                          |  | $            | 1,395  |      |  | $ | 1,416  |  
|                                              
|                                              
|                                              
|                                              
|Buildings and improvements                     |  |              | 6,265  |      |  |   | 6,066  |  
|                                              
|                                              
|                                              
|                                              
|Furniture, fixtures and equipment              |  |              | 1,603  |      |  |   | 1,345  |  
|                                              
|                                              
|                                              
|                                              
|Construction work in process                   |  |              | 113    |      |  |   | 93     |  
|                                               |  |              |        |      |  |   |        |  
|                                               |  |              | 9,376  |      |  |   | 8,920  |  
|                                              
|                                              
|                                              
|                                              
|Less accumulated depreciation and amortization |  |              | (1,487 | )    |  |   | (1,133 | )
|                                               |  |              |        |      |  |   |        |  
|                                               |  | $            | 7,889  |      |  | $ | 7,787  |  
|                                               |  |              |        |      |  |   |        |  

F-19



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

As of December 31, 2000, the Company identified six hotels
totaling $70 million as non-core assets and classified them as
held for sale. These hotels are included in plant, property and
equipment in the accompanying 2000 consolidated balance sheet.

Note 9.  Income Taxes

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

|                                   |                 |                         |     |      |  |      |       |     |  |   |      |      |  
|---------------------------------- | --------------- | ----------------------- | --- | ---- |  | ---- | ----- | --- |  | - | ---- | ---- | -
|                                   |                 |                        
|                                   |                 | Year Ended December 31,
|                                   |                 |                        
|                                   |                 | 2000                    |     | 1999 |  | 1998
|                                   |                 |                         |     |      |  |     
|Pretax income                      |                 |                         |     |      |  |      |       |     |  |   |      |     
|                                  
|                                  
|                                  
|                                  
|                                   | U.S.            |                         | $   | 437  |  |      | $     | 277 |  |   | $    | 35   |  
|                                  
|                                  
|                                  
|                                  
|                                   | Foreign         |                         |     | 173  |  |      |       | 256 |  |   |      | 110  |  
|                                   |                 |                         |     |      |  |      |       |     |  |   |      |     
|                                   |                 | $                       | 610 |      |  | $    | 533   |     |  | $ | 145  |     
|                                   |                 |                         |     |      |  |      |       |     |  |   |      |     
|Provision (benefit) for income tax |                 |                         |     |      |  |      |       |     |  |   |      |     
|                                  
|                                  
|                                  
|                                  
|Current:                           |                 |                         |     |      |  |      |       |     |  |   |      |     
|                                  
|                                  
|                                  
|                                  
|                                   | U.S. federal    |                         | $   | 71   |  |      | $     | 65  |  |   | $    | 34   |  
|                                  
|                                  
|                                  
|                                  
|                                   | State and local |                         |     | 9    |  |      |       | 13  |  |   |      | 6    |  
|                                  
|                                  
|                                  
|                                  
|                                   | Foreign         |                         |     | 95   |  |      |       | 95  |  |   |      | 43   |  
|                                   |                 |                         |     |      |  |      |       |     |  |   |      |     
|                                   |                 |                         | 175 |      |  |      | 173   |     |  |   | 83   |     
|                                   |                 |                         |     |      |  |      |       |     |  |   |      |     
|Deferred:                          |                 |                         |     |      |  |      |       |     |  |   |      |     
|                                  
|                                  
|                                  
|                                  
|                                   | U.S. federal    |                         |     | 19   |  |      |       | 718 |  |   |      | (189 | )
|                                  
|                                  
|                                  
|                                  
|                                   | State and local |                         |     |     |  |      |       | 180 |  |   |      |     |  
|                                  
|                                  
|                                  
|                                  
|                                   | Foreign         |                         |     | 7    |  |      |       | 5   |  |   |      | 17   |  
|                                   |                 |                         |     |      |  |      |       |     |  |   |      |     
|                                   |                 |                         | 26  |      |  |      | 903   |     |  |   | (172 | )   
|                                   |                 |                         |     |      |  |      |       |     |  |   |      |     
|                                   |                 | $                       | 201 |      |  | $    | 1,076 |     |  | $ | (89  | )   
|                                   |                 |                         |     |      |  |      |       |     |  |   |      |     

No provision was made for U.S. taxes payable on undistributed
foreign earnings amounting to approximately $32 million since
these amounts are permanently reinvested.

F-20



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

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

|                                                    |  |              |        |      |  |   |        |  
|--------------------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                                                    |  |             
|                                                    |  | December 31,
|                                                    |  |             
|                                                    |  | 2000         |        | 1999
|                                                    |  |              |        |     
|Plant, property and equipment                       |  | $            | (779   | )    |  | $ | (757   | )
|                                                   
|                                                   
|                                                   
|                                                   
|Intangibles                                         |  |              | (335   | )    |  |   | (342   | )
|                                                   
|                                                   
|                                                   
|                                                   
|Allowances for doubtful accounts and other reserves |  |              | 139    |      |  |   | 121    |  
|                                                   
|                                                   
|                                                   
|                                                   
|Employee benefits                                   |  |              | 36     |      |  |   | 29     |  
|                                                   
|                                                   
|                                                   
|                                                   
|Deferred gain                                       |  |              | (524   | )    |  |   | (524   | )
|                                                   
|                                                   
|                                                   
|                                                   
|Net operating loss and tax credit carryforwards     |  |              | 188    |      |  |   | 161    |  
|                                                   
|                                                   
|                                                   
|                                                   
|Deferred income                                     |  |              | (115   | )    |  |   | (87    | )
|                                                   
|                                                   
|                                                   
|                                                   
|Transaction costs                                   |  |              | 22     |      |  |   | 23     |  
|                                                   
|                                                   
|                                                   
|                                                   
|Other                                               |  |              | (11    | )    |  |   | (11    | )
|                                                    |  |              |        |      |  |   |        |  
|                                                    |  |              | (1,379 | )    |  |   | (1,387 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Less valuation allowance                            |  |              | (65    | )    |  |   | (83    | )
|                                                    |  |              |        |      |  |   |        |  
|Deferred income taxes                               |  | $            | (1,444 | )    |  | $ | (1,470 | )
|                                                    |  |              |        |      |  |   |        |  

At December 31, 2000, the Company has net operating loss
and tax credit carryforwards of approximately $478 million and
$22 million, respectively, for federal income tax purposes.
Substantially all operating loss carryforwards, which are
expected to provide future tax benefits, expire in 2018.

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

|                                        |  |                         |     |      |  |      |       |   |  |   |      |  
|--------------------------------------- |  | ----------------------- | --- | ---- |  | ---- | ----- | - |  | - | ---- | -
|                                        |  |                        
|                                        |  | Year Ended December 31,
|                                        |  |                        
|                                        |  | 2000                    |     | 1999 |  | 1998
|                                        |  |                         |     |      |  |     
|Tax provision at U.S. statutory rate    |  | $                       | 214 |      |  | $    | 187   |   |  | $ | 51   |  
|                                       
|                                       
|                                       
|                                       
|U.S. state and local income taxes       |  |                         | 6   |      |  |      | 8     |   |  |   | 6    |  
|                                       
|                                       
|                                       
|                                       
|Exempt Trust income                     |  |                         | (49 | )    |  |      | (41   | ) |  |   | (147 | )
|                                       
|                                       
|                                       
|                                       
|Tax on repatriation of foreign earnings |  |                         | 21  |      |  |      | 16    |   |  |   | (5   | )
|                                       
|                                       
|                                       
|                                       
|Foreign tax rate differential           |  |                         | 14  |      |  |      | (5    | ) |  |   | 8    |  
|                                       
|                                       
|                                       
|                                       
|Non-deductible goodwill                 |  |                         | 16  |      |  |      | 14    |   |  |   | 19   |  
|                                       
|                                       
|                                       
|                                       
|Reorganization                          |  |                         |    |      |  |      | 936   |   |  |   |     |  
|                                       
|                                       
|                                       
|                                       
|Transaction costs                       |  |                         |    |      |  |      | (58   | ) |  |   | (21  | )
|                                       
|                                       
|                                       
|                                       
|Deferred asset valuation allowance      |  |                         | (18 | )    |  |      | 5     |   |  |   |     |  
|                                       
|                                       
|                                       
|                                       
|Other                                   |  |                         | (3  | )    |  |      | 14    |   |  |   |     |  
|                                        |  |                         |     |      |  |      |       |   |  |   |      |  
|Provision (benefit) for income tax      |  | $                       | 201 |      |  | $    | 1,076 |   |  | $ | (89  | )
|                                        |  |                         |     |      |  |      |       |   |  |   |      |  

F-21



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 10.  Debt

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

|                                                                                                 |                                                                                                           |              |       |       |  |   |       |       | 
|------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------- | ------------ | ----- | ----- |  | - | ----- | ----- | 
|                                                                                                 |                                                                                                           |             
|                                                                                                 |                                                                                                           | December 31,
|                                                                                                 |                                                                                                           |             
|                                                                                                 |                                                                                                           | 2000         |       | 1999 
|                                                                                                 |                                                                                                           |              |       |      
|Senior Credit Facility:                                                                          |                                                                                                           |              |       |       |  |   |       |      
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                 | Five-year term loan, interest at LIBOR+ 0.625% (7.19% at
	December 31, 2000), maturing through 2003       |              | $     | 925   |  |   | $     | 1,000 | 
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                 | Term Loan Add-on, interest at LIBOR+ 1.25% (7.81% at
	December 31, 2000), maturing through 2003           |              |       | 173   |  |   |       |      | 
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                 | Revolving Credit Facility, interest at LIBOR+ 0.625% (7.19% at
	December 31, 2000), maturing through 2003 |              |       | 620   |  |   |       | 336   | 
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Senior Secured Notes Facility:                                                                   |                                                                                                           |              |       |       |  |   |       |      
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                 | Tranche II Loans, interest at LIBOR+ 2.75% (9.31% at
	December 31, 2000), maturing through 2003           |              |       | 1,000 |  |   |       | 1,000 | 
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Sheraton Holding public debt, interest rates ranging from 6.25%
	to 7.75%, maturing through 2025 |                                                                                                           |              | 1,296 |       |  |   | 1,995 |      
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Mortgages and other, interest rates ranging from 4.5% to 11.5%                                   |                                                                                                           |              | 1,528 |       |  |   | 1,465 |      
|                                                                                                 |                                                                                                           |              |       |       |  |   |       |      
|                                                                                                 |                                                                                                           |              | 5,542 |       |  |   | 5,796 |      
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Less indebtedness classified in discontinued operations                                          |                                                                                                           |              |      |       |  |   | (165  | )    
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Less current maturities                                                                          |                                                                                                           |              | (585  | )     |  |   | (988  | )    
|                                                                                                 |                                                                                                           |              |       |       |  |   |       |      
|Long-term debt                                                                                   |                                                                                                           | $            | 4,957 |       |  | $ | 4,643 |      
|                                                                                                 |                                                                                                           |              |       |       |  |   |       |      

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

|           |  |   |       | 
|---------- |  | - | ----- | 
|          
|          
|          
|          
|2001       |  | $ | 585   | 
|          
|          
|          
|          
|2002       |  |   | 296   | 
|          
|          
|          
|          
|2003       |  |   | 2,723 | 
|          
|          
|          
|          
|2004       |  |   | 57    | 
|          
|          
|          
|          
|2005       |  |   | 502   | 
|          
|          
|          
|          
|Thereafter |  |   | 1,379 | 
|           |  |   |       | 
|           |  | $ | 5,542 | 
|           |  |   |       | 

In December 2000, the Company increased the amount
available under the Senior Credit Facility by $172.5 million
(Term Loan Add-on). Additionally, in
January 2001, the Company further increased the amount
available under the Senior Credit Facility by an additional $150
million. The proceeds from the Term Loan Add-on were used to
further reduce the amount outstanding under the Companys
Revolving Credit Facility.

On July 25, 2000, the Company entered into a one-year, Euro
270 million loan (approximately $252 million). The interest rate
on this loan at December 31, 2000 was Euribor plus 112.5
basis points. The proceeds from the loan were used to reduce the
amount outstanding under the Companys Revolving Credit
Facility.

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

F-22



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

On February 23, 1998, Starwood entered into two credit
facilities ($5.6 billion in total) with Lehman Brothers, Bankers
Trust Company, The Chase Manhattan Bank and other financial
institutions to fund the cash portion of the ITT Merger
consideration, to refinance a portion of the Companys
existing indebtedness and to provide funds for general corporate
purposes. The Senior Credit Facility and the Senior Secured
Notes Facility comprise Starwoods primary existing credit
facilities. In September 1998, the Company increased its
borrowings under the Senior Secured Notes Facility with a $1
billion, five-year term borrowing facility (Tranche II
Loans). Starwood completed the sale of Caesars on
December 30, 1999 and completed the sale of the Desert Inn
on June 23, 2000 for aggregate net proceeds of
approximately $3.3 billion. The proceeds from these sales were
used to repay $2.5 billion of the Senior Secured Notes Facility
and to reduce the amount outstanding under the Revolving Credit
Facility.

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

The Company maintains lines of credit under which bank loans and
other short-term debt are drawn. In addition, smaller credit
lines are maintained by the Companys foreign subsidiaries.
The Company had approximately $435 million of available
borrowing capacity under the Revolving Credit Facility as of
December 31, 2000.

The Company is subject to certain restrictive debt covenants
under its short-term borrowing and long-term debt obligations
including defined financial covenants, escrow account funding
requirements for capital purchases and tax payments and
insurance premiums, limitations on capital expenditures and on
the Companys right to incur further debt and restrictions
on transactions with affiliates and related persons, among other
restrictions. The Company was in compliance with all of the
short-term borrowing and long-term debt obligation covenants at
December 31, 2000.

The weighted average interest rate for short-term borrowings was
6.04% and 6.47% at December 31, 2000 and 1999,
respectively, and their fair values approximated carrying value
given their short-term nature. These average interest rates are
composed of interest rates on both U.S. dollar and non-U.S.
dollar denominated indebtedness.

