WHITE PLAINS, N.Y. July 25, 2002 Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) (Starwood or the Company) today reported results for the second quarter of 2002.

Second Quarter Financial Results

• EPS, excluding special items, was $0.41 compared to $0.54 in 2001. Including special items, EPS was $0.37 compared to $0.52 in 2001. EPS, including tax benefits from discontinued operations was $0.87 compared to $0.52 in 2001.
• Total revenues of $1.032 billion, excluding other revenues from managed and franchised properties, decreased 7.0% from 2001 levels. Revenue per available room (REVPAR) for Same-Store Owned Hotels decreased 10.1% in North America and
• 10.2% worldwide when compared to 2001.
• Total Company EBITDA was $320 million compared to $401 million in 2001. EBITDA at Comparable Owned Hotels worldwide decreased
• 19.2% to $253 million. EBITDA at Comparable Owned Hotels in North America decreased 20.8% to $178 million.
• Total Company EBITDA margin was approximately 31.0%. EBITDA margin at Comparable Owned Hotels in North America was 29.2%, up 190 basis points from the first quarter of 2002. EBITDA margin at Comparable Owned Hotels worldwide was 30.3%, up 380 basis
  points from the first quarter of 2002.

Second Quarter Ended June 30, 2002

Excluding net charges for special items of approximately $14 million (pretax) in 2002 and $8 million (pretax) in 2001, EPS was $0.41 compared to EPS of $0.54 in the corresponding period of 2001. Including these special items, EPS was $0.37 compared to
EPS of $0.52 in 2001. Total revenues were down 7.0% to $1.032 billion compared to the same period of 2001. Operating income, excluding special items, was $189 million compared to $254 million in the same period of 2001 and income from continuing
operations, excluding special items, was $85 million compared to $112 million in the same period of 2001. Though in line with the Company's expectations, results were adversely impacted by the weakened worldwide economic environment. However, operating
results continued the sequential quarterly improvement over the fourth quarter of 2001 and first quarter of 2002. Operating results continued to improve primarily as a result of an improving demand environment, a continued focus on cost control and an
increase in vacation ownership interest (VOI) results. As discussed in the first quarter 2002 earnings release, in connection with the repayment of debt with the proceeds from the April 2002 senior notes offering, the Company incurred approximately $29
million (pretax) of one-time charges relating to the write-off of deferred financing costs, termination fees for early extinguishment of debt, and terminated interest rate swaps associated with the repaid debt. During the second quarter of 2001, the
Company incurred approximately $9 million (pretax) of such charges related to the early extinguishment of debt. Excluding these charges, net interest expense decreased by $11 million when compared to the second quarter of 2001 due to a reduction in
interest rates and the completion of financing transactions in the past year. Results further benefited from a $16 million after-tax reduction in goodwill amortization as a result of a new accounting rule pertaining to goodwill and intangible assets.
Depreciation expense increased $9 million or 8.4% when compared to the second quarter of 2001 due to prior year's renovation program and the repositioning and acquisition of certain hotels.

Six Months Ended June 30, 2002

For the six months ended June 30, 2002, total revenues were $1.926 billion when compared to $2.124 billion in the same period in 2001. EPS excluding net benefits for special items of $9 million (pretax) in 2002 and net charges of $7 million (pretax) in
2001 was $0.49, compared to EPS of $0.84 in the corresponding period in 2001. EPS including these special items was $0.52 compared to $0.82 in 2001 and EPS including discontinued operations was $1.03 compared to $0.82 in 2001. Income from continuing
operations decreased to $108 million in the six months ended June 30, 2002 compared to $169 million in the same period of 2001. Income from continuing operations excluding special items was $102 million for the six months ended June 30, 2002 and $174
million for the comparable period of 2001.

Comments from the CEO

Barry S. Sternlicht, Chairman and CEO said, Though the economic environment remains extremely challenging and the speed of the economic recovery has clearly moderated from our expectations in the first quarter of 2002, there are very encouraging
trends, both for the industry and for our company that remain intact. For the industry, future supply continues to decline rapidly, particularly in large urban markets where our assets are concentrated and where the recovery is likely to be most
pronounced. For our company, our European operations, particularly Italy and Spain, have fared better than we had predicted and will be helped further by the Euro's rise. Asia also has exceeded our expectations with owned hotels posting a 14% increase in
REVPAR for the quarter. South America, particularly Argentina, has been extremely difficult and is likely to remain so for the foreseeable future.

Concluding, Mr. Sternlicht said, As for our brands, our Same-Store Owned W brand's REVPAR fell just 2% in the quarter and North America systemwide REVPAR declined less than 1% as the brand continues to build share. Three new W's in San Diego, Seoul
and Mexico City will bring our total to 19 and we soon expect W to expand to Europe. Our Westin brand also performed admirably with Same-Store Owned Hotels REVPAR down 8.8% in North America and owned and managed REVPAR down just 5.9%. Westin continues to
gain share buoyed by product innovations like the Heavenly Bed, the Heavenly Shower and a new marketing campaign. While Sheraton's owned REVPAR did not meet our expectations, in part because of its heavy urban concentration, we expect to build upon our
Westin and W experience and launch several new Sheraton programs in the third and fourth quarter as we continue the re-imaging of the brand.

Operating Results

At the Company's Comparable Owned Hotels worldwide, revenues for the second quarter of 2002 decreased approximately $89 million to $834 million from $923 million in 2001 and EBITDA decreased 19.2% to $253 million from $313 million in 2001. EBITDA at
the Company's Comparable Owned Hotels in North America decreased 20.8% to $178 million in the second quarter of 2002 when compared to the same period of 2001. EBITDA at the Company's Comparable Owned Hotels internationally decreased 15.1% to approximately
$75 million in the second quarter of 2002 when compared to the same period of 2001. The positive effects of foreign exchange in Europe were offset by the effects from the continued weakening of the Argentine Peso. Excluding the unfavorable effects of
foreign exchange, EBITDA at the Company's Comparable Owned Hotels internationally decreased 11.9% in the second quarter of 2002 when compared to the same period in 2001. The decline in operating results at Comparable Owned Hotels in North America when
compared to 2001 reflect the impact of lower REVPAR primarily attributable to the weakened global economies.

REVPAR at Same-Store Owned Hotels worldwide decreased 10.2% in the second quarter of 2002 when compared to the same period of 2001 as a result of a decline in occupancy rates of 350 basis points to 66.5% and a decline in average daily rate (ADR) of
5.5% from the prior year. REVPAR at Same-Store Owned Hotels in North America decreased

• 10.1% to $98.93 when compared to the same period of 2001 as a result of a decrease in occupancy rates to 68.1% from 70.9% in the prior year, while ADR decreased 6.5% to $145.20. Internationally, Same-Store Owned Hotel REVPAR decreased 10.5%, with
  Europe down 7.9%, Latin America down 24.7% and Asia Pacific up 14.1% when compared to 2001.

EBITDA margins at Comparable Owned Hotels worldwide were 30.3% in the second quarter of 2002 when compared to 33.9% in the same period of 2001. In North America, EBITDA margins at Comparable Owned Hotels were 29.2% when compared to 33.1% in the same
period of 2001 but increased 190 basis points when compared to 27.3% in the first quarter of 2002. Internationally, EBITDA margins at Comparable Owned Hotels were 33.4% when compared to 35.9% in the same period of 2001 but increased substantially when
compared to 23.8% in the first quarter of 2002.

During the second quarter of 2002, the Company added five management and franchise contracts representing more than 1,000 rooms, including the Sheraton Krakow (238 rooms) in Krakow, Poland; the Lanesborough, a St. Regis Hotel (95 rooms) in London,
England and the St. Regis Ft. Lauderdale (197 rooms) in Florida. New hotel openings during the balance of 2002 include the Westin Shanghai (approximately 450 rooms) in Shanghai, China, the Sheraton Wild Horse Pass (approximately 500 rooms) in Phoenix,
Arizona; the W San Diego (approximately 260 rooms) in California and the Hotel Bora Bora Nui (approximately 120 rooms) in French Polynesia. Including these properties, through the end of 2003, the Company expects 50 new hotels and resorts around the
world, with approximately 15,000 rooms to commence operations.

Starwood Vacation Ownership, Inc. (SVO) is currently selling VOI inventory at ten resorts and engaged in pre-opening sales at two others currently under construction (Westin Mission Hills Resort Villas in Rancho Mirage, California and Westin
Ka\'anapali Ocean Resort Villas in Maui, Hawaii). Contract sales in the second quarter increased approximately 11.3% when compared to the same period in 2001 and sales were particularly strong at the Maui and Mission Hills resorts. SVO EBITDA increased
approximately 7.3% when compared to the same period in 2001. SVO will begin construction of its fourth Westin-branded interval ownership resort later this year featuring 158 villas located adjacent to the Westin Kierland Resort & Spa in Scottsdale,
Arizona. The resort is scheduled to open in late 2002. The Company sold approximately $87 million of notes receivable originated by the vacation ownership operations in the second quarter of 2002, recognizing a gain of $9 million in operating income
compared to a gain of $8 million in the second quarter of 2001.