For adjustable rate debt, fair value approximates carrying value
due to the variable nature of the interest rates. For fixed rate
debt, fair value is determined based upon discounted cash flows
for the debt at rates deemed reasonable for the type of debt and
prevailing market conditions and, if appropriate, the length to
maturity for the debt. The estimated fair value of long-term
debt at December 31, 2000 and 1999 was $5.4 billion and
$5.6 billion, respectively, and was determined based on quoted
market prices and/or discounted cash flows using the
Companys incremental borrowing rates for similar
arrangements.

Note 11.  Employee Benefit Plans

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

F-23



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

The Company also sponsors the ITT Sheraton Post-Retirement
Welfare Program. The plan provides health care and life
insurance benefits for certain eligible retired employees. The
Company has prefunded a portion of the health care and life
insurance obligations through trust funds where such prefunding
can be accomplished on a tax effective basis. The Company also
funds the health plan on a pay-as-you-go basis.

Effective January 1, 2000, the ITT Plans were merged and
the ITT Corporation Salaried Retirement Plan (Salaried
Plan) name was retained. Immediately after the merger, the
merged Plans spun off an allocated portion of assets and
liabilities to form the ITT Sheraton Corporation Ongoing
Retirement Plan (Ongoing Plan). Additionally, the
Company filed a request for an Internal Revenue Service
determination letter concerning the termination of the Salaried
Plan as of July 31, 2000. Since the Internal Revenue
Service has not yet approved the request, the plan termination
has not been reflected below. The Ongoing Plan purchased a group
annuity for all participants retired prior to January 1,
2000, for approximately $80.9 million. The ending balance of the
fair value of plan assets for the Salaried and Ongoing Plans
reflects lump sum payments made to former terminated vested
participants in 2000. The total payment was approximately $23.6
million from the Salaried Plan. As of December 31, 2000,
the Ongoing Plan assets included approximately 348,000 Shares of
the Companys common stock.

The following table sets forth the benefit obligation, fair
value of plan assets, and the funded status of the
Companys pension and other benefit plans, amounts
recognized in the Companys consolidated balance sheets at
December 31, 2000 and 1999, and the principal weighted
average assumptions inherent in their determination (amounts are
in millions).

|                                               |                                  |                  |     |                  |   |                |     |      |   |      |     |      |   |   |    |     |   |   |    |    |   |   |    |    |  
|---------------------------------------------- | -------------------------------- | ---------------- | --- | ---------------- | - | -------------- | --- | ---- | - | ---- | --- | ---- | - | - | -- | --- | - | - | -- | -- | - | - | -- | -- | -
|                                               |                                  |                  |     |                  |   |                |     |      |   |     
|                                               |                                  |                  |     | Foreign          |   |               
|                                               |                                  | Pension Benefits |     | Pension Benefits |   | Other Benefits
|                                               |                                  |                  |     |                  |   |               
|                                               |                                  | 2000             |     | 1999             |   | 2000           |     | 1999 |   | 2000 |     | 1999
|                                               |                                  |                  |     |                  |   |                |     |      |   |      |     |     
|Change in Benefit Obligation                   |                                  |                  |     |                  |   |                |     |      |   |      |     |      |   |   |    |     |   |   |    |    |   |   |    |   
|                                              
|                                              
|                                              
|                                              
|Benefit obligation at beginning of year        |                                  | $                | 240 |                  |   | $              | 271 |      |   | $    | 53  |      |   | $ | 80 |     |   | $ | 31 |    |   | $ | 36 |   
|                                              
|                                              
|                                              
|                                              
|                                               | Service cost                     |                  |     |                 |   |                |     | 3    |   |      |     | 1    |   |   |    | 1   |   |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Interest cost                    |                  |     | 15               |   |                |     | 17   |   |      |     | 3    |   |   |    | 3   |   |   |    | 2  |   |   |    | 2  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Actuarial (gain) loss            |                  |     | 31               |   |                |     | (34  | ) |      |     | 4    |   |   |    | (4  | ) |   |    |   |   |   |    | (5 | )
|                                              
|                                              
|                                              
|                                              
|                                               | Acquisitions                     |                  |     |                 |   |                |     |     |   |      |     | 37   |   |   |    | 7   |   |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Divestitures                     |                  |     |                 |   |                |     |     |   |      |     |     |   |   |    | (30 | ) |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Settlements                      |                  |     | (105             | ) |                |     |     |   |      |     | 2    |   |   |    |    |   |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Effect of foreign exchange rates |                  |     |                 |   |                |     |     |   |      |     | (4   | ) |   |    | (1  | ) |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Benefits paid                    |                  |     | (1               | ) |                |     | (17  | ) |      |     | (2   | ) |   |    | (3  | ) |   |    | (2 | ) |   |    | (2 | )
|                                               |                                  |                  |     |                  |   |                |     |      |   |      |     |      |   |   |    |     |   |   |    |    |   |   |    |   
|Benefit obligation at end of year              |                                  | $                | 180 |                  |   | $              | 240 |      |   | $    | 94  |      |   | $ | 53 |     |   | $ | 31 |    |   | $ | 31 |   
|                                               |                                  |                  |     |                  |   |                |     |      |   |      |     |      |   |   |    |     |   |   |    |    |   |   |    |   
|Change in Plan Assets                          |                                  |                  |     |                  |   |                |     |      |   |      |     |      |   |   |    |     |   |   |    |    |   |   |    |   
|                                              
|                                              
|                                              
|                                              
|Fair value of plan assets at beginning of year |                                  | $                | 242 |                  |   | $              | 240 |      |   | $    | 63  |      |   | $ | 47 |     |   | $ | 22 |    |   | $ | 20 |   
|                                              
|                                              
|                                              
|                                              
|                                               | Actual return on plan assets     |                  |     | 31               |   |                |     | 18   |   |      |     | 6    |   |   |    | 12  |   |   |    |   |   |   |    | 2  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Employer contribution            |                  |     | 1                |   |                |     | 1    |   |      |     | 1    |   |   |    |    |   |   |    | 2  |   |   |    | 2  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Acquisitions                     |                  |     |                 |   |                |     |     |   |      |     | 37   |   |   |    | 8   |   |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Settlements                      |                  |     | (105             | ) |                |     |     |   |      |     | 2    |   |   |    |    |   |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Effect of foreign exchange rates |                  |     |                 |   |                |     |     |   |      |     | (4   | ) |   |    | (1  | ) |   |    |   |   |   |    |   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Benefits paid                    |                  |     | (1               | ) |                |     | (17  | ) |      |     | (2   | ) |   |    | (3  | ) |   |    | (2 | ) |   |    | (2 | )
|                                               |                                  |                  |     |                  |   |                |     |      |   |      |     |      |   |   |    |     |   |   |    |    |   |   |    |   
|Fair value of plan assets at end of year       |                                  | $                | 168 |                  |   | $              | 242 |      |   | $    | 103 |      |   | $ | 63 |     |   | $ | 22 |    |   | $ | 22 |   
|                                               |                                  |                  |     |                  |   |                |     |      |   |      |     |      |   |   |    |     |   |   |    |    |   |   |    |   

F-24



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

|                                                                  |                                 |                  |     |                  |   |                |     |      |   |      |   |      |   |   |    |    |   |   |     |     |   |   |     |     |  
|----------------------------------------------------------------- | ------------------------------- | ---------------- | --- | ---------------- | - | -------------- | --- | ---- | - | ---- | - | ---- | - | - | -- | -- | - | - | --- | --- | - | - | --- | --- | -
|                                                                  |                                 |                  |     |                  |   |                |     |      |   |     
|                                                                  |                                 |                  |     | Foreign          |   |               
|                                                                  |                                 | Pension Benefits |     | Pension Benefits |   | Other Benefits
|                                                                  |                                 |                  |     |                  |   |               
|                                                                  |                                 | 2000             |     | 1999             |   | 2000           |     | 1999 |   | 2000 |   | 1999
|                                                                  |                                 |                  |     |                  |   |                |     |      |   |      |   |     
|Funded status                                                     |                                 | $                | (12 | )                |   | $              | 2   |      |   | $    | 9 |      |   | $ | 10 |    |   | $ | (9  | )   |   | $ | (9  | )  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Unrecognized net actuarial gain |                  |     | (20              | ) |                |     | (43  | ) |      |   | (4   | ) |   |    | (6 | ) |   |     | (3  | ) |   |     | (6  | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Unrecognized prior service cost |                  |     |                 |   |                |     |     |   |      |   |     |   |   |    |   |   |   |     | (1  | ) |   |     | (1  | )
|                                                                  |                                 |                  |     |                  |   |                |     |      |   |      |   |      |   |   |    |    |   |   |     |     |   |   |     |    
|Accrued benefit cost                                              |                                 | $                | (32 | )                |   | $              | (41 | )    |   | $    | 5 |      |   | $ | 4  |    |   | $ | (13 | )   |   | $ | (16 | )  
|                                                                  |                                 |                  |     |                  |   |                |     |      |   |      |   |      |   |   |    |    |   |   |     |     |   |   |     |    
|Amounts recognized in the consolidated balance sheets consist of: |                                 |                  |     |                  |   |                |     |      |   |      |   |      |   |   |    |    |   |   |     |     |   |   |     |    
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Prepaid benefit cost            |                  | $   |                 |   |                | $   | 3    |   |      | $ | 8    |   |   | $  | 7  |   |   | $   |    |   |   | $   |    |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Accrued benefit cost            |                  |     | (32              | ) |                |     | (44  | ) |      |   | (3   | ) |   |    | (3 | ) |   |     | (13 | ) |   |     | (16 | )
|                                                                  |                                 |                  |     |                  |   |                |     |      |   |      |   |      |   |   |    |    |   |   |     |     |   |   |     |    
|Net amount recognized at end of year                              |                                 | $                | (32 | )                |   | $              | (41 | )    |   | $    | 5 |      |   | $ | 4  |    |   | $ | (13 | )   |   | $ | (16 | )  
|                                                                  |                                 |                  |     |                  |   |                |     |      |   |      |   |      |   |   |    |    |   |   |     |     |   |   |     |    

|                                                 |  |                  |      |                  |  |                |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |  
|------------------------------------------------ |  | ---------------- | ---- | ---------------- |  | -------------- | ---- | ---- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                                                 |  |                  |      |                  |  |                |      |      |  |     
|                                                 |  |                  |      | Foreign          |  |               
|                                                 |  | Pension Benefits |      | Pension Benefits |  | Other Benefits
|                                                 |  |                  |      |                  |  |               
|                                                 |  | 2000             |      | 1999             |  | 2000           |      | 1999 |  | 2000 |      | 1999
|                                                 |  |                  |      |                  |  |                |      |      |  |      |      |     
|Weighted Average Assumptions as of December  31, |  |                  |      |                  |  |                |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |  
|                                                
|                                                
|                                                
|                                                
|Discount rate                                    |  |                  | 7.25 | %                |  |                | 7.25 | %    |  |      | 6.63 | %    |  |  | 6.02 | % |  |  | 7.25 | % |  |  | 7.25 | %
|                                                
|                                                
|                                                
|                                                
|Expected return on plan assets                   |  |                  | 7.00 | %                |  |                | 7.00 | %    |  |      | 8.11 | %    |  |  | 7.00 | % |  |  | 9.75 | % |  |  | 7.00 | %
|                                                
|                                                
|                                                
|                                                
|Rate of compensation increase                    |  |                  | N/A  |                  |  |                | N/A  |      |  |      | 4.51 | %    |  |  | 4.52 | % |  |  | N/A  |   |  |  | N/A  |  

For measurement purposes, a 6.10% annual rate of
increase in the per capita cost of covered health care benefits
was assumed for 2000. The rate was assumed to decrease gradually
to 5.00% in 2002 and remain at that level thereafter. Assumed
health care cost trend rates can have a significant effect on
the amounts reported for the health care plans. A
one-percentage-point change in assumed health care cost trend
rates would not have a material effect on the total of service
and interest cost components or on the postretirement benefit
obligation.

|                                        |                                             |                  |     |                  |   |                |     |      |  |      |     |      |   |      |    |      |  |      |    |   |  |   |    |    |   |   |    |    |   |   |    |    |   |   |    |   | 
|--------------------------------------- | ------------------------------------------- | ---------------- | --- | ---------------- | - | -------------- | --- | ---- |  | ---- | --- | ---- | - | ---- | -- | ---- |  | ---- | -- | - |  | - | -- | -- | - | - | -- | -- | - | - | -- | -- | - | - | -- | - | 
|                                        |                                             |                  |     |                  |   |                |     |      |  |      |     |      |   |     
|                                        |                                             |                  |     | Foreign          |   |               
|                                        |                                             | Pension Benefits |     | Pension Benefits |   | Other Benefits
|                                        |                                             |                  |     |                  |   |               
|                                        |                                             | 2000             |     | 1999             |   | 1998           |     | 2000 |  | 1999 |     | 1998 |   | 2000 |    | 1999 |  | 1998
|                                        |                                             |                  |     |                  |   |                |     |      |  |      |     |      |   |      |    |      |  |     
|Components of Net Periodic Benefit Cost |                                             |                  |     |                  |   |                |     |      |  |      |     |      |   |      |    |      |  |      |    |   |  |   |    |    |   |   |    |    |   |   |    |    |   |   |    |  
|                                       
|                                       
|                                       
|                                       
|Service cost                            |                                             | $                |    |                  |   | $              | 3   |      |  | $    | 15  |      |   | $    | 1  |      |  | $    | 1  |   |  | $ | 6  |    |   | $ |   |    |   | $ |   |    |   | $ | 1  |  
|                                       
|                                       
|                                       
|                                       
|Interest cost                           |                                             |                  | 15  |                  |   |                | 17  |      |  |      | 18  |      |   |      | 3  |      |  |      | 3  |   |  |   | 5  |    |   |   | 2  |    |   |   | 2  |    |   |   | 2  |  
|                                       
|                                       
|                                       
|                                       
|Expected return on plan assets          |                                             |                  | (14 | )                |   |                | (20 | )    |  |      | (18 | )    |   |      | (5 | )    |  |      | (3 | ) |  |   | (5 | )  |   |   | (2 | )  |   |   | (2 | )  |   |   | (2 | )
|                                       
|                                       
|                                       
|                                       
|Amortization of:                        |                                             |                  |     |                  |   |                |     |      |  |      |     |      |   |      |    |      |  |      |    |   |  |   |    |    |   |   |    |    |   |   |    |    |   |   |    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Prior service cost                          |                  |     |                 |   |                |     |     |  |      |     | 1    |   |      |    |     |  |      |    |  |  |   |    |   |   |   |    | (1 | ) |   |    | (1 | ) |   |    |  | 
|                                       
|                                       
|                                       
|                                       
|                                        | Actuarial (gain) loss                       |                  |     | (1               | ) |                |     |     |  |      |     | 1    |   |      |    |     |  |      |    |  |  |   |    |   |   |   |    |   |   |   |    |   |   |   |    |  | 
|                                        |                                             |                  |     |                  |   |                |     |      |  |      |     |      |   |      |    |      |  |      |    |   |  |   |    |    |   |   |    |    |   |   |    |    |   |   |    |  
|SFAS 87 cost/ SFAS 106 cost             |                                             |                  |    |                  |   |                |    |      |  |      | 17  |      |   |      | (1 | )    |  |      | 1  |   |  |   | 6  |    |   |   | (1 | )  |   |   | (1 | )  |   |   | 1  |  
|                                        |                                             |                  |     |                  |   |                |     |      |  |      |     |      |   |      |    |      |  |      |    |   |  |   |    |    |   |   |    |    |   |   |    |    |   |   |    |  
|SFAS 88 charges:                        |                                             |                  |     |                  |   |                |     |      |  |      |     |      |   |      |    |      |  |      |    |   |  |   |    |    |   |   |    |    |   |   |    |    |   |   |    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Special termination benefit charge (credit) |                  |     |                 |   |                |     |     |  |      |     | (1   | ) |      |    |     |  |      |    |  |  |   |    |   |   |   |    |   |   |   |    |   |   |   |    |  | 
|                                       
|                                       
|                                       
|                                       
|                                        | Curtailment charge (credit)                 |                  |     |                 |   |                |     |     |  |      |     | 4    |   |      |    |     |  |      |    |  |  |   |    | (1 | ) |   |    |   |   |   |    |   |   |   |    |  | 
|                                       
|                                       
|                                       
|                                       
|                                        | Settlement charge (credit)                  |                  |     | (8               | ) |                |     |     |  |      |     |     |   |      |    |     |  |      |    |  |  |   |    | 5  |   |   |    |   |   |   |    |   |   |   |    |  | 
|                                        |                                             |                  |     |                  |   |                |     |      |  |      |     |      |   |      |    |      |  |      |    |   |  |   |    |    |   |   |    |    |   |   |    |    |   |   |    |  
|Net periodic benefit cost               |                                             | $                | (8  | )                |   | $              |    |      |  | $    | 20  |      |   | $    | (1 | )    |  | $    | 1  |   |  | $ | 10 |    |   | $ | (1 | )  |   | $ | (1 | )  |   | $ | 1  |  
|                                        |                                             |                  |     |                  |   |                |     |      |  |      |     |      |   |      |    |      |  |      |    |   |  |   |    |    |   |   |    |    |   |   |    |    |   |   |    |  

F-25



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

|                                                |                           |                  |   |                  |  |      |   |      |  |  |   |   |  |  |   |   | 
|----------------------------------------------- | ------------------------- | ---------------- | - | ---------------- |  | ---- | - | ---- |  |  | - | - |  |  | - | - | 
|                                                |                           |                  |   |                  |  |     
|                                                |                           |                  |   | Foreign         
|                                                |                           | Pension Benefits |   | Pension Benefits
|                                                |                           |                  |   |                 
|                                                |                           | 2000             |   | 1999             |  | 2000 |   | 1999
|                                                |                           |                  |   |                  |  |      |   |     
|Plans with ABO exceeding assets at end of year: |                           |                  |   |                  |  |      |   |      |  |  |   |   |  |  |   |  
|                                               
|                                               
|                                               
|                                               
|                                                | ABO                       |                  | $ | 12               |  |      | $ | 12   |  |  | $ | 1 |  |  | $ | 3 | 
|                                               
|                                               
|                                               
|                                               
|                                                | PBO                       |                  | $ |                 |  |      | $ |     |  |  | $ | 1 |  |  | $ | 3 | 
|                                               
|                                               
|                                               
|                                               
|                                                | Fair value of plan assets |                  | $ |                 |  |      | $ |     |  |  | $ |  |  |  | $ | 2 | 

Defined Contribution Plans.The Company sponsors
the Starwood Hotels & Resorts Worldwide, Inc. Savings and
Retirement Plan, which is a voluntary defined contribution plan
allowing participation by domestic employees that meet certain
age and service requirements. Each participant may contribute on
a pretax basis between 1% and 18% of his or her compensation to
the plan. The plan also contains additional provisions for
matching contributions to be made by the Company which are based
on a portion of a participants eligible compensation. The
amount of expense for matching contributions totaled $17 million
in 2000, $19 million in 1999 and $15 million in 1998.

Note 12.  Leases and Rentals

At December 31, 2000, the Trust owned equity interests in
99 hotels, of which 90 properties were owned and 9 were held
pursuant to long-term leases.

All of the Trusts hotels are leased to the Corporation as
of December 31, 2000. The leases between the Trust and the
Corporation are generally long-term and provide for annual base,
or minimum rents, plus contingent, or percentage rents based on
the gross revenues of the properties and are accounted for as
operating leases. The leases are triple-net in that
the lessee is generally responsible for paying all operating
expenses of the properties, including maintenance, insurance and
real property taxes. The lessee is also generally responsible
for any payments required pursuant to underlying ground leases.
Total rental expense incurred by the Corporation under such
leases was approximately $520 million for the year ended
December 31, 2000, of which approximately $169 million
related to percentage rent.

The Corporations minimum future rents (inclusive of
various ground leases) at December 31, 2000 payable under
non-cancelable operating leases with the Trust and with others
for the years ended December 31 are as follows (in
millions):

|      |  |      |    |      |  |      |    |      |  |      |    |            |  |   |    |  |  |   |    |  |  |   |     | 
|----- |  | ---- | -- | ---- |  | ---- | -- | ---- |  | ---- | -- | ---------- |  | - | -- |  |  | - | -- |  |  | - | --- | 
|      |  | 2001 |    | 2002 |  | 2003 |    | 2004 |  | 2005 |    | Thereafter
|      |  |      |    |      |  |      |    |      |  |      |    |           
|Trust |  | $    | 27 |      |  | $    | 14 |      |  | $    | 9  |            |  | $ | 9  |  |  | $ | 9  |  |  | $ | 28  | 
|     
|     
|     
|     
|Other |  |      | 63 |      |  |      | 50 |      |  |      | 47 |            |  |   | 46 |  |  |   | 42 |  |  |   | 463 | 
|      |  |      |    |      |  |      |    |      |  |      |    |            |  |   |    |  |  |   |    |  |  |   |     | 
|Total |  | $    | 90 |      |  | $    | 64 |      |  | $    | 56 |            |  | $ | 55 |  |  | $ | 51 |  |  | $ | 491 | 
|      |  |      |    |      |  |      |    |      |  |      |    |            |  |   |    |  |  |   |    |  |  |   |     | 

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

Rent expense under other non-cancelable operating leases was $64
million, $41 million and $37 million in 2000, 1999 and 1998,
respectively.

The Trusts rents receivable from the Corporation relating
to leased hotel properties at December 31, 2000 and 1999
was $34 million.

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 13.  Equity Put Options

As a part of its Share repurchase program (see Note 14),
the Company sold equity put options during 1998 for $1.8
million, which entitled the holder, at the expiration date, to
sell one million Shares to the Company at contractually
specified prices. During 1999, the Company repurchased 500,000
Shares for $16 million under a portion of the equity put option
contracts and the remaining equity put option contracts expired.

In November 1999, in connection with the termination of a
certain executives employment, the Company granted this
executive the option to cause the Company to purchase from the
executive 566,166 Shares for a purchase price of $34.25 per
Share. This option was exercisable in the fourth quarter of 2000
at which time the executive sold 366,166 of these Shares on the
open market and put the remaining 200,000 Shares to the Company
at a total cost of $6.9 million. The Company recorded the fair
market value of the options as compensation expense of $6.7
million in 1999.

Note 14.  Stockholders Equity

Share Repurchases.In 1998, the Board of Directors
of the Company approved the repurchase of up to $1 billion of
Shares under a Share repurchase program (the Share
Repurchase Program). Pursuant to the Share Repurchase
Program, through December 31, 2000, Starwood has
repurchased 15.8 million Shares (including 500,000 Shares of
equity put option contracts) in the open market for an aggregate
cost of $521 million. Additionally, the Company repurchased 6.8
million Shares for an aggregate cost of $385 million as
settlement of the forward equity transactions described below.

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

On February 24, 1998, the Company sold an aggregate of
4.641 million Shares to Merrill Lynch International, NMS
Services, Inc., Lehman Brothers Inc. and certain affiliates for
a cash purchase price per Share of $52.798, which price
reflected a 2% discount from the last reported sale price of the
Shares on the date of the purchase. Concurrently with these
sales, the Company entered into three separate agreements with
these purchasers and/or certain of their affiliates pursuant to
which each of these purchasers or their respective affiliates
agreed to sell, as directed by the Company in an underwritten
fixed price offering or other specified methods, a sufficient
number of the Shares to achieve net sales proceeds equal to the
aggregate market value of the Shares purchased in
February 1998, plus a forward accretion component, minus an
adjustment for dividends paid on the purchased Shares.
Additional Shares were required to be delivered by the Company
as security in the event the market prices of the Shares dropped
below certain specified levels. In October 1998, the
Company settled its obligations under these agreements by
repurchasing all of the Shares issued to these purchasers for an
aggregate of approximately $255 million in cash. As a result of
this settlement, the Company has no further obligations under
these agreements and Shares outstanding were reduced by
approximately 7.379 million (4.641 million original Shares
issued and 2.738 million Shares previously issued as security).

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Exchangeable Preferred Shares.During 1998, 6.3
million shares of Class A EPS and 5.5 million shares of
Class B EPS were issued by the Trust in connection with the
Westin Merger. Class A EPS have a par value of $0.01 per
share and are convertible on a one-for-one basis (subject to
certain adjustments) to Shares. Class B EPS have a
liquidation preference of $38.50 per share and provide the
holders with the right, from and after the fifth anniversary of
the closing date of the Westin Merger, to require the Trust to
redeem such shares at a price of $38.50. Shares of Class B
EPS are convertible on a one-for-one basis (subject to certain
adjustments) to Class A EPS. During 2000, the Trust
consented to the conversion of approximately 508,000 shares of
Class B EPS by certain stockholders into an equal number of
shares of Class A EPS. Additionally, the Trust consented to
the exchange of approximately 3.0 million shares of Class A
EPS into an equal number of Shares. At December 31, 2000,
the Trust had 150 million preferred shares authorized and
610,000 and 3.0 million of Class A EPS and Class B EPS
outstanding, respectively.

Note 15.  Stock Incentive Plans

In 1999, the Company adopted the 1999 Long-Term Incentive
Compensation Plan (1999 LTIP) which superseded the
1995 Share Option Plan (the 1995 LTIP) and provides
for the purchase of Shares by Directors, officers, employees,
consultants and advisors, pursuant to option grants. Although no
additional awards will be granted under the 1995 LTIP, the 1995
LTIP will continue to govern awards that have been granted and
remain outstanding under the 1995 LTIP. The aggregate number of
Shares subject to non-qualified or incentive stock options,
performance shares, restricted stock or any combination of the
foregoing which are available to be granted under the 1999 LTIP
at December 31, 2000 was approximately 15.9 million.

The Company applies APB Opinion No. 25, Accounting
for Stock Issued to Employees, and related
interpretations; accordingly, compensation cost is not
recognized for grants of stock options at market price. Had
compensation cost for grants been determined based on the fair
value of the options at the grant dates consistent with SFAS
No. 123, Accounting for Stock-Based
Compensation, the Companys net income would have
been reduced by $92 million ($0.47 per basic Share), $76 million
($0.40 per basic Share) and $86 million ($0.46 per basic Share)
in 2000, 1999 and 1998, respectively. The fair value of each
option grant used in the 2000, 1999 and 1998 pro forma amounts
was estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average
assumptions used for grants in 2000, 1999 and 1998,
respectively: dividend yield of 2.4%, 2.9% and 2.6%, expected
volatility of 46.1%, 41.9% and 47.6%, risk-free interest rates
of 6.5%, 6.3% and 4.5% and an expected life of three years for
all options.

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

The following table summarizes stock option activity for the
Company, including stock options granted to the gaming operation
employees:

|                                 |              |         |            |                  |   |   |       |       | 
|-------------------------------- | ------------ | ------- | ---------- | ---------------- | - | - | ----- | ----- | 
|                                 |              |         |            | Weighted Average
|                                 |              |         |            | Exercise Price  
|                                 |              | Options |            | Per Share       
|                                 |              |         |            |                 
|Outstanding at December 31, 1997 |              |         | 13,268,977 |                  |   | $ | 29.29 |      
|                                
|                                
|                                
|                                
|                                 | Granted(a)   |         |            | 19,783,847       |   |   |       | 43.18 | 
|                                
|                                
|                                
|                                
|                                 | Exercised(b) |         |            | (12,536,071      | ) |   |       | 28.45 | 
|                                
|                                
|                                
|                                
|                                 | Forfeited    |         |            | (2,393,977       | ) |   |       | 44.61 | 
|                                 |              |         |            |                  |   |   |       |      
|Outstanding at December 31, 1998 |              |         | 18,122,776 |                  |   |   | 43.80 |      
|                                
|                                
|                                
|                                
|                                 | Granted      |         |            | 9,155,246        |   |   |       | 23.76 | 
|                                
|                                
|                                
|                                
|                                 | Exercised    |         |            | (346,575         | ) |   |       | 22.46 | 
|                                
|                                
|                                
|                                
|                                 | Forfeited    |         |            | (6,009,005       | ) |   |       | 50.41 | 
|                                 |              |         |            |                  |   |   |       |      
|Outstanding at December 31, 1999 |              |         | 20,922,442 |                  |   |   | 34.26 |      
|                                
|                                
|                                
|                                
|                                 | Granted      |         |            | 10,614,800       |   |   |       | 24.22 | 
|                                
|                                
|                                
|                                
|                                 | Exercised    |         |            | (1,682,653       | ) |   |       | 21.10 | 
|                                
|                                
|                                
|                                
|                                 | Forfeited    |         |            | (1,689,378       | ) |   |       | 33.96 | 
|                                 |              |         |            |                  |   |   |       |      
|Outstanding at December 31, 2000 |              |         | 28,165,211 |                  |   | $ | 31.33 |      
|                                 |              |         |            |                  |   |   |       |      
|Exercisable at December 31, 1999 |              |         | 10,443,940 |                  |   | $ | 35.36 |      
|                                 |              |         |            |                  |   |   |       |      
|Exercisable at December 31, 2000 |              |         | 13,362,454 |                  |   | $ | 37.00 |      
|                                 |              |         |            |                  |   |   |       |      






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

The following table summarizes information about outstanding
stock options at December 31, 2000:

|                |  |                     |              |                     |  |                  |      |             |  |                  |       |  |  |  |            |  |  |   |       | 
|--------------- |  | ------------------- | ------------ | ------------------- |  | ---------------- | ---- | ----------- |  | ---------------- | ----- |  |  |  | ---------- |  |  | - | ----- | 
|                |  |                     |              |                    
|                |  | Options Outstanding |              | Options Exercisable
|                |  |                     |              |                    
|                |  |                     |              | Weighted Average    |  |                  |      |            
|                |  |                     |              | Remaining           |  | Weighted Average |      |             |  | Weighted Average
|Range of        |  | Number              |              | Contractual Life    |  | Exercise         |      | Number      |  | Exercise        
|Exercise Prices |  | Outstanding         |              | in Years            |  | Price/Share      |      | Exercisable |  | Price/Share     
|                |  |                     |              |                     |  |                  |      |             |  |                 
|$11.00  $15.33 |  |                     | 1,147,225    |                     |  |                  | 4.77 |             |  | $                | 15.17 |  |  |  | 1,147,225  |  |  | $ | 15.17 | 
|$17.41  $21.8  |  |                     | 1 2,023,460  |                     |  |                  | 8.76 |             |  |                  | 21.40 |  |  |  | 768,960    |  |  |   | 21.22 | 
|$22.00  $23.9  |  |                     | 2 2,938,057  |                     |  |                  | 6.33 |             |  |                  | 23.21 |  |  |  | 2,314,057  |  |  |   | 23.39 | 
|$24.00  $24.0  |  |                     | 0 11,340,093 |                     |  |                  | 8.75 |             |  |                  | 24.00 |  |  |  | 1,068,122  |  |  |   | 24.00 | 
|$24.25  $36.3  |  |                     | 8 2,617,578  |                     |  |                  | 7.68 |             |  |                  | 29.62 |  |  |  | 1,241,261  |  |  |   | 31.33 | 
|$36.54  $47.0  |  |                     | 0 2,005,319  |                     |  |                  | 6.92 |             |  |                  | 40.35 |  |  |  | 1,563,894  |  |  |   | 39.79 | 
|$49.19  $53.9  |  |                     | 4 2,500,780  |                     |  |                  | 6.74 |             |  |                  | 50.58 |  |  |  | 1,955,104  |  |  |   | 50.69 | 
|$54.63  $58.8  |  |                     | 1 3,592,699  |                     |  |                  | 7.10 |             |  |                  | 54.70 |  |  |  | 3,303,831  |  |  |   | 54.69 | 
|                |  |                     |              |                     |  |                  |      |             |  |                  |       |  |  |  |            |  |  |   |       | 
|Total/average   |  |                     | 28,165,211   |                     |  |                  | 7.72 |             |  |                  | 31.33 |  |  |  | 13,362,454 |  |  |   | 37.00 | 
|                |  |                     |              |                     |  |                  |      |             |  |                  |       |  |  |  |            |  |  |   |       | 

During 2000, the Company granted restricted stock awards for
197,089 Shares. Total restricted stock awards outstanding as of
December 31, 2000 totaled 434,323 Shares, and approximately
44,948 Shares were

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

vested. The remaining restricted stock awards vest at varying
rates over four years from the award grant date. Compensation
expense of approximately $3.8 million, $0.6 million and $16
million was recorded during 2000, 1999 and 1998, respectively,
related to restricted stock awards.

Note 16.  Derivative Financial Instruments

The Company enters into interest rate swap agreements to manage
interest rate fluctuations of its variable rate debt. The
Company currently has five outstanding interest rate swap
agreements under which the Company pays a fixed rate and
receives variable rates of interest. The aggregate notional
amount of these interest rate swaps was approximately $1.052
billion and the estimated unrealized loss on these interest rate
swaps was approximately $3.2 million at December 31, 2000.
The unrealized loss represents the amount the Company would pay
upon the termination of the swap agreements based on market
rates.

The Company enters into forward foreign exchange contracts to
hedge the foreign currency exposure associated with the
Companys foreign currency denominated assets and
liabilities. The Company currently has four forward foreign
exchange contracts outstanding with a dollar equivalent of the
contractual amounts of these hedges at December 31, 2000 of
approximately $44 million. These contracts mature in 2001.

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

Note 17.  Related Party Transactions

General.Barry S. Sternlicht, Chairman, Chief
Executive Officer and a Director of the Corporation, and
Chairman, Chief Executive Officer and a Trustee of the Trust,
controls and has been the President and Chief Executive Officer
of Starwood Capital Group, L.L.C. (Starwood Capital)
since its formation in 1991. In addition, Madison F. Grose
is a Senior Managing Director of, and holds direct and indirect
interests in, Starwood Capital and Jonathan D. Eilian (a
former Director of the Corporation and Trustee of the Trust)
holds direct and indirect interests in Starwood Capital. Prior
to joining Starwood, Steven R. Goldman was an employee of
Starwood Capital, and he continues to own an interest in certain
portfolio investments of Starwood Capital.

Trademark License.An affiliate of Starwood
Capital has granted to Starwood, subject to Starwood
Capitals unrestricted right to use such name, an
exclusive, non-transferable, royalty-free license to use the
Starwood name and trademarks in connection with the
acquisition, ownership, leasing, management, merchandising,
operation and disposition of hotels worldwide, and to use the
Starwood name in its corporate name worldwide, in
perpetuity.

Starwood Capital Noncompete.In connection with
the Restructuring, Starwood Capital agreed that, with certain
exceptions, Starwood Capital would not compete directly or
indirectly with the Company within the United States and would
present to the Company all opportunities presented to Starwood
Capital to acquire fee interests in hotels in the United States
and debt interests in hotels in the United States where it is
anticipated that the equity will be acquired by the debt holder
within one year from the acquisition of such debt (the
Starwood Capital Noncompete). During the term of the
Starwood Capital Noncompete, neither Starwood Capital nor any of
its affiliates is permitted to acquire any such interest, or any
ground lease interest or other equity interest, in hotels in the
United States. The Starwood Capital Noncompete continues until
no officer, director, general partner or employee of Starwood
Capital is on either the Board of Directors of the

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Corporation or the Board of Trustees of the Trust (subject to
exceptions for certain restructurings, mergers or other
combination transactions with unaffiliated parties). Several
properties managed by the Company, including the Westin
Innisbrook Resort (the Innisbrook), the Westin
Savannah Harbor Resort and the Turnberry Hotel, were
opportunities presented to the Company by Starwood Capital. With
the approval in each case of the Audit Committee of the Board of
Directors of the Corporation and the Board of Trustees of the
Trust, from time to time the Company has waived the restrictions
of the Starwood Capital Noncompete in whole or in part with
respect to particular acquisition opportunities in which the
Company had no interest.

Portfolio Investments.An affiliate of Starwood
Capital holds an approximately 25% non-controlling interest in a
golf course management company that currently manages over 40
golf courses, including seven golf courses that are amenities to
resorts that the Company manages. An entity in which
Messrs. Sternlicht, Eilian and Grose have indirect
interests owns the common area of the Sheraton Tamarron Resort
which the Company manages. In addition, an affiliate of Starwood
Capital has an indirect interest of approximately 50% in an
entity that manages over 40 health clubs, including health club
and spa space in a hotel owned by the Company.

Other Management-Related Investments.Individuals
affiliated with Starwood Capital, including
Messrs. Sternlicht, Eilian and Grose, own indirect
interests in an entity (the Innisbrook Entity) that
owns the common area facilities and certain undeveloped land at
the Innisbrook. In May 1997, the Innisbrook Entity entered
into a management agreement for the Innisbrook property with
Westin, which was then a privately held company partly owned by
Starwood Capital and Goldman, Sachs & Co. When the Company
acquired Westin in January 1998, it acquired Westins
rights and obligations under this management agreement. The
Company is currently attempting to resolve a disagreement with
the Innisbrook Entity relating to various payment and other
provisions of the management agreement.

Aircraft Lease.In February 1998, the Company
leased a Gulfstream III Aircraft from Star Flight LLC, an
affiliate of Starwood Capital. The term of the lease was one
year and automatically renews for one-year terms until either
party terminates the lease upon 90 days written
notice. The rent for the aircraft, which was set at
approximately 90% of fair market value (based on two estimates
from unrelated third parties), is (i) a monthly payment of
1.25% of the lessors total costs relating to the aircraft
(approximately $123,000 at the beginning of the lease with this
amount increasing as additional costs are incurred by the
lessor), plus (ii) $300 for each hour that the aircraft is
in use.

Employee and Officer Loans.In connection with
specific employees and officers relocation to
Starwood headquarters in 2000, 1999 and 1998, Starwood made
non-interest bearing loans to certain individuals. The original
loan amounts totaled approximately $15 million and the amount
outstanding at December 31, 2000 was approximately $13
million. These loans are generally due five years from the date
of issuance or upon the individuals termination.

Note 18.  Commitments and Contingencies

Litigation.The Sheraton Corporation
(Sheraton Corp.) (formerly ITT Sheraton
Corporation), a subsidiary of the Company, is a defendant in
certain litigation relating to Sheraton Corp.s management
of a hotel. The case is titled 2660 Woodley Road Joint
Venture v. ITT Sheraton Corporation, Civil Action
No. 97-450-JJF (U.S.D.C., D. Del.). In December 1999,
following trial, the jury returned a verdict finding that
Sheraton Corp. had violated its contractual obligations to the
hotel owner and awarded contractual damages totaling $11
million. The jury also found for plaintiff on certain common law
and other claims and awarded compensatory and other damages of
$2 million and punitive damages of $38 million. The jury
found for Sheraton Corp. and rejected plaintiffs
additional claims that Sheraton Corp. had violated the Racketeer
Influenced and Corrupt Organizations Act, and that Sheraton
Corp. had engaged in fraud. Sheraton Corp. believes that the
jurys determination against it on liability issues was
erroneous as a matter of law, and that

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

the damage awards were excessive and not supported by the
evidence. Sheraton Corp. has sought to have the verdict set
aside in the trial court and, if necessary, will appeal to the
United States Court of Appeals. There can be no assurance that
Sheraton Corp. will be successful in having the verdict set
aside or overturned or reduced on appeal, or that other owners
of properties managed by Sheraton Corp. will not seek to assert
similar claims.

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

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

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

Estimated insurance claims payable at December 31, 2000 was
$33 million. At December 31, 2000, standby letters of
credit amounting to $25 million had been issued to provide
collateral for the estimated claims. The letters of credit are
guaranteed by the predecessor owner of Westin and Bankers Trust
Company.

Guaranteed Loans and Commitments.The Company
issues guarantees to lenders and other third parties in
connection with financing transactions and other obligations.
These guarantees were limited, in the aggregate, to
approximately $82 million at December 31, 2000, including
guarantees involving major customers. Additionally, the Company
manages certain hotels for others under agreements that provide
for payments or loans to the hotel owners if stipulated levels
of financial performance are not maintained.

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

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

F-32



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 19.  Business Segment and Geographical
Information

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

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

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

|                              |                         |      |        |        |  |      |        |        |  |   |        |        | 
|----------------------------- | ----------------------- | ---- | ------ | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                              |                         | 2000 |        | 1999   |  | 1998
|                              |                         |      |        |        |  |     
|Revenues                      |                         | $    | 4,345  |        |  | $    | 3,829  |        |  | $ | 3,281  |       
|                              |                         |      |        |        |  |      |        |        |  |   |        |       
|Operating profit(a)           |                         | $    | 1,118  |        |  | $    | 921    |        |  | $ | 753    |       
|                              |                         |      |        |        |  |      |        |        |  |   |        |       
|Depreciation and amortization |                         | $    | 481    |        |  | $    | 452    |        |  | $ | 378    |       
|                              |                         |      |        |        |  |      |        |        |  |   |        |       
|Assets:                       |                         |      |        |        |  |      |        |        |  |   |        |       
|                             
|                             
|                             
|                             
|                              | Hotel and leisure       |      | $      | 12,529 |  |      | $      | 12,653 |  |   | $      | 11,827 | 
|                             
|                             
|                             
|                             
|                              | Corporate               |      |        | 131    |  |      |        | 168    |  |   |        | 487    | 
|                             
|                             
|                             
|                             
|                              | Discontinued operations |      |        |       |  |      |        | 104    |  |   |        | 1,103  | 
|                              |                         |      |        |        |  |      |        |        |  |   |        |       
|                              |                         | $    | 12,660 |        |  | $    | 12,925 |        |  | $ | 13,417 |       
|                              |                         |      |        |        |  |      |        |        |  |   |        |       
|Capital expenditures:         |                         |      |        |        |  |      |        |        |  |   |        |       
|                             
|                             
|                             
|                             
|                              | Hotel and leisure       |      | $      | 544    |  |      | $      | 521    |  |   | $      | 427    | 
|                              |                         |      |        |        |  |      |        |        |  |   |        |       






|    |                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------
|(a) | The following costs are not allocated to hotel
	and leisure in evaluating operating profit (in millions):

|                                              |  |      |    |      |  |      |    |  |  |   |     | 
|--------------------------------------------- |  | ---- | -- | ---- |  | ---- | -- |  |  | - | --- | 
|                                              |  | 2000 |    | 1999 |  | 1998
|                                              |  |      |    |      |  |     
|Corporate selling, general and administrative |  | $    | 90 |      |  | $    | 77 |  |  | $ | 90  | 
|                                             
|                                             
|                                             
|                                             
|Restructuring and other special charges       |  | $    |   |      |  | $    | 3  |  |  | $ | 149 | 

|                        |  |               |       |                   |  |      |       |      |  |      |       |      |  |   |       |  |  |   |       |  |  |   |       | 
|----------------------- |  | ------------- | ----- | ----------------- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                        |  |               |       |                  
|                        |  | Revenues      |       | Long-Lived Assets
|                        |  |               |       |                  
|                        |  | 2000          |       | 1999              |  | 1998 |       | 2000 |  | 1999 |       | 1998
|                        |  |               |       |                   |  |      |       |      |  |      |       |     
|                        |  |              
|                        |  | (In millions)
|                       
|                       
|                       
|                       
|United States           |  | $             | 3,230 |                   |  | $    | 2,705 |      |  | $    | 2,180 |      |  | $ | 6,362 |  |  | $ | 6,329 |  |  | $ | 6,242 | 
|                       
|                       
|                       
|                       
|All other international |  |               | 1,115 |                   |  |      | 1,124 |      |  |      | 1,101 |      |  |   | 1,939 |  |  |   | 1,900 |  |  |   | 2,014 | 
|                        |  |               |       |                   |  |      |       |      |  |      |       |      |  |   |       |  |  |   |       |  |  |   |       | 
|Total                   |  | $             | 4,345 |                   |  | $    | 3,829 |      |  | $    | 3,281 |      |  | $ | 8,301 |  |  | $ | 8,229 |  |  | $ | 8,256 | 
|                        |  |               |       |                   |  |      |       |      |  |      |       |      |  |   |       |  |  |   |       |  |  |   |       | 

There were no individual international countries which comprised
over 10% of the total revenues and long-lived assets of the
Company as of December 31, 2000, 1999 or 1998.

F-33



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 20.  Quarterly Results (Unaudited)

The following unaudited quarterly results for 2000 and 1999 have
been restated from amounts previously reported by the Company
for the reclassification in accordance with EITF Issue
No. 00-1 (see Note 2).

|                                         |                                          |                                      |      |         |   |              |       |             |  |      |       |       |   |   |       |       |   |   |       |       |  
|---------------------------------------- | ---------------------------------------- | ------------------------------------ | ---- | ------- | - | ------------ | ----- | ----------- |  | ---- | ----- | ----- | - | - | ----- | ----- | - | - | ----- | ----- | -
|                                         |                                          |                                      |      |        
|                                         |                                          | Three Months Ended                   |      |        
|                                         |                                          |                                      |      |        
|                                         |                                          | March 31                             |      | June 30 |   | September 30 |       | December 31 |  | Year
|                                         |                                          |                                      |      |         |   |              |       |             |  |     
|                                         |                                          |                                     
|                                         |                                          | (In millions, except per Share data)
|                                        
|                                        
|                                        
|                                        
|2000                                     |                                          |                                      |      |         |   |              |       |             |  |      |       |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|Revenues                                 |                                          | $                                    | 996  |         |   | $            | 1,142 |             |  | $    | 1,102 |       |   | $ | 1,105 |       |   | $ | 4,345 |      
|                                        
|                                        
|                                        
|                                        
|Costs and expenses                       |                                          | $                                    | 811  |         |   | $            | 857   |             |  | $    | 834   |       |   | $ | 815   |       |   | $ | 3,317 |      
|                                        
|                                        
|                                        
|                                        
|Income from continuing operations        |                                          | $                                    | 53   |         |   | $            | 114   |             |  | $    | 103   |       |   | $ | 131   |       |   | $ | 401   |      
|                                        
|                                        
|                                        
|                                        
|Discontinued operations                  |                                          | $                                    |     |         |   | $            | 5     |             |  | $    |      |       |   | $ |      |       |   | $ | 5     |      
|                                        
|                                        
|                                        
|                                        
|Extraordinary item                       |                                          | $                                    | (3   | )       |   | $            |      |             |  | $    |      |       |   | $ |      |       |   | $ | (3    | )    
|                                        
|                                        
|                                        
|                                        
|Net income                               |                                          | $                                    | 50   |         |   | $            | 119   |             |  | $    | 103   |       |   | $ | 131   |       |   | $ | 403   |      
|                                        
|                                        
|                                        
|                                        
|Earnings per Share:                      |                                          |                                      |      |         |   |              |       |             |  |      |       |       |   |   |       |       |   |   |       |      
|Basic                                   |                                          |                                      |      |         |   |              |       |             |  |      |       |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|                                         | Income from continuing operations        |                                      | $    | 0.26    |   |              | $     | 0.58        |  |      | $     | 0.51  |   |   | $     | 0.66  |   |   | $     | 2.03  |  
|                                        
|                                        
|                                        
|                                        
|                                         | Discontinued operations                  |                                      | $    |        |   |              | $     | 0.02        |  |      | $     |      |   |   | $     |      |   |   | $     | 0.02  |  
|                                        
|                                        
|                                        
|                                        
|                                         | Extraordinary item                       |                                      | $    | (0.01   | ) |              | $     |            |  |      | $     |      |   |   | $     |      |   |   | $     | (0.01 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Net income                               |                                      | $    | 0.25    |   |              | $     | 0.60        |  |      | $     | 0.51  |   |   | $     | 0.66  |   |   | $     | 2.04  |  
|Diluted                                 |                                          |                                      |      |         |   |              |       |             |  |      |       |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|                                         | Income from continuing operations        |                                      | $    | 0.26    |   |              | $     | 0.56        |  |      | $     | 0.50  |   |   | $     | 0.64  |   |   | $     | 1.96  |  
|                                        
|                                        
|                                        
|                                        
|                                         | Discontinued operations                  |                                      | $    |        |   |              | $     | 0.02        |  |      | $     |      |   |   | $     |      |   |   | $     | 0.02  |  
|                                        
|                                        
|                                        
|                                        
|                                         | Extraordinary item                       |                                      | $    | (0.01   | ) |              | $     |            |  |      | $     |      |   |   | $     |      |   |   | $     | (0.01 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Net income                               |                                      | $    | 0.25    |   |              | $     | 0.58        |  |      | $     | 0.50  |   |   | $     | 0.64  |   |   | $     | 1.97  |  
|                                        
|                                        
|                                        
|                                        
|                                        
|1999                                     |                                          |                                      |      |         |   |              |       |             |  |      |       |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|Revenues                                 |                                          | $                                    | 842  |         |   | $            | 960   |             |  | $    | 948   |       |   | $ | 1,079 |       |   | $ | 3,829 |      
|                                        
|                                        
|                                        
|                                        
|Costs and expenses                       |                                          | $                                    | 702  |         |   | $            | 689   |             |  | $    | 736   |       |   | $ | 861   |       |   | $ | 2,988 |      
|                                        
|                                        
|                                        
|                                        
|Income (loss) from continuing operations |                                          | $                                    | (925 | )       |   | $            | 142   |             |  | $    | 44    |       |   | $ | 101   |       |   | $ | (638  | )    
|                                        
|                                        
|                                        
|                                        
|Discontinued operations                  |                                          | $                                    | (7   | )       |   | $            |      |             |  | $    |      |       |   | $ | (64   | )     |   | $ | (71   | )    
|                                        
|                                        
|                                        
|                                        
|Extraordinary item                       |                                          | $                                    |     |         |   | $            |      |             |  | $    | (2    | )     |   | $ | (30   | )     |   | $ | (32   | )    
|                                        
|                                        
|                                        
|                                        
|Net income (loss)                        |                                          | $                                    | (932 | )       |   | $            | 142   |             |  | $    | 42    |       |   | $ | 7     |       |   | $ | (741  | )    
|                                        
|                                        
|                                        
|                                        
|Earnings per Share:                      |                                          |                                      |      |         |   |              |       |             |  |      |       |       |   |   |       |       |   |   |       |      
|Basic                                   |                                          |                                      |      |         |   |              |       |             |  |      |       |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|                                         | Income (loss) from continuing operations |                                      | $    | (4.86   | ) |              | $     | 0.76        |  |      | $     | 0.23  |   |   | $     | 0.51  |   |   | $     | (3.41 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Discontinued operations                  |                                      | $    | (0.04   | ) |              | $     |            |  |      | $     |      |   |   | $     | (0.33 | ) |   | $     | (0.38 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Extraordinary item                       |                                      | $    |        |   |              | $     |            |  |      | $     | (0.01 | ) |   | $     | (0.15 | ) |   | $     | (0.17 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Net income (loss)                        |                                      | $    | (4.90   | ) |              | $     | 0.76        |  |      | $     | 0.22  |   |   | $     | 0.03  |   |   | $     | (3.96 | )
|Diluted                                 |                                          |                                      |      |         |   |              |       |             |  |      |       |       |   |   |       |       |   |   |       |      
|                                        
|                                        
|                                        
|                                        
|                                         | Income (loss) from continuing operations |                                      | $    | (4.86   | ) |              | $     | 0.73        |  |      | $     | 0.23  |   |   | $     | 0.50  |   |   | $     | (3.41 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Discontinued operations                  |                                      | $    | (0.04   | ) |              | $     |            |  |      | $     |      |   |   | $     | (0.32 | ) |   | $     | (0.38 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Extraordinary item                       |                                      | $    |        |   |              | $     |            |  |      | $     | (0.01 | ) |   | $     | (0.15 | ) |   | $     | (0.17 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Net income (loss)                        |                                      | $    | (4.90   | ) |              | $     | 0.73        |  |      | $     | 0.22  |   |   | $     | 0.03  |   |   | $     | (3.96 | )

F-34



---



##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 21.  Supplementary Financial Information
(Unaudited)

The following table presents a reconciliation of operating
income to EBITDA(1) (in millions):

|                                                  |  |                         |       |      |  |      |       |  |  |   |       | 
|------------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                                  |  |                        
|                                                  |  | Year Ended December 31,
|                                                  |  |                        
|                                                  |  | 2000                    |       | 1999 |  | 1998
|                                                  |  |                         |       |      |  |     
|Operating income                                  |  | $                       | 1,028 |      |  | $    | 841   |  |  | $ | 514   | 
|                                                 
|                                                 
|                                                 
|                                                 
|Depreciation(2)                                   |  |                         | 418   |      |  |      | 394   |  |  |   | 318   | 
|                                                 
|                                                 
|                                                 
|                                                 
|Amortization                                      |  |                         | 90    |      |  |      | 82    |  |  |   | 81    | 
|                                                 
|                                                 
|                                                 
|                                                 
|Interest expense of unconsolidated joint ventures |  |                         | 18    |      |  |      | 16    |  |  |   | 23    | 
|                                                 
|                                                 
|                                                 
|                                                 
|Interest income                                   |  |                         | 19    |      |  |      | 16    |  |  |   | 26    | 
|                                                 
|                                                 
|                                                 
|                                                 
|Restructuring and other special charges           |  |                         |      |      |  |      | 3     |  |  |   | 149   | 
|                                                  |  |                         |       |      |  |      |       |  |  |   |       | 
|EBITDA                                            |  | $                       | 1,573 |      |  | $    | 1,352 |  |  | $ | 1,111 | 
|                                                  |  |                         |       |      |  |      |       |  |  |   |       | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | EBITDA is defined as income before interest
	expense, income tax expense and depreciation and amortization.
	Non-recurring items and gains and losses from sales of real
	estate and investments are also excluded from EBITDA as these
	items do not impact operating results on a recurring basis.
	Management considers EBITDA to be one measure of the cash flows
	from operations of the Company before debt service that provides
	a relevant basis for comparison, and EBITDA is presented to
	assist investors in analyzing the performance of the Company.
	This information should not be considered as an alternative to
	any measure of performance as promulgated under accounting
	principles generally accepted in the United States, nor should
	it be considered as an indicator of the overall financial
	performance of the Company. The Companys calculation of
	EBITDA may be different from the calculation used by other
	companies and, therefore, comparability may be limited.
|   
|(2) | Includes depreciation expense of unconsolidated
	joint ventures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

F-35



---



##### Table of Contents



SCHEDULE II

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

AND STARWOOD HOTELS & RESORTS


VALUATION AND QUALIFYING ACCOUNTS


(In millions)


|                                                    |                                         |            |    |                        |  |             |    |           |     |              |    |     |   |   |     |      |   |   |    |     | 
|--------------------------------------------------- | --------------------------------------- | ---------- | -- | ---------------------- |  | ----------- | -- | --------- | --- | ------------ | -- | --- | - | - | --- | ---- | - | - | -- | --- | 
|                                                    |                                         |            |    |                        |  |            
|                                                    |                                         |            |    | Additions (Deductions) |  |            
|                                                    |                                         |            |    |                        |  |            
|                                                    |                                         |            |    |                        |  | Charged     |    |           |     |             
|                                                    |                                         |            |    |                        |  | to/from     |    |           |     |             
|                                                    |                                         | Balance    |    | Charged                |  | Other       |    | Payments/ |     | Balance     
|                                                    |                                         | January 1, |    | to Expenses            |  | Accounts(a) |    | Other     |     | December 31,
|                                                    |                                         |            |    |                        |  |             |    |           |     |             
|2000                                                |                                         |            |    |                        |  |             |    |           |     |              |    |     |   |   |     |      |   |   |    |    
|                                                   
|                                                   
|                                                   
|                                                   
|Trade receivablesallowance for doubtful accounts   |                                         | $          | 62 |                        |  | $           | 2  |           |     | $            | (8 | )   |   | $ | (11 | )    |   | $ | 45 |    
|                                                   
|                                                   
|                                                   
|                                                   
|Notes receivableallowance for doubtful accounts    |                                         | $          | 43 |                        |  | $           | 17 |           |     | $            | 6  |     |   | $ | (24 | )    |   | $ | 42 |    
|                                                   
|                                                   
|                                                   
|                                                   
|Reserves included in accrued and other liabilities: |                                         |            |    |                        |  |             |    |           |     |              |    |     |   |   |     |      |   |   |    |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Restructuring and other special charges |            | $  | 121                    |  |             | $  |          |     |              | $  | (13 | ) |   | $   | (8   | ) |   | $  | 100 | 
|                                                   
|                                                   
|                                                   
|                                                   
|1999                                                |                                         |            |    |                        |  |             |    |           |     |              |    |     |   |   |     |      |   |   |    |    
|                                                   
|                                                   
|                                                   
|                                                   
|Trade receivablesallowance for doubtful accounts   |                                         | $          | 55 |                        |  | $           | 5  |           |     | $            |   |     |   | $ | 2   |      |   | $ | 62 |    
|                                                   
|                                                   
|                                                   
|                                                   
|Notes receivableallowance for doubtful accounts    |                                         | $          | 31 |                        |  | $           | 4  |           |     | $            |   |     |   | $ | 8   |      |   | $ | 43 |    
|                                                   
|                                                   
|                                                   
|                                                   
|Reserves included in accrued and other liabilities: |                                         |            |    |                        |  |             |    |           |     |              |    |     |   |   |     |      |   |   |    |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Restructuring and other special charges |            | $  | 202                    |  |             | $  | 3         | (b) |              | $  | (15 | ) |   | $   | (69  | ) |   | $  | 121 | 
|                                                   
|                                                   
|                                                   
|                                                   
|1998                                                |                                         |            |    |                        |  |             |    |           |     |              |    |     |   |   |     |      |   |   |    |    
|                                                   
|                                                   
|                                                   
|                                                   
|Trade receivablesallowance for doubtful accounts   |                                         | $          | 45 |                        |  | $           | 13 |           |     | $            | 7  |     |   | $ | (10 | )    |   | $ | 55 |    
|                                                   
|                                                   
|                                                   
|                                                   
|Notes receivableallowance for doubtful accounts    |                                         | $          | 55 |                        |  | $           |   |           |     | $            |   |     |   | $ | (24 | )    |   | $ | 31 |    
|                                                   
|                                                   
|                                                   
|                                                   
|Reserves included in accrued and other liabilities: |                                         |            |    |                        |  |             |    |           |     |              |    |     |   |   |     |      |   |   |    |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Restructuring and other special charges |            | $  | 730                    |  |             | $  | 149       |     |              | $  | (79 | ) |   | $   | (598 | ) |   | $  | 202 | 






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

|                                     |  |                   |    |                 |  |   |     |  
|------------------------------------ |  | ----------------- | -- | --------------- |  | - | --- | -
|                                     |  | Trade and Notes   |    |                
|                                     |  | Receivable       |    | Restructuring  
|                                     |  | Allowance for     |    | and Other      
|                                     |  | Doubtful Accounts |    | Special Charges
|                                     |  |                   |    |                
|2000                                 |  |                   |    |                 |  |   |     |  
|                                    
|                                    
|                                    
|                                    
|Other assets                         |  | $                 | (5 | )               |  | $ |    |  
|                                    
|                                    
|                                    
|                                    
|Other liabilities                    |  |                   | 3  |                 |  |   | (13 | )
|                                     |  |                   |    |                 |  |   |     |  
|Total charged to/from other accounts |  | $                 | (2 | )               |  | $ | (13 | )
|                                     |  |                   |    |                 |  |   |     |  
|1999                                 |  |                   |    |                 |  |   |     |  
|                                    
|                                    
|                                    
|                                    
|Other assets                         |  | $                 |   |                 |  | $ | (3  | )
|                                    
|                                    
|                                    
|                                    
|Other liabilities                    |  |                   |   |                 |  |   | (12 | )
|                                     |  |                   |    |                 |  |   |     |  
|Total charged to/from other accounts |  | $                 |   |                 |  | $ | (15 | )
|                                     |  |                   |    |                 |  |   |     |  
|1998                                 |  |                   |    |                 |  |   |     |  
|                                    
|                                    
|                                    
|                                    
|Notes receivable                     |  | $                 |   |                 |  | $ | (20 | )
|                                    
|                                    
|                                    
|                                    
|Investments                          |  |                   |   |                 |  |   | (27 | )
|                                    
|                                    
|                                    
|                                    
|Other assets                         |  |                   |   |                 |  |   | (15 | )
|                                    
|                                    
|                                    
|                                    
|Other long-term liabilities          |  |                   |   |                 |  |   | (17 | )
|                                    
|                                    
|                                    
|                                    
|Acquired assets                      |  |                   | 7  |                 |  |   |    |  
|                                     |  |                   |    |                 |  |   |     |  
|Total charged to/from other accounts |  | $                 | 7  |                 |  | $ | (79 | )
|                                     |  |                   |    |                 |  |   |     |  



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

S-1



---



##### Table of Contents



SCHEDULE III

STARWOOD HOTELS & RESORTS

REAL ESTATE AND ACCUMULATED DEPRECIATION


December 31, 2000


(In millions)


|                                                   |  |      |          |       |  |              |    |                  |  |                         |       |              |  |      |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   |         | 
|-------------------------------------------------- |  | ---- | -------- | ----- |  | ------------ | -- | ---------------- |  | ----------------------- | ----- | ------------ |  | ---- | ------- | ------------ |  | - | - |  |  | - | ----- |  |  | - | ----- |  |  | - | ------- | 
|                                                   |  |      |          |       |  |              |    |                  |  |                        
|                                                   |  |      |          |       |  | Initial Cost |    | Costs Subsequent |  | Gross Amount Book Value
|                                                   |  |      |          |       |  | to Company   |    | to Acquisition   |  | at December 31, 2000   
|                                                   |  |      |          |       |  |              |    |                  |  |                        
|                                                   |  |      |          |       |  |              |    |                  |  | (a)                     |       |             
|                                                   |  |      |          |       |  |              |    |                  |  |                         |       | (a)(b)      
|                                                   |  |      |          |       |  |              |    | Building and     |  |                         |       | Building and |  |      |         | Building and
|Description                                        |  | City |          | State |  | Land         |    | Improvements     |  | Land                    |       | Improvements |  | Land |         | Improvements
|                                                   |  |      |          |       |  |              |    |                  |  |                         |       |              |  |      |         |             
|The St. Regis, New York                            |  |      | New York |       |  |              | NY |                  |  | $                       | 65.0  |              |  | $    | 149.8   |              |  | $ |  |  |  | $ | 6.5   |  |  | $ | 65.0  |  |  | $ | 156.3   | 
|                                                  
|                                                  
|                                                  
|                                                  
|Other hotel properties, each less than 5% of total |  |      |          |       |  |              |    |                  |  |                         | 393.4 |              |  |      | 3,377.5 |              |  |   |  |  |  |   | 249.0 |  |  |   | 393.4 |  |  |   | 3,626.5 | 
|                                                   |  |      |          |       |  |              |    |                  |  |                         |       |              |  |      |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   |         | 
|                                                   |  |      |          |       |  |              |    |                  |  | $                       | 458.4 |              |  | $    | 3,527.3 |              |  | $ |  |  |  | $ | 255.5 |  |  | $ | 458.4 |  |  |   | 3,782.8 | 
|                                                   |  |      |          |       |  |              |    |                  |  |                         |       |              |  |      |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   |         | 
|Land                                               |  |      |          |       |  |              |    |                  |  |                         |       |              |  |      |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   | 458.4   | 
|                                                  
|                                                  
|                                                  
|                                                  
|Furniture, fixtures, and equipment                 |  |      |          |       |  |              |    |                  |  |                         |       |              |  |      |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   | 483.4   | 
|                                                  
|                                                  
|                                                  
|                                                  
|Construction in progress                           |  |      |          |       |  |              |    |                  |  |                         |       |              |  |      |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   | 24.9    | 
|                                                   |  |      |          |       |  |              |    |                  |  |                         |       |              |  |      |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   |         | 
|                                                   |  |      |          |       |  |              |    |                  |  |                         |       |              |  |      |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  | $ | 4,749.5 | 
|                                                   |  |      |          |       |  |              |    |                  |  |                         |       |              |  |      |         |              |  |   |   |  |  |   |       |  |  |   |       |  |  |   |         | 

[Additional columns below]

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

|                                                   |  |                |       |              |  |          |         |      |  |  |         |  |  |  |         | 
|-------------------------------------------------- |  | -------------- | ----- | ------------ |  | -------- | ------- | ---- |  |  | ------- |  |  |  | ------- | 
|                                                   |  | Accumulated    |       |              |  |          |         |     
|                                                   |  | Depreciation & |       | Year of      |  | Date     |         |     
|Description                                        |  | Amortization   |       | Construction |  | Acquired |         | Life
|                                                   |  |                |       |              |  |          |         |     
|The St. Regis, New York                            |  | $              | 9.5   |              |  |          | 1904    |      |  |  | 06/98   |  |  |  | 40      | 
|                                                  
|                                                  
|                                                  
|                                                  
|Other hotel properties, each less than 5% of total |  |                | 292.2 |              |  |          | Various |      |  |  | Various |  |  |  | Various | 
|                                                   |  |                |       |              |  |          |         |      |  |  |         |  |  |  |         | 
|                                                   |  |                | 301.7 |              |  |          |         |      |  |  |         |  |  |  |         | 
|                                                  
|                                                  
|                                                  
|                                                  
|Land                                               |  |                |      |              |  |          |         |      |  |  |         |  |  |  |         | 
|                                                  
|                                                  
|                                                  
|                                                  
|Furniture, fixtures, and equipment                 |  |                | 187.4 |              |  |          |         |      |  |  |         |  |  |  |         | 
|                                                  
|                                                  
|                                                  
|                                                  
|Construction in progress                           |  |                |      |              |  |          |         |      |  |  |         |  |  |  |         | 
|                                                   |  |                |       |              |  |          |         |      |  |  |         |  |  |  |         | 
|                                                   |  | $              | 489.1 |              |  |          |         |      |  |  |         |  |  |  |         | 
|                                                   |  |                |       |              |  |          |         |      |  |  |         |  |  |  |         | 






|    |                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | As of December 31, 2000, land, building,
	furniture, fixtures and equipment and construction in progress
	have a cost basis of $451.8 million, $2,486.2 million, $533.7
	million and $24.9 million, respectively, for federal income tax
	purposes.
|   
|(b) | Building and improvements include amounts
	allocated for leasehold interest in land and net assets held for
	sale.                                                                                                                                 

S-2



---



##### Table of Contents



SCHEDULE III (Continued)


STARWOOD HOTELS & RESORTS

REAL ESTATE AND ACCUMULATED DEPRECIATION


(In millions)


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

|                                       |                      |                   |       |      |  
|-------------------------------------- | -------------------- | ----------------- | ----- | ---- | -
|                                       |                      | Year Ended       
|                                       |                      | December 31, 2000
|                                       |                      |                  
|Real Estate and Furniture and Fixtures |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|Balance at beginning of period         |                      | $                 | 4,599 |     
|                                      
|                                      
|                                      
|                                      
|Additions during period:               |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|                                       | Acquisitions         |                   |       |     |  
|                                      
|                                      
|                                      
|                                      
|                                       | Improvements         |                   |       | 204  |  
|                                      
|                                      
|                                      
|                                      
|                                       | Other                |                   |       | 34   |  
|                                      
|                                      
|                                      
|                                      
|Deductions during period:              |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|                                       | Sale of properties   |                   |       | (88  | )
|                                       |                      |                   |       |     
|Balance at end of period               |                      | $                 | 4,749 |     
|                                       |                      |                   |       |     
|Accumulated Depreciation               |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|Balance at beginning of period         |                      | $                 | (306  | )   
|                                      
|                                      
|                                      
|                                      
|Additions during period:               |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|                                       | Depreciation expense |                   |       | (183 | )
|                                      
|                                      
|                                      
|                                      
|                                       | Other                |                   |       | (5   | )
|                                      
|                                      
|                                      
|                                      
|Deductions during period:              |                      |                   |       |     
|                                      
|                                      
|                                      
|                                      
|                                       | Sale of properties   |                   |       | 5    |  
|                                       |                      |                   |       |     
|Balance at end of period               |                      | $                 | (489  | )   
|                                       |                      |                   |       |     

S-3



---



##### Table of Contents



SCHEDULE IV

STARWOOD HOTELS & RESORTS

MORTGAGE LOANS ON REAL ESTATE


December 31, 2000


(In millions)


|                            |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  |   |       |       |  |   |       |       |  |  |  |  | 
|--------------------------- | ------------------------------------------ | -------- |  | -------- | - | -------- |  | --------- |  | ------------ |  | ------------ | - | ---------------- |  | --- |  | - | ----- | ----- |  | - | ----- | ----- |  |  |  |  | 
|                            |                                            |          |  |          |   |          |  |           |  |              |  |              |   | Principal Amount
|                            |                                            |          |  |          |   |          |  |           |  |              |  |              |   | of Loans Subject
|                            |                                            |          |  |          |   | Periodic |  |           |  | Original     |  | Carrying     |   | to Delinquent   
|                            |                                            | Interest |  | Final    |   | Payment  |  | Prior     |  | Face Amount  |  | Amount of    |   | Principal or    
|Description                 |                                            | Rate     |  | Maturity |   | Terms    |  | Liens     |  | of Mortgages |  | Mortgages(a) |   | Interest        
|                            |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                 
|First Mortgages:            |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                           
|                           
|                           
|                           
|                            | Ramada InnTucker, GA                      |          |  | 9.00     | % |          |  | 2002      |  |              |  | (b           | ) |                  |  | No  |  |   | $     | 2     |  |   | $     | 2     |  |  |  |  | 
|                           
|                           
|                           
|                           
|Second Mortgages:           |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                           
|                           
|                           
|                           
|                            | Westin PortlandPortland, OR               |          |  | 11.50    | % |          |  | 2003      |  |              |  | (c           | ) |                  |  | Yes |  |   |       | 2     |  |   |       | 2     |  |  |  |  | 
|                            |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                            |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  | $ | 4     |       |  | $ | 4     |       |  |  |  | 
|                            |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|Intercompany Mortgage Loans |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                           
|                           
|                           
|                           
|First Mortgages:            |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                           
|                           
|                           
|                           
|                            | W New YorkNew York, NY                    |          |  | 9.50     | % |          |  | 2006      |  |              |  | (d           | ) |                  |  | No  |  |   | $     | 40    |  |   | $     | 40    |  |  |  |  | 
|                           
|                           
|                           
|                           
|                            | Westin MauiMaui, HI                       |          |  | 10.00    | % |          |  | On Demand |  |              |  | (e           | ) |                  |  | No  |  |   |       | 105   |  |   |       | 121   |  |  |  |  | 
|                           
|                           
|                           
|                           
|                            | Westin ReginaCancun, Mexico               |          |  | 9.00     | % |          |  | 2005      |  |              |  | (f           | ) |                  |  | No  |  |   |       | 41    |  |   |       | 40    |  |  |  |  | 
|                           
|                           
|                           
|                           
|                            | Westin ReginaLos Cabos, Mexico            |          |  | 9.00     | % |          |  | 2005      |  |              |  | (f           | ) |                  |  | No  |  |   |       | 53    |  |   |       | 44    |  |  |  |  | 
|                           
|                           
|                           
|                           
|                            | Westin ReginaPuerto Vallarta, Mexico      |          |  | 9.00     | % |          |  | 2005      |  |              |  | (f           | ) |                  |  | No  |  |   |       | 25    |  |   |       | 21    |  |  |  |  | 
|                           
|                           
|                           
|                           
|                            | Westin HotelTurnberry, Scotland           |          |  | 10.00    | % |          |  | On Demand |  |              |  | (g           | ) |                  |  | No  |  |   |       | 27    |  |   |       | 16    |  |  |  |  | 
|                           
|                           
|                           
|                           
|                            | Sheraton Holding Corporation Mortgage Note |          |  | 10.00    | % |          |  | 2005      |  |              |  | (h           | ) |                  |  | No  |  |   |       | 2,489 |  |   |       | 1,289 |  |  |  |  | 
|                           
|                           
|                           
|                           
|                            | Sheraton Holding Corporation Mortgage Note |          |  | 8.50     | % |          |  | 2005      |  |              |  | (h           | ) |                  |  | No  |  |   |       | 210   |  |   |       | 210   |  |  |  |  | 
|                           
|                           
|                           
|                           
|                            | Starwood Hotels & Resorts Worldwide, Inc.  |          |  | 8.50     | % |          |  | 2005      |  |              |  | (i           | ) |                  |  | No  |  |   |       | 150   |  |   |       | 150   |  |  |  |  | 
|                            |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  |   |       |       |  |   |       |       |  |  |  | 
|                            |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  | $ | 3,140 |       |  | $ | 1,931 |       |  |  |  | 
|                            |                                            |          |  |          |   |          |  |           |  |              |  |              |   |                  |  |     |  |   |       |       |  |   |       |       |  |  |  | 






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



|    |                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------
|(f) | Interest only payable monthly; principal and all
	accrued and unpaid interest are due December 2005.



|    |                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------
|(g) | Interest only payable monthly; principal and all
	accrued and unpaid interest are due on demand.    
|   
|(h) | Interest only payable monthly; principal and all
	accrued and unpaid interest are due February 2005.



|    |                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------
|(i) | Interest only payable monthly; principal and all
	accrued and unpaid interest are due February 2005.

S-4



---



##### Table of Contents



SCHEDULE IV (Continued)

STARWOOD HOTELS & RESORTS

RECONCILIATION OF MORTGAGE LOANS


(In millions)


|                               |                                  |                         |   |      |  |      |     |      |   |   |     |     |  
|------------------------------ | -------------------------------- | ----------------------- | - | ---- |  | ---- | --- | ---- | - | - | --- | --- | -
|                               |                                  |                        
|                               |                                  | Year Ended December 31,
|                               |                                  |                        
|                               |                                  | 2000                    |   | 1999 |  | 1998
|                               |                                  |                         |   |      |  |     
|Balance at beginning of period |                                  | $                       | 4 |      |  | $    | 164 |      |   | $ | 51  |    
|                              
|                              
|                              
|                              
|Additions:                     |                                  |                         |   |      |  |      |     |      |   |   |     |    
|                              
|                              
|                              
|                              
|                               | New mortgage loans               |                         |   |     |  |      |     |     |   |   |     | 107 |  
|                              
|                              
|                              
|                              
|                               | Purchase accounting revaluation  |                         |   |     |  |      |     |     |   |   |     | 12  |  
|                              
|                              
|                              
|                              
|Deductions:                    |                                  |                         |   |      |  |      |     |      |   |   |     |    
|                              
|                              
|                              
|                              
|                               | Principal repayments             |                         |   |     |  |      |     | (55  | ) |   |     | (6  | )
|                              
|                              
|                              
|                              
|                               | Reclassification to Intercompany |                         |   |     |  |      |     | (105 | ) |   |     |    |  
|                               |                                  |                         |   |      |  |      |     |      |   |   |     |    
|Balance at end of period       |                                  | $                       | 4 |      |  | $    | 4   |      |   | $ | 164 |    
|                               |                                  |                         |   |      |  |      |     |      |   |   |     |    

INTERCOMPANY MORTGAGE ROLLFORWARD

December 31, 2000


(In millions)


|                                          |  |           |       |           |  |          |   |           |  |         |    |   |  |   |    |   |  |   |       | 
|----------------------------------------- |  | --------- | ----- | --------- |  | -------- | - | --------- |  | ------- | -- | - |  | - | -- | - |  | - | ----- | 
|                                          |  | Beginning |       |           |  | Accrued  |   | Principal |  | Ending 
|Description                               |  | Balance   |       | Additions |  | Interest |   | Payments  |  | Balance
|                                          |  |           |       |           |  |          |   |           |  |        
|W New YorkNew York, NY                   |  | $         | 40    |           |  | $        |  |           |  | $       |   |   |  | $ |   |   |  | $ | 40    | 
|                                         
|                                         
|                                         
|                                         
|Westin MauiMaui, HI(a)                   |  |           | 110   |           |  |          |  |           |  |         | 11 |   |  |   |   |   |  |   | 121   | 
|                                         
|                                         
|                                         
|                                         
|Westin ReginaCancun, Mexico(a)           |  |           | 41    |           |  |          |  |           |  |         | (1 | ) |  |   |   |   |  |   | 40    | 
|                                         
|                                         
|                                         
|                                         
|Westin ReginaLos Cabos, Mexico(a)        |  |           | 44    |           |  |          |  |           |  |         | 1  |   |  |   | (1 | ) |  |   | 44    | 
|                                         
|                                         
|                                         
|                                         
|Westin ReginaPuerto Vallarta, Mexico     |  |           | 22    |           |  |          |  |           |  |         |   |   |  |   | (1 | ) |  |   | 21    | 
|                                         
|                                         
|                                         
|                                         
|Westin HotelTurnberry, Scotland(a)       |  |           | 15    |           |  |          |  |           |  |         | 1  |   |  |   |   |   |  |   | 16    | 
|                                         
|                                         
|                                         
|                                         
|Sheraton Holding Corporation              |  |           | 1,289 |           |  |          |  |           |  |         |   |   |  |   |   |   |  |   | 1,289 | 
|                                         
|                                         
|                                         
|                                         
|Sheraton Holding Corporation              |  |           | 210   |           |  |          |  |           |  |         |   |   |  |   |   |   |  |   | 210   | 
|                                         
|                                         
|                                         
|                                         
|Starwood Hotels & Resorts Worldwide, Inc. |  |           | 150   |           |  |          |  |           |  |         |   |   |  |   |   |   |  |   | 150   | 
|                                          |  |           |       |           |  |          |   |           |  |         |    |   |  |   |    |   |  |   |       | 
|                                          |  | $         | 1,921 |           |  | $        |  |           |  | $       | 12 |   |  | $ | (2 | ) |  | $ | 1,931 | 
|                                          |  |           |       |           |  |          |   |           |  |         |    |   |  |   |    |   |  |   |       | 






|    |                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Per mortgage loan agreements, the borrowers are
	not required to pay monthly interest if the cash flows are
	insufficient. Thus, the Trust has accrued interest on the
	notes.

S-5



---



##### Table of Contents



EXHIBIT INDEX

|        |     |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | --- | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |                       
|Number  |     | Description of Exhibit
|        |     |                       
|        | 2.1 |                        |  | Formation Agreement, dated as of November 11, 1994, among
	the Trust, the Corporation, Starwood Capital and the Starwood
	Partners (incorporated by reference to Exhibit 2 to the
	Trusts and the Corporations Joint Current Report on
	Form 8-K dated November 16, 1994). (The SEC file
	numbers of all filings made by the Corporation and the Trust
	pursuant to the Securities Act of 1934, as amended, and
	referenced herein are: 1-7959 (the Corporation) and 1-6828 (the
	Trust)).                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 2.2 |                        |  | Form of Amendment No. 1 to Formation Agreement, dated as of
	July 1995, among the Trust, the Corporation and the
	Starwood Partners (incorporated by reference to Exhibit 10.23 to
	the Trusts and the Corporations Joint Registration
	Statement on Form S-2 filed with the SEC on June 29,
	1995 (Registration Nos. 33-59155 and 33-59155-01)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 2.3 |                        |  | Transaction Agreement, dated as of September 8, 1997, by
	and among the Trust, the Corporation, Realty Partnership,
	Operating Partnership, WHWE L.L.C., Woodstar Investor
	Partnership (Woodstar), Nomura Asset Capital
	Corporation, Juergen Bartels, Westin Hotels & Resorts
	Worldwide, Inc., W&S Lauderdale Corp., W&S Seattle
	Corp., Westin St. John Hotel Company, Inc., W&S Denver
	Corp., W&S Atlanta Corp. and W&S Hotel L.L.C.
	(incorporated by reference to Exhibit 2 to the Trusts
	and the Corporations Joint Current Report on Form 8-K
	dated September 9, 1997, as amended by the Form 8-K/ A
	dated December 18, 1997).                                                                                                                                                                                                                                                                                                    
|        | 2.4 |                        |  | Amended and Restated Agreement and Plan of Merger, dated as of
	November 12, 1997, by and among the Corporation, the Trust,
	Chess Acquisition Corp. (Chess) and ITT Corporation
	(incorporated by reference to Exhibit 2.1 to the
	Trusts and the Corporations Joint Current Report on
	Form 8-K dated November 13, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 2.5 |                        |  | Agreement and Plan of Restructuring, dated as of September 16,
	1998, and amended as of November 30, 1998, among the
	Corporation, ST Acquisition Trust (ST Trust) and the
	Trust (incorporated by reference to Annex A to the Trusts
	and the Corporations Joint Proxy Statement dated December
	3, 1998 (the 1998 Proxy Statement)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 2.6 |                        |  | Form of Stock Purchase Agreement, dated as of February 23,
	1998, between the Trust and the Corporation (incorporated by
	reference to Exhibit 10.4 to the Trusts and the
	Corporations Joint Annual Report on Form 10-K for the
	year ended December 31, 1997 (the 1997
	Form 10-K)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 3.1 |                        |  | Amended and Restated Declaration of Trust of the Trust, amended
	and restated as of January 6, 1999 (incorporated by
	reference to Exhibit 1 to the Trusts Registration
	Statement on Form 8-A filed on December 21, 1998 (the
	Trust Form 8-A), except that the following
	changes were made on January 6, 1999, upon the filing by
	the Trust and ST Trust of the Articles of Merger of ST Trust
	into the Trust (the Articles of Merger) with, and
	the acceptance thereof for record by, the State Department of
	Assessments and Taxation of the State of Maryland (the
	SDAT): Section 6.14 specifies January 6,
	1999 as the date of the Intercompany Agreement;
	Section 6.19.1 specifies January 6, 1999 as the date of the
	acceptance for record by the SDAT of the Articles of Merger; and
	the definition of Intercompany Agreement in
	Section 6.19.2 specifies January 6, 1999 as the date
	of the Intercompany Agreement).
|        | 3.2 |                        |  | Charter of the Corporation, amended and restated as of
	February 1, 1995, as amended through March 26, 1999
	(incorporated by reference to Exhibit 3.2 to the
	Trusts and the Corporations Joint Annual Report on
	Form 10-K for the year ended December 31, 1998, as
	amended by the Form 10-K/ A filed May 17, 1999 (as so
	amended, the 1998 Form 10-K)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 3.3 |                        |  | Bylaws of the Trust, as amended through April 16, 1999
	(incorporated by reference to Exhibit 3.3 to the
	Corporations and the Trusts Joint Quarterly Report
	on Form 10-Q for the quarterly period ended March 31,
	1999 (the 1999 Form 10-Q1)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 3.4 |                        |  | Bylaws of the Corporation, as amended through March 15,
	1999 (incorporated by reference to Exhibit 3 to the
	Corporations and the Trusts Joint Current Report on
	Form 8-K dated March 15, 1999 (the March 15
	Form 8-K)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



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##### Table of Contents



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



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##### Table of Contents



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | ----- | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.12 |                        |  | Form of Indemnification Agreement and Amendment No. 1 to
	Indemnification Agreement between the Trust and each of its
	Trustees and executive officers (incorporated by reference to
	Exhibit 10.7 to the Trusts and the Corporations
	Joint Annual Report on Form 10-K for the year ended
	December 31, 1995 (the 1995
	Form 10-K)).(1)                                                                                                                                                                                     
|        | 10.13 |                        |  | Form of Indemnification Agreement and Amendment No. 1 to
	Indemnification Agreement between the Corporation and each of
	its Directors and executive officers (incorporated by reference
	to Exhibit 10.8 to the 1995 Form 10-K).(1)                                                                                                                                                                                                                                                                                             
|        | 10.14 |                        |  | Form of Amendment No. 2 to Indemnification Agreement, dated
	June 26, 1997, between the Trust and each of its Trustees
	and executive officers (incorporated by reference to
	Exhibit 10.1 to the Trusts and the Corporations
	Joint Quarterly Report on Form 10-Q for the quarterly
	period ended June 30, 1997 (the 1997
	Form 10-Q2)).(1)                                                                                                                                                                                 
|        | 10.15 |                        |  | Form of Amendment No. 2 to Indemnification Agreement, dated
	June 26, 1997, between the Corporation and each of its
	Directors and executive officers (incorporated by reference to
	Exhibit 10.2 to the 1997 Form 10-Q2).(1)                                                                                                                                                                                                                                                                                                    
|        | 10.16 |                        |  | Form of Trademark License Agreement, dated as of December 10,
	1997, between Starwood Capital and the Trust (incorporated by
	reference to Exhibit 10.22 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                 
|        | 10.17 |                        |  | 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)).                                                                                                                                                                                            
|        | 10.18 |                        |  | 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).                                                                                                                                                                                                                                                                                                                                        
|        | 10.19 |                        |  | 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)).                                                                                                                
|        | 10.20 |                        |  | 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).                                                                                                                                                                                                                                                                                                                        
|        | 10.21 |                        |  | 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).                                                                                                                                                                                                                                                               
|        | 10.22 |                        |  | 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).                                                                                                                                                                                                                                                                                  
|        | 10.23 |                        |  | Exchange Rights Agreement, dated as of March 11, 1997,
	among the Corporation, the Trust, Realty Partnership, Operating
	Partnership and the Hermitage, L.P. (incorporated by reference
	to Exhibit 10.41 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                
|        | 10.24 |                        |  | Registration Rights Agreement, dated as of March 11, 1997,
	among the Corporation, the Trust, Realty Partnership, Operating
	Partnership and the Hermitage, L.P. (incorporated by reference
	to Exhibit 10.42 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                            
|        | 10.25 |                        |  | Credit Agreement, dated as of September 10, 1997, between
	Realty Partnership and the Trust and Bankers Trust Company
	(BTC), Lehman Brothers Holdings Inc. d/b/a Lehman
	Capital, a division of Lehman Brothers Holdings Inc.
	(Lehman Capital), BankBoston, N.A., and Bank of
	Montreal (incorporated by reference to Exhibit 10.1 to the
	Trusts and the Corporations Joint Quarterly Report
	on Form 10-Q for the quarterly period ended
	September 30, 1997, as amended by the Form 10-Q/ A
	dated November 10, 1997).



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##### Table of Contents



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | ----- | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.26 |                        |  | 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).                                                                                                                                                                                                                                                                                                                                                                   
|        | 10.27 |                        |  | 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).                                                                                                                                                                                                                                                                                                                                                          
|        | 10.28 |                        |  | Registration Rights Agreement, dated as of January 2, 1998,
	among, inter alia, the Trust, the Corporation, and
	Woodstar (incorporated by reference to Exhibit 10.52 to the
	1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                 
|        | 10.29 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the
	Trust and New Remington Partners (incorporated by reference to
	Exhibit 10.54 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                
|        | 10.30 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the
	Trust and Savannah Limited Partnership (incorporated by
	reference to Exhibit 10.56 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                          
|        | 10.31 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the
	Trust and N.Y. Overnight Partners, L.P. (incorporated by
	reference to Exhibit 10.58 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                         
|        | 10.32 |                        |  | Stock Agreement and Registration Rights Agreement, each dated as
	of January 15, 1998, by and among the Corporation, the
	Trust and D.C. Overnight Partners, L.P. (incorporated by
	reference to Exhibit 10.60 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                         
|        | 10.33 |                        |  | Credit Agreement, dated as of February 23, 1998, among the
	Trust, Realty Partnership, the Corporation, Chess (and ITT
	Corporation as its successor by merger), certain additional
	borrowers, various lenders, BTC and The Chase Manhattan Bank
	(Chase Bank), as Administrative Agents, and Lehman
	Commercial Paper Inc. (Lehman Paper) and Bank of
	Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.1 to the Trusts and the Corporations
	Joint Current Report on Form 8-K dated February 23,
	1998 (the ITT Form 8-K)).
|        | 10.34 |                        |  | First Amendment to the Credit Agreement, dated as of March 3,
	1998, among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, and Lehman Paper and Bank
	of Montreal, as Syndication Agents, and the new lenders
	(incorporated by reference to Exhibit 10.2 to the ITT
	Form 8-K).                                                                                                                                                                   
|        | 10.35 |                        |  | Second Amendment to the Credit Agreement, dated as of
	April  30, 1998, among the Trust, Realty Partnership, the
	Corporation, ITT Corporation, the lenders party to the Credit
	Agreement, BTC and Chase Bank, as Administrative Agents, and
	Lehman Paper and Bank of Montreal, as Syndication Agents
	(incorporated by reference to Exhibit 10.2 to the Trusts
	and the Corporations Joint Quarterly Report on
	Form 10-Q for the quarterly period ended June 30, 1998 (the
	1998 Form 10-Q2)).                                                         
|        | 10.36 |                        |  | Third Amendment to the Credit Agreement, dated as of June 15,
	1998, among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, and Lehman Paper and Bank
	of Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.3 to the 1998 Form 10-Q2).                                                                                                                                                                                      
|        | 10.37 |                        |  | Fourth Amendment to the Credit Agreement, dated as of July 15,
	1998, among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, and Lehman Paper and Bank
	of Montreal, as Syndication Agents (incorporated by reference to
	Exhibit 10.4 to the 1998 Form 10-Q2).                                                                                                                                                                                     
|        | 10.38 |                        |  | Fifth Amendment to the Credit Agreement, dated as of
	August  26, 1998, among the Trust, Realty Partnership, the
	Corporation, ITT Corporation, the lenders party to the Credit
	Agreement, BTC and Chase Bank, as Administrative Agents, and
	Lehman Paper and Bank of Montreal, as Syndication Agents
	(incorporated by reference to Exhibit 10.2 to the 1998
	Form 10-Q3).                                                                                                                                                                                  



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##### Table of Contents



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- | ----- | ---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.39 |                        |  | Sixth Amendment to the Credit Agreement, dated as of
	December 15, 1998, among the Trust, Realty Partnership, the
	Corporation, ITT Corporation, the lenders party to the Credit
	Agreement, BTC and Chase Bank, as Administrative Agents, and
	Lehman Paper and Bank of Montreal, as Syndication Agents
	(incorporated by reference to Exhibit 10.50 to the 1998
	Form 10-K).                                                                                                                                                                                                                                                                                
|        | 10.40 |                        |  | Seventh Amendment to the Credit Agreement, dated as of
	February 1999, among the Trust, Realty Partnership, the
	Corporation, ITT Corporation, the lenders party to the Credit
	Agreement, BTC and Chase Bank, as Administrative Agents, and
	Lehman Paper and Bank of Montreal, as Syndication Agents
	(incorporated by reference to Exhibit 10.51 to the 1998
	Form 10-K).                                                                                                                                                                                                                                                                                  
|        | 10.41 |                        |  | Eighth Amendment to the Credit Agreement and Modification to
	Pledge and Security Agreement, dated as of July 2, 1999,
	among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, Lehman Paper and Bank of
	Montreal, as Syndication Agents, and BTC, as Collateral Agent
	(incorporated by reference to Exhibit 10.1 to the
	Corporations and the Trusts Joint Quarterly Report
	on Form 10-Q for the quarterly period ended
	September 30, 1999, as amended by the Form 10-Q/ A
	filed November 16, 1999 (as so amended, the 1999
	Form 10-Q3)).
|        | 10.42 |                        |  | Ninth Amendment to the Credit Agreement and Modification to
	Pledge and Security Agreement, dated as of September 20, 1999,
	among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, Lehman Paper and Bank of
	Montreal, as Syndication Agents, and BTC, as Collateral Agent
	(incorporated by reference to Exhibit 10.2 to the 1999
	Form 10-Q3).                                                                                                                                                                                                  
|        | 10.43 |                        |  | Tenth Amendment to the Credit Agreement and Modification to
	Pledge and Security Agreement, dated as of June 12, 2000,
	among the Trust, Realty Partnership, the Corporation, ITT
	Corporation, the lenders party to the Credit Agreement, BTC and
	Chase Bank, as Administrative Agents, Lehman Paper and Bank of
	Montreal, as Syndication Agents, and BTC, as Collateral
	Agent.(2)                                                                                                                                                                                                                                                                        
|        | 10.44 |                        |  | Pledge and Security Agreement, dated as of February 23,
	1998, executed and delivered by the Trust, the Corporation and
	the other Pledgors party thereto, in favor of BTC as Collateral
	Agent (incorporated by reference to Exhibit 10.63 to the 1997
	Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10.45 |                        |  | Second Amended and Restated Senior Secured Note Agreement, dated
	December 30, 1999, among the Corporation, the Trust, the
	guarantors listed therein, the lenders listed therein, Lehman
	Paper, as Arranger and Administrative Agent, and Alex Brown and
	Chase Securities Inc., as Syndication Agents (incorporated by
	reference to Exhibit 10.46 to the 1999 Form 10-K).                                                                                                                                                                                                                                                                                 
|        | 10.46 |                        |  | 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).                                                                                                                                                                                                                                                                                                                                        
|        | 10.47 |                        |  | Loan Agreement, dated as of February 23, 1998, between the
	Trust and the Corporation, together with Promissory Note
	executed in connection therewith, by the Corporation to the
	order of the Trust, in the principal amount of $100,000,000
	(incorporated by reference to Exhibit 10.66 to the 1997
	Form 10-K).                                                                                                                                                                                                                                                                                                                                          
|        | 10.48 |                        |  | Loan Agreement, dated as of February 23, 1998, between the
	Trust and the Corporation, together with Promissory Note
	executed in connection therewith, by the Corporation to the
	order of the Trust, in the principal amount of $50,000,000
	(incorporated by reference to Exhibit 10.67 to the 1997
	Form 10-K).                                                                                                                                                                                                                                                                                                                                           
|        | 10.49 |                        |  | Loan Agreement, dated as of January 27, 1999, among the
	Borrowers named therein, as Borrowers, Starwood Operator I LLC,
	as Operator, and Lehman Capital (incorporated by reference to
	Exhibit 10.58 to the 1998 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                



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##### Table of Contents



|        |       |                        |  |                                                                                                                                                                                                                                                                                                                                  
|------- | ----- | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10.50 |                        |  | Aircraft Dry Lease Agreement, entered into as of February 6,
	1998, between Star Flight, L.L.C. and ITT Flight Operation,
	Inc., as amended by First Amendment thereto, dated as of
	August 25, 1998 (incorporated by reference to
	Exhibit 10.4 to the 1998 Form 10-Q3).                                                        
|        | 10.51 |                        |  | Form of Severance Agreement, dated December 1999, between
	the Corporation and each of Barry S. Sternlicht, Ronald C.
	Brown, Steve R. Goldman and Thomas C. Janson, Jr. (incorporated
	by reference to Exhibit 10.52 to the 1999
	Form 10-K).(1)                                                                                
|        | 10.52 |                        |  | Separation Agreement, dated as of February 10, 2000, by and
	between the Corporation and Susan R. Bolger (incorporated by
	reference to Exhibit 10.53 to the 1999
	Form 10-K).(1)                                                                                                                                                
|        | 10.53 |                        |  | Amended and Restated Employment Agreement, effective as of
	January 1, 2000, between Barry S. Sternlicht and the
	Company (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 March 31,
	2000). (1)                             
|        | 10.54 |                        |  | Employment Agreement, dated as of April 7, 2000, between
	the Corporation and David K. Norton (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 June 30, 2000).(1)                                                           
|        | 10.55 |                        |  | 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)                                                     
|        | 10.56 |                        |  | Form of Severance Agreement, dated as of August 14, 2000,
	between the Corporation and Robert F. Cotter.(1)(2)                                                                                                                                                                                                                   
|        | 10.57 |                        |  | Employment Agreement, dated as of September 25, 2000,
	between the Corporation and Kenneth S. Siegel.(1)(2)                                                                                                                                                                                                                      
|        | 10.58 |                        |  | Form of Severance Agreement, dated as of September 26,
	2000, between the Corporation and Kenneth S.
	Siegel.(1)(2)                                                                                                                                                                                                              
|        | 10.59 |                        |  | Form of Severance Agreement, dated as of June 9, 2000,
	between the Corporation and David K. Norton.(1)(2)                                                                                                                                                                                                                       
|        | 10.60 |                        |  | Stock Purchase Agreement, dated as of April 27, 1999, among
	the Corporation, ITT Sheraton Corporation, Starwood Canada
	Corp., Caesars World, Inc., Sheraton Desert Inn Corporation,
	Sheraton Tunica Corporation and Park Place Entertainment
	Corporation (incorporated by reference to Exhibit 10.5 to
	the 1999 Form 10-Q1).
|        | 10.61 |                        |  | Starwood Hotels & Resorts Worldwide, Inc. 1999 Long-Term
	Incentive Compensation Plan (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)                                          
|        | 10.62 |                        |  | Starwood Hotels & Resorts Worldwide, Inc. 1999 Annual
	Incentive Plan for Certain Executives (incorporated by reference
	to Exhibit 10.5 to the 1999 Form 10-Q2).(1)                                                                                                                                                             
|        | 12.1  |                        |  | Calculation of Ratio of Earnings to Total Fixed Charges.
	(2)                                                                                                                                                                                                                                                                    
|        | 21.1  |                        |  | Subsidiaries of the Registrants.(2)                                                                                                                                                                                                                                                                                              
|        | 23.1  |                        |  | Consent of Arthur Andersen LLP.(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.