Acquisitions and Dispositions

During the second quarter of 2002, the Company sold the Allentown Clarion for $5 million in cash. The Company continues to review its portfolio for disposition candidates. In January, the Company announced that it had initiated the formal sale process
for the CIGA portfolio of 25 luxury hotels, land, golf courses and marinas. The Company is in final discussions with interested parties with respect to a select group of properties and is expected to enter into definitive contracts for sale in the next
sixty days.

Capital

During the second quarter of 2002, the Company invested approximately $66 million in hotel and VOI capital assets, including VOI construction at Westin Mission Hills Resort Villas in Rancho Mirage, California and Westin Ka\'anapali Ocean Resort Villas
in Maui, Hawaii as well as the ongoing development of the St. Regis Museum Tower in San Francisco (269 rooms and 102 condominiums) scheduled for completion in 2004. Work also continues on the flexible new build Sheraton and Westin prototypes.

Financing

On June 30, 2002, the Company had total debt of $5.497 billion and cash and cash equivalents of $196 million. At the end of the second quarter of 2002, the Company's debt was approximately 53% fixed rate and 47% floating rate and its weighted average
maturity was 5.9 years. As of June 30, 2002, the Company had cash and availability under its domestic and international revolving credit facilities of approximately $663 million and the Company's debt had a weighted average interest rate of 5.75%.

In April 2002, the Company sold $1.5 billion of senior notes in two tranches — $700 million principal amount of 7-3/8% senior notes due 2007 and $800 million principal amount of 7-7/8% senior notes due 2012. The Company used the proceeds to repay all
of its senior secured notes facility and a portion of its senior credit facility. After the close of the second quarter, the Company entered the market to refinance the remaining senior credit facility maturing February 2003, with an expected closing of
the new facility in September 2002.

In May 2002, the Company repurchased Series A convertible notes for $202 million in cash. Series B convertible notes, which can be put to the Company in May 2004 for approximately $330 million, were originally issued in May 2001.

At June 30, 2002, Starwood had approximately 203 million shares outstanding (including partnership units and exchangeable preferred shares).

Dividend

In 2002, the Company has shifted from a quarterly dividend to an annual dividend. The final determination of the amount of the dividend will be subject to economic and financial considerations and Board approval in the fourth quarter of 2002. At this
time, the Company expects the annual dividend to be $0.84 per share.

Special Items

The Company recorded net charges of $14 million (pretax) for special items in the second quarter of 2002 when compared to net charges of $8 million (pretax) in the same period of 2001.

As discussed previously, the net charges in the second quarter of 2002 primarily represent $29 million (pretax) of costs associated with the early extinguishment of debt, offset, in part, by a non-cash foreign exchange gain of approximately $9 million
(pretax), resulting from the devaluation of the Argentine Peso and a $6 million (pretax) state tax refund. The foreign exchange gain represents the mark-to-market, in accordance with Statement of Financial Accounting Standards No. 52, of a U.S. dollar
intercompany receivable in Argentina. The special charges for the second quarter of 2001 primarily represent $9 million (pretax) of costs associated with the early extinguishment of debt.

The following represents a reconciliation of income from continuing operations before special items to income from continuing operations after special items:

Discontinued Operations

During the second quarter of 2002, the Company recorded a gain of $104 million from discontinued operations primarily related to IRS regulations issued earlier this year, which allows the Company to recognize a tax benefit from a loss on the 1999 sale
of Caesars World, Inc. The tax loss was previously disallowed under the old regulations. The remaining gain resulted from an adjustment to the Company's tax basis in its World Directories subsidiary, which was disposed of in early 1998. The increase in
the tax basis has the effect of reducing the deferred tax gain on this disposition.

Future Performance

All comments in the following paragraphs and certain comments in this release above are deemed to be forward-looking statements. These statements reflect expectations of the Company's performance given its current base of assets and its current
understanding of external economic and political environments. Actual results may differ materially.

The weakness in North American and European economies, combined with the current political environment in Argentina and other parts of the world and their consequent impact on travel in their respective regions and on the rest of the world, make it
difficult to predict future results with any degree of precision.

• The Company currently expects full year 2002 REVPAR to decline 2-3% from 2001 levels, full-year EBITDA of approximately $1.185 to $1.210 billion and EPS of approximately $1.20 to $1.30 with an effective tax rate of approximately 21%. Based on these
  assumptions and assuming no asset sales for modeling purposes, approximate quarterly EPS for the remaining quarters of 2002 is expected to be as follows: