April 30, 2013 at 06:00 AM EDT
Starwood Reports First Quarter 2013 Results

Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported first quarter 2013 financial results.

First Quarter 2013 Highlights

  • Excluding special items, EPS from continuing operations was $0.76. Including special items, EPS from continuing operations was $0.73.
  • Adjusted EBITDA was $315 million, which included $58 million of EBITDA from the St. Regis Bal Harbour residential project.
  • Excluding special items, income from continuing operations was $148 million. Including special items, income from continuing operations was $143 million.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 5.0% in constant dollars (4.6% in actual dollars) compared to 2012. Systemwide REVPAR for Same-Store Hotels in North America increased 6.2% in constant dollars (6.2% in actual dollars).
  • Management fees, franchise fees and other income increased 8.0% compared to 2012.
  • Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 52 basis points compared to 2012.
  • Worldwide REVPAR for Starwood Same-Store Owned Hotels increased 3.4% in constant dollars (3.1% in actual dollars) compared to 2012.
  • Margins at Starwood Same-Store Owned Hotels Worldwide remained flat compared to 2012.
  • Earnings from Starwood’s vacation ownership and residential business decreased approximately $11 million compared to 2012, due to lower revenues at the St. Regis Bal Harbour residential project that is nearing completion.
  • During the quarter, the Company signed 26 hotel management and franchise contracts, representing approximately 6,200 rooms, and opened 18 hotels and resorts with approximately 4,000 rooms.

First Quarter 2013 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the first quarter of 2013 of $0.73 compared to $0.65 in the first quarter of 2012. Excluding special items, EPS from continuing operations was $0.76 for the first quarter of 2013 compared to $0.63 in the first quarter of 2012. Special items in the first quarter of 2013, which totaled a charge of $5 million (after-tax), included a loss of $8 million (pre-tax), primarily related to the sale of three wholly-owned hotels. Special items in the first quarter of 2012, which totaled a benefit of $5 million (after-tax), included an $11 million (pre-tax) reduction of a legal reserve, partially offset by a $7 million (pre-tax) loss on the sale of one wholly-owned hotel. Excluding special items, the effective income tax rate in the first quarter of 2013 was 31.3% compared to 29.8% in the first quarter of 2012.

Income from continuing operations was $143 million in the first quarter of 2013, compared to $129 million in the first quarter of 2012. Excluding special items, income from continuing operations was $148 million in the first quarter of 2013 compared to $124 million in the first quarter of 2012.

Net income was $213 million and $1.09 per share in the first quarter of 2013, compared to $128 million and $0.65 per share in the first quarter of 2012. The net income in the first quarter of 2013 included a tax benefit of $70 million, in discontinued operations, as a result of the reversal of a reserve associated with an uncertain tax position related to a previous disposition. The applicable statute of limitation for this tax position lapsed during the first quarter of 2013.

Frits van Paasschen, CEO, said, “We had a solid first quarter across all lines of our business. Our management and franchise fees grew strongly, and despite our sale of 11 hotels, earnings at our owned portfolio exceeded last year’s levels, driven by great performance at our North American properties. We grew REVPAR Index as we captured more than our fair share of global growth. And at Bal Harbour, we’ve now sold and closed on approximately 86% of the residences. Overall, the global lodging recovery continues along the trend lines we’ve been seeing. Tight supply is driving higher room rates in North America, and our footprint continues to expand in the growing economies. We are seeing more interest among real estate buyers for both vacation ownership and our owned hotels.”

“We spent a month in Dubai as part of a temporary office relocation to work closely with our teams in that region. Dubai is a perfect example of how growth in lodging demand is being fueled by the rising wealth around the world, the creation of new cities in fast growing economies, and the expanding reach of global businesses.”

First Quarter 2013 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 5.0% in constant dollars (4.6% in actual dollars) compared to the first quarter of 2012. International Systemwide REVPAR for Same-Store Hotels increased 3.4% in constant dollars (increased 2.6% in actual dollars).

Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by region:

REVPAR
Region

Constant

Dollars

Actual

Dollars

Americas:
North America 6.2% 6.2%
Latin America 0.3% 0.3%
Asia Pacific:
Greater China 5.4% 6.4%
Rest of Asia 5.5% 1.7%
Europe, Africa & Middle East:
Europe (1.3)% (0.4)%
Africa & Middle East 7.3% 6.0%

Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by brand:

REVPAR

Brand

Constant

Dollars

Actual

Dollars

St. Regis/Luxury Collection 11.1% 10.4%
W Hotels 7.9% 7.9%
Westin 3.6% 3.1%
Sheraton 3.8% 3.2%
Le Méridien 2.0% 2.3%
Four Points by Sheraton 6.9% 6.7%
Aloft 7.7% 7.7%

Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 52 basis points compared to 2012. International gross operating profit margins for Same-Store Company-Operated properties increased 12 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 110 basis points, driven by REVPAR increases and cost controls.

Management fees, franchise fees and other income were $217 million, up $16 million, or 8.0% compared to the first quarter of 2012. Management fees increased 7.8% to $124 million and franchise fees increased 6.7% to $48 million.

Development

During the first quarter of 2013, the Company signed 26 hotel management and franchise contracts, representing approximately 6,200 rooms, of which 20 are new builds and 6 are conversions from other brands. At March 31, 2013, the Company had approximately 400 hotels in the active pipeline representing approximately 100,000 rooms.

During the first quarter of 2013, 18 new hotels and resorts (representing approximately 4,000 rooms) entered the system, including Le Méridien Dallas, The Stoneleigh (Dallas, 170 rooms), The Westin Birmingham (Birmingham, 294 rooms), The Westin Panama (Panama City, 218 rooms), Sheraton Dubai Mall of Emirates Hotel (Dubai, 481 rooms), Aloft Kuala Lumpur Sentral (Kuala Lumpur, 482 rooms), and W Guangzhou (Guangdong, 317 rooms). During the quarter, five properties (representing approximately 900 rooms) were removed from the system.

Owned, Leased and Consolidated Joint Venture Hotels

Worldwide REVPAR at Starwood Same-Store Owned Hotels increased 3.4% in constant dollars (3.1% in actual dollars) when compared to 2012. Excluding owned hotels in Argentina, REVPAR at Worldwide Owned Hotels increased 5.3% in constant dollars (4.9% in actual dollars). REVPAR at Starwood Same-Store Owned Hotels in North America increased 6.3% in constant dollars (6.1% actual dollars). Internationally, Starwood Same-Store Owned Hotel REVPAR increased 0.9% in constant dollars (0.4% in actual dollars). Excluding owned hotels in Argentina, internationally, REVPAR at owned hotels increased 4.2% in constant dollars (3.7% in actual dollars). REVPAR at owned hotels in Argentina decreased approximately 27% in constant dollars driven by economic instability in the country.

Revenues at Starwood Same-Store Owned Hotels Worldwide increased 2.0% in constant dollars (increased 1.6% in actual dollars) while costs and expenses increased 1.9% in constant dollars (1.5% in actual dollars) when compared to 2012. Margins at these hotels remained flat compared to 2012. Excluding owned hotels in Argentina, margins increased by approximately 100 basis points.

Revenues at Starwood Same-Store Owned Hotels in North America increased 4.5% in constant dollars (4.3% in actual dollars) while costs and expenses increased 2.8% in constant dollars (2.7% in actual dollars) when compared to 2012. Margins at these hotels increased approximately 130 basis points.

Internationally, revenues at Starwood Same-Store Owned Hotels decreased 0.3% in constant dollars (decreased 0.9% in actual dollars) while costs and expenses increased 1.1% in constant dollars (0.5% in actual dollars) when compared to 2012. Margins at these hotels decreased approximately 120 basis points. Excluding owned hotels in Argentina, margins increased by approximately 70 basis points.

Revenues at owned, leased and consolidated joint venture hotels were $379 million, compared to $402 million in 2012. Expenses at owned, leased and consolidated joint venture hotels were $320 million compared to $349 million in 2012. First quarter results were negatively impacted by asset sales since the first quarter of 2012.

Vacation Ownership

Total vacation ownership revenues increased 16.4% to $177 million in the first quarter of 2013 when compared to 2012 primarily due to increased revenues from resort operations, the transfer of the Westin St. John from owned hotel revenues to vacation ownership revenues, and a favorable adjustment to loan loss reserves. Originated contract sales of vacation ownership intervals and the number of contracts signed were flat compared to 2012. The average price per vacation ownership unit sold increased 0.5% to approximately $16,200, driven by inventory mix.

Residential

During the first quarter of 2013, the Company’s residential revenues were $132 million compared to $362 million in 2012. The Company realized residential revenues from Bal Harbour of $129 million and generated EBITDA of $58 million, compared to revenues of $356 million and EBITDA of $78 million in the same period of 2012. During the first quarter of 2013, the Company closed sales of 38 units at Bal Harbour and realized incremental cash proceeds of $127 million associated with these units. From project inception through March 31, 2013, the Company has closed contracts on approximately 86% of the total residential units available at Bal Harbour and realized residential revenue of $939 million and EBITDA of $219 million.

Selling, General, Administrative and Other

During the first quarter of 2013, selling, general, administrative and other expenses decreased 6.3% to $90 million compared to $96 million in 2012 primarily due to organizational changes in the second half of 2012 and non-recurring professional expenses recorded in the prior year. The Company continues to target a 3-5% increase for the full year.

During the first quarter of 2013, the Company completed certain changes to its organizational structures in the Americas division. The Company recorded an expense for severance costs of approximately $4 million associated with these changes.

Capital

Gross capital spending during the quarter included approximately $17 million of maintenance capital and $81 million of development capital.

Asset Sales

During the first quarter of 2013, the Company completed the sales of three hotels; the Aloft and Element hotels in Lexington, Massachusetts and the W New Orleans - French Quarter for cash proceeds of approximately $61 million. These hotels were sold subject to either long-term management or franchise contracts. The Company recorded a loss of $8 million associated with these sales. In addition, following the end of the first quarter the Company completed the sale of the W New Orleans for cash proceeds of approximately $65 million.

Share Repurchase

In the first quarter of 2013 and through April 5, 2013, the Company repurchased nearly 1 million shares at a total cost of approximately $56 million and a weighted average price of $59.35 per share. As of April 5, 2013, approximately $624 million remained available under the Company’s share repurchase authorization.

Balance Sheet

At March 31, 2013, the Company had gross debt of $1.275 billion, cash and cash equivalents of $529 million (including $142 million of restricted cash) and net debt of $746 million, compared to net debt of $847 million as of December 31, 2012, in each case excluding debt and restricted cash associated with securitized vacation ownership notes receivable. Net debt at March 31, 2013, including $472 million of debt and $20 million of restricted cash associated with securitized vacation ownership notes receivable, was $1.198 billion.

Outlook

For the Full Year 2013:

Including Bal Harbour, which is expected to contribute approximately $90 million of EBITDA, adjusted EBITDA is expected to be approximately $1.210 billion to $1.235 billion (based on the assumptions below).

  • Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $1.120 billion to $1.145 billion, assuming:
    • REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 5% to 7% in constant and actual dollars.
    • REVPAR increases at Same-Store Owned Hotels Worldwide of 4% to 6% in constant and actual dollars.
    • Margins at Same-Store Owned Hotels Worldwide increase 75 to 125 basis points.
    • Management fees, franchise fees and other income increase approximately 9% to 11%.
    • Earnings from the Company’s vacation ownership and residential business of approximately $160 million to $165 million.
    • Selling, general and administrative expenses increase approximately 3% to 5%.
  • Full year owned earnings are negatively impacted by approximately $8 million due to assets sold year to date in 2013.
  • Depreciation and amortization is expected to be approximately $300 million.
  • Interest expense is expected to be approximately $125 million.
  • Full year effective tax rate is expected to be approximately 32%, and cash taxes are expected to be approximately $115 million.
  • Including Bal Harbour, EPS before special items is expected to be approximately $2.75 to $2.83 (based on the assumptions above).
  • Full year capital expenditures (excluding vacation ownership and residential inventory) are expected to be approximately $200 million for maintenance, renovation and technology. In addition, in-flight investment projects and prior commitments for joint ventures and other investments are expected to total approximately $350 million.
  • Vacation ownership (excluding Bal Harbour) is expected to generate approximately $175 million in positive cash flow. Bal Harbour is expected to generate at least $150 million in net cash flow.

For the three months ended June 30, 2013:

  • Including Bal Harbour, which is expected to contribute approximately $20 million of EBITDA, adjusted EBITDA is expected to be approximately $305 million to $315 million (based on the assumptions below).
  • Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $285 million to $295 million, assuming:
    • REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 5% to 7% in constant dollars (approximately 50 basis points lower in actual dollars at current exchange rates).
    • REVPAR increases at Same-Store Company-Owned Hotels Worldwide of 4% to 6% in constant dollars (approximately 50 basis points lower in actual dollars at current exchange rates).
    • Management fees, franchise fees and other income increase approximately 8% to 10%.
    • Earnings from the Company’s vacation ownership and residential business are flat to up approximately $5 million year over year.
  • Depreciation and amortization is expected to be approximately $75 million.
  • Interest expense is expected to be approximately $30 million.
  • Including Bal Harbour, income from continuing operations is expected to be approximately $136 million to $143 million, reflecting an effective tax rate of approximately 32% (based on the assumptions above).
  • Including Bal Harbour, EPS is expected to be approximately $0.70 to $0.73 (based on the assumptions above).

Special Items

The Company’s special items netted to a charge of $8 million ($5 million after-tax) in the first quarter of 2013 compared to a benefit of $4 million (a $5 million benefit after-tax) in the same period of 2012.

The following represents a reconciliation of income from continuing operations before special items to income from continuing operations including special items (in millions, except per share data):

Three Months Ended

March 31,

20132012
Income from continuing operations before special items $ 148 $ 124
EPS before special items $ 0.76 $ 0.63
Special Items
Restructuring and other special (charges) credits, net (a) 1 11
Gain (loss) on asset dispositions and impairments, net (b) (9 ) (7 )
Total special items – pre-tax (8 ) 4
Income tax benefit (expense) for special items (c) 3 1
Total special items – after-tax (5 ) 5
Income from continuing operations $ 143 $ 129
EPS including special items $ 0.73 $ 0.65
a) During the three months ended March 31, 2012, the Company recorded a favorable adjustment of $11 million to reverse a portion of a litigation reserve established in 2011.
b) During the three months ended March 31, 2013, the net loss primarily relates to the sale of three wholly-owned hotels. During the three months ended March 31, 2012, the net loss primarily relates to the sale of one wholly-owned hotel.
c) During the three months ended March 31, 2013, the benefit primarily relates to a tax benefit on the special items at the statutory tax rate. The three months ended March 31, 2012 includes the recognition of a deferred tax adjustment associated with a previous transaction.

The Company has included the above supplemental information concerning special items to assist investors in analyzing Starwood’s financial position and results of operations. The Company has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of core ongoing operations.

Starwood will be conducting a conference call to discuss the first quarter financial results at 10:30 a.m. Eastern Time today, available via webcast on the Company’s website at http://www.starwoodhotels.com/corporate/about/investor/earnings.html. A webcast replay will be available at 1:30 p.m. Eastern Time on Tuesday, April 30 and will run for one year. Alternatively, participants may call into (866) 921-0636 with conference ID 27331153; please dial in fifteen minutes early to ensure a timely start. A call replay will be available from 1:30 p.m. Eastern Time on Tuesday, April 30 through Tuesday, May 7, 2013 and can be accessed by dialing (855) 859-2056 with conference ID 27331153.

Definitions

All references to EPS, unless otherwise noted, reflect earnings per diluted share from continuing operations attributable to Starwood’s common stockholders. All references to continuing operations, discontinued operations and net income reflect amounts attributable to Starwood’s common stockholders (i.e., excluding amounts attributable to noncontrolling interests). All references to “net capital expenditures” mean gross capital expenditures for timeshare and fractional inventory net of cost of sales. EBITDA represents net income before interest expense, taxes, depreciation and amortization. The Company believes that EBITDA is a useful measure of the Company’s operating performance due to the significance of the Company’s long-lived assets and level of indebtedness. EBITDA is a commonly used measure of performance in its industry which when considered with GAAP measures, the Company believes gives a more complete understanding of the Company’s operating performance. It also facilitates comparisons between the Company and its competitors. The Company’s management has historically adjusted EBITDA (i.e., “Adjusted EBITDA”) when evaluating operating performance for the Company, as well as for individual properties or groups of properties, because the Company believes that the inclusion or exclusion of certain recurring and non-recurring items, such as restructuring, goodwill impairment and other special charges, and gains and losses on asset dispositions and impairments, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results. The Company’s management also uses Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions and it is used in the annual budget process. The Company has historically reported this measure to its investors and believes that the continued inclusion of Adjusted EBITDA provides consistency in its financial reporting and enables investors to perform more meaningful comparisons of past, present and future operating results and provides a means to evaluate the results of its core ongoing operations. EBITDA and Adjusted EBITDA are not intended to represent cash flow from operations as defined by GAAP and such metrics should not be considered as an alternative to net income, cash flow from operations or any other performance measure prescribed by GAAP. The Company’s calculation of EBITDA and Adjusted EBITDA may be different from the calculations used by other companies and, therefore, comparability may be limited.

All references to Same-Store Owned Hotels reflect the Company’s owned, leased and consolidated joint venture hotels, excluding condo hotels, hotels sold to date and hotels undergoing significant repositionings or for which comparable results are not available (i.e., hotels not owned during the entire periods presented or closed due to seasonality or natural disasters). References to Company-Operated Hotel metrics (e.g., REVPAR) reflect metrics for the Company’s owned, leased and managed hotels. References to Systemwide metrics (e.g., REVPAR) reflect metrics for the Company’s owned, managed and franchised hotels. REVPAR is defined as revenue per available room. ADR is defined as average daily rate.

All references to revenues in constant dollars represent revenues, excluding the impact of the movement of foreign exchange rates. The Company calculates revenues in constant dollars by calculating revenues for the current year using the prior year’s exchange rates. The Company uses this revenue measure to better understand the underlying results and trends of the business, excluding the impact of movements in foreign exchange rates.

All references to contract sales or originated sales reflect vacation ownership sales before revenue adjustments for percentage of completion accounting methodology. All references to earnings from vacation ownership and residential represents operating income before depreciation expense. All references to management and franchise revenues represent base and incentive fees, franchise fees, amortization of deferred gains resulting from the sales of hotels subject to long-term management contracts and termination fees.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with 1,146 properties in nearly 100 countries and 171,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences with the following internationally renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, Aloft®, and Element®. The Company boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG), allowing members to earn and redeem points for room stays, room upgrades and flights, with no blackout dates. Starwood also owns Starwood Vacation Ownership, Inc., a premier provider of world-class vacation experiences through villa-style resorts and privileged access to Starwood brands. For more information, including reconciliations of non-GAAP financial measures to GAAP financial measures, please visit www.starwoodhotels.com or contact Investor Relations at (203) 351-3500.

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties and other factors that may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Further results, performance and achievements may be affected by general economic conditions including the impact of war and terrorist activity, natural disasters, business and financing conditions (including the condition of credit markets in the U.S. and internationally), foreign exchange fluctuations, cyclicality of the real estate (including residential) and the hotel and vacation ownership businesses, operating risks associated with the hotel, vacation ownership and residential businesses, relationships with associates and labor unions, customers and property owners, the impact of the internet reservation channels, our reliance on technology, domestic and international political and geopolitical conditions, competition, governmental and regulatory actions (including the impact of changes in U.S. and foreign tax laws and their interpretation), travelers’ fears of exposure to contagious diseases, risk associated with the level of our indebtedness, risk associated with potential acquisitions and dispositions and the introduction of new brand concepts and other risks and uncertainties. These risks and uncertainties are presented in detail in our filings with the Securities and Exchange Commission. Future vacation ownership units indicated in this press release include planned units on land owned by the Company or by joint ventures in which the Company has an interest that have received all major governmental land use approvals for the development of vacation ownership resorts. There can also be no assurance that such units will in fact be developed and, if developed, the time period of such development (which may be more than several years in the future). Some of the projects may require additional third-party approvals or permits for development and build out and may also be subject to legal challenges as well as a commitment of capital by the Company. The actual number of units to be constructed may be significantly lower than the number of future units indicated. There can also be no assurance that agreements will be entered into for the hotels in the Company’s pipeline and, if entered into, the timing of any agreement and the opening of the related hotel. Although we believe the expectations reflected in forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Unaudited Consolidated Statements of Income

(In millions, except per share data)

Three Months Ended

March 31,

20132012

%

Variance

Revenues
Owned, leased and consolidated joint venture hotels $ 379 $ 402 (5.7 )
Vacation ownership and residential sales and services 309 514 (39.9 )
Management fees, franchise fees and other income 217 201 8.0
Other revenues from managed and franchised properties (a) 634 598 6.0
1,539 1,715 (10.3 )
Costs and Expenses
Owned, leased and consolidated joint venture hotels 320 349 8.3
Vacation ownership and residential 199 393 49.4
Selling, general, administrative and other 90 96 6.3
Restructuring and other special charges (credits), net (1 ) (11 ) 90.9
Depreciation 58 57 (1.8 )
Amortization 7 6 (16.7 )
Other expenses from managed and franchised properties (a) 634 598 (6.0 )
1,307 1,488 12.2
Operating income 232 227 2.2

Equity (losses) earnings and gains (losses) from unconsolidated

   ventures, net

9 10 (10.0 )
Interest expense, net of interest income of $1 and $0 (26 ) (49 ) 46.9
Gain (loss) on asset dispositions and impairments, net (9 ) (7 ) (28.6 )

Income from continuing operations before taxes and

   noncontrolling interests

206 181 13.8
Income tax benefit (expense) (64 ) (52 ) (23.1 )
Income from continuing operations 142 129 10.1
Discontinued Operations:
Gain (loss) on dispositions, net of tax 70 (1 ) n/m
Net income 212 128 65.6
Net loss (income) attributable to noncontrolling interests 1 n/m
Net income attributable to Starwood $ 213 $ 128 66.4
Earnings (Losses) Per Share – Basic
Continuing operations $ 0.74 $ 0.67 10.4
Discontinued operations 0.37 n/m
Net income (loss) $ 1.11 $ 0.67 65.7
Earnings (Losses) Per Share – Diluted
Continuing operations $ 0.73 $ 0.65 12.3
Discontinued operations 0.36 n/m
Net income (loss) $ 1.09 $ 0.65 67.7
Amounts attributable to Starwood’s Common Stockholders
Continuing operations $ 143 $ 129 10.9
Discontinued operations 70 (1 ) n/m
Net income (loss) $ 213 $ 128 66.4
Weighted average number of shares 191 192
Weighted average number of shares assuming dilution 194 197
(a)The Company includes in revenues the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin and includes in costs and expenses these reimbursed costs. These costs relate primarily to payroll costs at managed properties where the Company is the employer.
n/m= not meaningful

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Consolidated Balance Sheets

(In millions, except share data)

  March 31,

2013

December 31,

2012

(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 387 $ 305
Restricted cash 158 158
Accounts receivable, net of allowance for doubtful accounts of $54 and $59 600 586
Inventories 299 361

Securitized vacation ownership notes receivable, net of allowance for doubtful

  accounts of $8 and $9

63 65
Deferred income taxes 277 320
Prepaid expenses and other 163 124
Total current assets 1,947 1,919
Investments 266 260
Plant, property and equipment, net 3,133 3,162
Assets held for sale, net 36
Goodwill and intangible assets, net 2,025 2,025
Deferred income taxes 624 636
Other assets (a) 425 385
Securitized vacation ownership notes receivable 410 438
Total assets $ 8,830 $ 8,861
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt (b) $ 2 $ 2
Accounts payable 100 121
Current maturities of long-term securitized vacation ownership debt 119 150
Accrued expenses 1,150 1,074
Accrued salaries, wages and benefits 297 395
Accrued taxes and other 195 287
Total current liabilities 1,863 2,029
Long-term debt (b) 1,273 1,273
Long-term securitized vacation ownership debt 353 383
Deferred income taxes 75 78
Other liabilities 1,921 1,956
Total liabilities 5,485 5,719
Commitments and contingencies
Stockholders’ equity:

Common stock; $0.01 par value; authorized 1,000,000,000 shares; outstanding

  194,555,997 and 193,121,094 shares at March 31, 2013 and December 31,

  2012, respectively

2 2
Additional paid-in capital 820 816
Accumulated other comprehensive loss (350 ) (338 )
Retained earnings 2,870 2,657
Total Starwood stockholders’ equity 3,342 3,137
Noncontrolling interest 3 5
Total stockholders’ equity 3,345 3,142
Total liabilities and stockholders’ equity $ 8,830 $ 8,861
(a) Includes restricted cash of $4 million and $6 million at March 31, 2013 and December 31, 2012, respectively.
(b) Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $362 million and $389 million at March 31, 2013 and December 31, 2012, respectively.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Historical Data

(In millions)

Three Months Ended

March 31,

   2013   

   2012   

%

Variance

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
Net income $ 213 $ 128 66.4 %
Interest expense (a) 28 49 (42.9 )%
Income tax (benefit) expense (b) (6 ) 53 n/m
Depreciation (c) 64 64
Amortization (d) 8 7 14.3 %
EBITDA 307 301 2.0 %
(Gain) loss on asset dispositions and impairments, net 9 7 28.6 %
Restructuring and other special charges (credits), net (1 ) (11 ) (90.9 )%
Adjusted EBITDA $ 315 $ 297 6.1 %
(a) Includes $1 million and $0 million of Starwood’s share of interest expense of unconsolidated joint ventures for the three months ended March 31, 2013 and 2012, respectively.
(b) Includes $(70 million) and $1 million of tax expense (benefit) recorded in discontinued operations for the three months ended March 31, 2013 and 2012, respectively.
(c) Includes $6 million and $7 million of Starwood’s share of depreciation expense of unconsolidated joint ventures for the three months ended March 31, 2013 and 2012, respectively.
(d) Includes $1 million and $1 million of Starwood’s share of amortization expense of unconsolidated joint ventures for the three months ended March 31, 2013 and 2012, respectively.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels Worldwide

(In millions)

Three Months Ended

March 31, 2013

  $ Change  

% Variance
Revenue
Revenue increase/(decrease) (GAAP) $ 4.4 1.6 %
Impact of changes in foreign exchange rates 1.1 0.4 %
Revenue increase/(decrease) in constant dollars $ 5.5 2.0 %
Expense
Expense increase/(decrease) (GAAP) $ 3.6 1.5 %
Impact of changes in foreign exchange rates 0.8 0.4 %
Expense increase/(decrease) in constant dollars $ 4.4 1.9 %

Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels North America

(In millions)

Three Months Ended

March 31, 2013

$ Change

% Variance
Revenue
Revenue increase/(decrease) (GAAP) $ 5.7 4.3 %
Impact of changes in foreign exchange rates 0.3 0.2 %
Revenue increase/(decrease) in constant dollars $ 6.0 4.5 %
Expense
Expense increase/(decrease) (GAAP) $ 3.0 2.7 %
Impact of changes in foreign exchange rates 0.1 0.1 %
Expense increase/(decrease) in constant dollars $ 3.1 2.8 %

Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels International

(In millions)

Three Months Ended

March 31, 2013

$ Change

% Variance
Revenue
Revenue increase/(decrease) (GAAP) $ (1.3 ) (0.9 )%
Impact of changes in foreign exchange rates 0.9 0.6 %
Revenue increase/(decrease) in constant dollars $ (0.4 ) (0.3 )%
Expense
Expense increase/(decrease) (GAAP) $ 0.6 0.5 %
Impact of changes in foreign exchange rates 0.7 0.6 %
Expense increase/(decrease) in constant dollars $ 1.3 1.1 %

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels Worldwide

(In millions)

Three Months Ended

March 31, 2013

    2013    

    2012    

% Variance (a)
Revenue
Total revenue from same-store owned hotels $ 285 $ 280 1.6 %
less: revenue from same-store owned hotels in Argentina (10 ) (14 ) (26.4 )%
Total revenue excluding revenue from same-store owned hotels in Argentina $ 275 $ 266 3.1 %
Expense
Total expense from same-store owned hotels $ 234 $ 230 1.5 %
less: expense from same-store owned hotels in Argentina (10 ) (10 ) (5.7 )%
Total expense excluding expense from same-store owned hotels in Argentina $ 224 $ 220 1.9 %

Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels International

(In millions)

Three Months Ended

March 31, 2013

20132012% Variance (a)
Revenue
Total revenue from same-store owned hotels $ 146 $ 147 (0.9 )%
less: revenue from same-store owned hotels in Argentina (10 ) (14 ) (26.4 )%
Total revenue excluding revenue from same-store owned hotels in Argentina $ 136 $ 133 1.9 %
Expense
Total expense from same-store owned hotels $ 122 $ 122 0.5 %
less: expense from same-store owned hotels in Argentina (10 ) (10 ) (5.7 )%
Total expense excluding expense from same-store owned hotels in Argentina $ 112 $ 112 1.1 %

(a) % Variance calculated based on numbers in thousands.

Non-GAAP to GAAP Reconciliation – Earnings from Vacation Ownership and Residential

Business

(In millions)

Three Months Ended

March 31, 2013

20132012$ Variance
Earnings from vacation ownership and residential $ 110 $ 121 (11 )
Depreciation expense (5 ) (5 )
Operating income from vacation ownership and residential $ 105 $ 116 (11 )

Non-GAAP to GAAP Reconciliation – Earnings from Bal Harbour

(In millions)

Three Months Ended

March 31, 2013

20132012$ Variance
Earnings from Bal Harbour $ 58 $ 78 (20 )
Depreciation expense
Operating income from Bal Harbour $ 58 $ 78 (20 )

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Future Performance

(In millions, except per share data)

Low Case

Three Months Ended

June 30, 2013

Year Ended

December 31, 2013

$

136

Net income (a) $ 599
30 Interest expense 125
64 Income tax expense (a) 178
75 Depreciation and amortization 300
305 EBITDA 1,202
(Gain) loss on asset dispositions and impairments, net 9
Restructuring and other special charges (credits) (1 )
$ 305 Adjusted EBITDA $ 1,210

Three Months Ended

June 30, 2013

Year Ended

December 31, 2013

$ 136 Income from continuing operations before special items $ 534
$ 0.70 EPS before special items $ 2.75
Special Items
Gain (loss) on asset dispositions and impairments, net (9 )
Restructuring and other special (charges) credits 1
Total special items – pre-tax (8 )
Income tax benefit associated with special items 3
Total special items – after-tax (5 )
$ 136 Income from continuing operations $ 529
$ 0.70 EPS including special items $ 2.72

High Case

Three Months Ended

June 30, 2013

Year Ended

December 31, 2013

$ 143 Net income (a) $ 616
30 Interest expense 125
67 Income tax expense (a) 186
75 Depreciation and amortization 300
315 EBITDA 1,227
(Gain) loss on asset dispositions and impairments, net 9
Restructuring and other special charges (credits) (1 )
$ 315 Adjusted EBITDA $ 1,235

Three Months Ended

June 30, 2013

Year Ended

December 31, 2013

$ 143 Income from continuing operations before special items $ 551
$ 0.73 EPS before special items $ 2.83
Special Items
Gain (loss) on asset dispositions and impairments, net (9 )
Restructuring and other special (charges) credits 1
Total special items – pre-tax (8 )
Income tax benefit associated with special items 3
Total special items – after-tax (5 )
$ 143 Income from continuing operations $ 546
$ 0.73 EPS including special items $ 2.81

(a) Includes a tax benefit of $70 million recorded in discontinued operations during the three months ended March 31, 2013.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations –

Future Earnings from Vacation Ownership and Residential Business

Excluding Bal Harbour

(In millions)

Low Case

Three Months Ended

June 30,

   2013   

   2012   

$

Variance

Earnings from vacation ownership and residential

$

40

$ 40 $
Depreciation expense (5 ) (4 ) (1 )
Operating income from vacation ownership and residential $ 35 $ 36 $ (1 )

Year Ended

December 31, 2013

Earnings from vacation ownership and residential $ 160
Depreciation expense (22 )
Operating income from vacation ownership and residential $ 138

High Case

Three Months Ended

June 30,

   2013   

   2012   

$

Variance

Earnings from vacation ownership and residential

$

45

$ 40 $ 5
Depreciation expense (5 ) (4 ) (1 )
Operating income from vacation ownership and residential $ 40 $ 36 $ 4

Year Ended

December 31, 2013

Earnings from vacation ownership and residential $ 165
Depreciation expense (22 )
Operating income from vacation ownership and residential $ 143

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations –

Future Earnings from Bal Harbour

(In millions)

Three Months Ended

June 30, 2013

Earnings from Bal Harbour

$

20

Depreciation expense
Operating income from Bal Harbour $ 20

Year Ended

December 31, 2013

Earnings from Bal Harbour $ 90
Depreciation expense
Operating income from Bal Harbour $ 90

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses

(In millions)

Three Months Ended

March 31,

Same-Store Owned Hotels

Worldwide

   2013   

   2012   

%

Variance

Revenue
Same-Store Owned Hotels (a) $

285

$ 280 1.8
Hotels Sold or Closed in 2013 and 2012 3 38 (92.1 )
Hotels Without Comparable Results 85 77 10.4
Other ancillary hotel operations 6 7 (14.3 )
Total Owned, Leased and Consolidated Joint Venture Hotels Revenue $ 379 $ 402 (5.7 )
Costs and Expenses
Same-Store Owned Hotels (a) $ 234 $ 230 (1.7 )
Hotels Sold or Closed in 2013 and 2012 3 35 91.4
Hotels Without Comparable Results 77 78 1.3
Other ancillary hotel operations 6 6
Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses $ 320 $ 349 8.3

Three Months Ended

March 31,

Same-Store Owned Hotels

North America

20132012

%

Variance

Revenue
Same-Store Owned Hotels (a) $ 139 $ 133 4.5
Hotels Sold or Closed in 2013 and 2012 3 38 (92.1 )
Hotels Without Comparable Results 76 72 5.6
Total Owned, Leased and Consolidated Joint Venture Hotels Revenue $ 218 $ 243 (10.3 )
Costs and Expenses
Same-Store Owned Hotels (a) $ 112 $ 108 (3.7 )
Hotels Sold or Closed in 2013 and 2012 3 35 91.4
Hotels Without Comparable Results 65 69 5.8
Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses $ 180 $ 212 15.1

Three Months Ended

March 31,

Same-Store Owned Hotels

International

20132012

%

Variance

Revenue
Same-Store Owned Hotels (a) $ 146 $ 147 (0.7 )
Hotels Without Comparable Results 9 5 80.0
Other ancillary hotel operations 6 7 (14.3 )
Total Owned, Leased and Consolidated Joint Venture Hotels Revenue $ 161 $ 159 1.3
Costs and Expenses
Same-Store Owned Hotels (a) $ 122 $ 122
Hotels Without Comparable Results 12 9 (33.3 )
Other ancillary hotel operations 6 6
Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses $ 140 $ 137 (2.2 )
(a)

Same-Store Owned Hotel results exclude 11 hotels sold and 12 hotels without comparable results for the three months

ended March 31, 2013.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Systemwide(1) Statistics - Same Store
For the Three Months Ended March 31, 2013
UNAUDITED
Systemwide - WorldwideSystemwide - North AmericaSystemwide - International

  2013  

  2012  

Variance

  2013  

  2012  

Variance

  2013  

  2012  

Variance
TOTAL HOTELS
REVPAR ($) 112.50 107.60 4.6% 112.44 105.89 6.2% 112.56 109.66 2.6%
ADR ($) 172.35 168.77 2.1% 163.96 157.33 4.2% 183.56 184.28 -0.4%
Occupancy (%) 65.3% 63.8% 1.5 68.6% 67.3% 1.3 61.3% 59.5% 1.8
SHERATON
REVPAR ($) 94.86 91.90 3.2% 94.26 88.90 6.0% 95.56 95.43 0.1%
ADR ($) 150.14 148.70 1.0% 141.45 136.04 4.0% 161.72 165.61 -2.3%
Occupancy (%) 63.2% 61.8% 1.4 66.6% 65.3% 1.3 59.1% 57.6% 1.5
WESTIN
REVPAR ($) 127.41 123.60 3.1% 126.00 121.32 3.9% 130.45 128.58 1.5%
ADR ($) 184.10 179.72 2.4% 178.12 172.17 3.5% 197.91 197.58 0.2%
Occupancy (%) 69.2% 68.8% 0.4 70.7% 70.5% 0.2 65.9% 65.1% 0.8
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 191.04 173.11 10.4% 252.51 223.41 13.0% 163.42 150.50 8.6%
ADR ($) 300.38 291.13 3.2% 344.44 320.26 7.6% 275.89 274.47 0.5%
Occupancy (%) 63.6% 59.5% 4.1 73.3% 69.8% 3.5 59.2% 54.8% 4.4
LE MERIDIEN
REVPAR ($) 121.90 119.13 2.3% 180.97 165.50 9.3% 114.87 113.61 1.1%
ADR ($) 188.61 185.72 1.6% 235.60 220.91 6.6% 181.81 180.74 0.6%
Occupancy (%) 64.6% 64.1% 0.5 76.8% 74.9% 1.9 63.2% 62.9% 0.3
W
REVPAR ($) 212.11 196.51 7.9% 196.43 185.25 6.0% 248.32 222.35 11.7%
ADR ($) 286.65 274.40 4.5% 264.17 251.98 4.8% 339.39 330.61 2.7%
Occupancy (%) 74.0% 71.6% 2.4 74.4% 73.5% 0.9 73.2% 67.3% 5.9
FOUR POINTS
REVPAR ($) 74.38 69.69 6.7% 70.55 65.07 8.4% 80.14 76.69 4.5%
ADR ($) 116.55 113.94 2.3% 107.79 103.98 3.7% 130.58 129.91 0.5%
Occupancy (%) 63.8% 61.2% 2.6 65.5% 62.6% 2.9 61.4% 59.0% 2.4
ALOFT
REVPAR ($) 70.67 65.61 7.7% 75.76 71.56 5.9%
ADR ($) 108.99 106.51 2.3% 112.53 108.05 4.1%
Occupancy (%) 64.8% 61.6% 3.2 67.3% 66.2% 1.1

(1)Includes same store owned, leased, managed, and franchised hotels

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Three Months Ended March 31, 2013
UNAUDITED
Systemwide (1)Company Operated (2)

  2013  

  2012  

Var. USD

  2013  

  2012  

Var. USD
TOTAL WORLDWIDE
REVPAR ($) 112.50 107.60 4.6% 127.70 121.99 4.7%
ADR ($) 172.35 168.77 2.1% 194.67 191.07 1.9%
Occupancy (%) 65.3% 63.8% 1.5 65.6% 63.8% 1.8
AMERICAS
REVPAR ($) 111.89 105.85 5.7% 140.23 133.26 5.2%
ADR ($) 164.46 158.38 3.8% 199.37 191.26 4.2%
Occupancy (%) 68.0% 66.8% 1.2 70.3% 69.7% 0.6
North America
REVPAR ($) 112.44 105.89 6.2% 143.32 135.43 5.8%
ADR ($) 163.96 157.33 4.2% 201.12 192.35 4.6%
Occupancy (%) 68.6% 67.3% 1.3 71.3% 70.4% 0.9
Latin America
REVPAR ($) 105.69 105.37 0.3% 118.38 117.90 0.4%
ADR ($) 170.73 171.55 -0.5% 185.52 182.82 1.5%
Occupancy (%) 61.9% 61.4% 0.5 63.8% 64.5% -0.7
ASIA PACIFIC
REVPAR ($) 108.22 104.42 3.6% 110.17 104.03 5.9%
ADR ($) 172.69 175.88 -1.8% 176.28 178.26 -1.1%
Occupancy (%) 62.7% 59.4% 3.3 62.5% 58.4% 4.1
Greater China
REVPAR ($) 89.73 84.30 6.4% 89.14 83.86 6.3%
ADR ($) 166.31 167.08 -0.5% 165.44 167.93 -1.5%
Occupancy (%) 54.0% 50.5% 3.5 53.9% 49.9% 4.0
Rest of Asia
REVPAR ($) 127.31 125.17 1.7% 140.16 132.78 5.6%
ADR ($) 177.65 182.55 -2.7% 187.43 188.71 -0.7%
Occupancy (%) 71.7% 68.6% 3.1 74.8% 70.4% 4.4
EAME
REVPAR ($) 119.73 117.22 2.1% 127.28 124.12 2.5%
ADR ($) 201.20 198.10 1.6% 207.70 205.24 1.2%
Occupancy (%) 59.5% 59.2% 0.3 61.3% 60.5% 0.8
Europe
REVPAR ($) 109.45 109.94 -0.4% 119.06 119.17 -0.1%
ADR ($) 195.07 193.39 0.9% 204.23 203.48 0.4%
Occupancy (%) 56.1% 56.8% -0.7 58.3% 58.6% -0.3
Africa & Middle East
REVPAR ($) 138.26 130.40 6.0% 138.83 131.09 5.9%
ADR ($) 210.65 205.75 2.4% 212.05 207.53 2.2%
Occupancy (%) 65.6% 63.4% 2.2 65.5% 63.2% 2.3
(1)Includes same store owned, leased, managed, and franchised hotels
(2)Includes same store owned, leased, and managed hotels
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned/Leased Hotel Results - Same Store
For the Three Months Ended March 31, 2013
UNAUDITED
WORLDWIDENORTH AMERICAINTERNATIONAL

  2013

  2012

Variance

  2013

  2012

Variance

  2013

  2012

Variance
TOTAL HOTELS

38 Hotels

14 Hotels

24 Hotels

REVPAR ($) 150.19 145.71 3.1% 156.98 147.95 6.1% 144.35 143.77 0.4%
ADR ($) 212.90 207.92 2.4% 207.64 198.41 4.7% 218.08 217.15 0.4%
Occupancy (%) 70.5% 70.1% 0.4 75.6% 74.6% 0.1 66.2% 66.2%

0.0

Total Revenue* 284,785 280,362 1.6% 139,121 133,424 4.3% 145,663 146,938 -0.9%
Total Expenses* 233,541 229,989 -1.5% 111,366 108,453 -2.7% 122,175 121,536 -0.5%
*Revenues & Expenses above are represented in '000's
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended March 31, 2013
UNAUDITED ($ millions)
Worldwide

   2013   

   2012   

$ Variance% Variance
Management Fees:
Base Fees 80 76 4 5.3%
Incentive Fees 44 39 5 12.8%
Total Management Fees 124 115 9 7.8%
Franchise Fees 48 45 3 6.7%
Total Management & Franchise Fees 172 160 12 7.5%
Other Management & Franchise Revenues (1) 39 36 3 8.3%
Total Management & Franchise Revenues 211 196 15 7.7%
Other 6 5 1 20.0%
Management Fees, Franchise Fees & Other Income 217 201 16 8.0%

(1) Other Management & Franchise Revenues includes the amortization of deferred gains of approximately $23

million in 2013 and $21 million in 2012, resulting from the sales of hotels subject to long-term management

contracts and termination fees.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Three Months Ended March 31, 2013
UNAUDITED ($ millions)

   2013   

   2012   

$ Variance% Variance
Originated Sales Revenues (1) -- Vacation Ownership Sales 83 83 0 0.0%
Other Sales and Services Revenues (2) 88 70 18 25.7%
Deferred Revenues -- Percentage of Completion (2) 1 (3) n/m
Deferred Revenues -- Other (3) 8 (2) 10 n/m
Vacation Ownership Sales and Services Revenues 177 152 25 16.4%
Residential Sales and Services Revenues (4) 132 362 (230) (63.5%)
Total Vacation Ownership & Residential Sales and Services Revenues 309 514 (205) (39.9%)
Originated Sales Expenses (5) -- Vacation Ownership Sales 63 59 (4) (6.8%)
Other Expenses (6) 64 53 (11) (20.8%)
Deferred Expenses -- Percentage of Completion (1) 0 1

n/m

Deferred Expenses -- Other 2 3 1 33.3%
Vacation Ownership Expenses 128 115 (13) (11.3%)
Residential Expenses (4) 71 278 207 (74.5%)
Total Vacation Ownership & Residential Expenses 199 393 194 49.4%

(1)

Timeshare sales revenue originated at each sales location before deferrals of revenue for U.S. GAAP reporting purposes

(2)

Includes resort income, interest income, and miscellaneous other revenues

(3)

Includes deferral of revenue for contracts still in rescission period, contracts that do not yet meet the requirements of ASC 978-605-25

and provision for loan loss

(4)

For 2013, includes $129 million of revenues and $71 million expenses associated with the St. Regis Bal Harbour residential project. For 2012,

includes $356 million of revenues and $278 million expenses associated wit the St. Regis Bal Harbour residential project.

(5)

Timeshare cost of sales and sales & marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes

(6)

Includes resort, general and administrative, and other miscellaneous expenses

Note: Deferred revenue is calculated based on the Percentage of Completion ("POC") of the project. Deferred expenses, also based on POC, include

product costs and direct sales and marketing costs only. Indirect sales and marketing costs are not deferred per ASC 978-720-25 and ASC 978-340-25.

n/m = not meaningful
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotels without Comparable Results & Other Selected Items
As of March 31, 2013
UNAUDITED ($ millions)
Properties without comparable results in 2013 and 2012:Revenues and Expenses Associated with Assets Sold or Closed in 2013 and 2012: (1)

Property

Location

The Westin Peachtree Plaza, Atlanta Atlanta, GA Q1Q2Q3Q4Full Year
The St. Regis Bal Harbour Resort Bal Harbour, FL Hotels Sold or Closed in 2012:
The St. Regis New York New York, NY 2012
The Westin Maui Resort & Spa, Ka'anapali Maui, HI Revenues $ 35 $ 43 $ 36 $ - $ 114
The Westin Denarau Island Resort & Spa, Fiji Nadi, Fiji Expenses (excluding depreciation) $ 32 $ 32 $ 28 $ 1 $ 93
Aloft San Francisco Airport Millbrae, CA
Sheraton Santa Maria de El Paular Madrid, Spain Hotels Sold or Closed in 2013: (3)
Hotel Maria Cristina, San Sebastian San Sebastian, Spain 2013
Hotel Alfonso XIII, Seville Seville, Spain Revenues $ 3 $ - $ - $ - $ 3
Four Points by Sheraton Tucson University (2) Tucson, AZ Expenses (excluding depreciation) $ 3 $ - $ - $ - $ 3
The Gritti Palace, Venice Venice, Italy
The Westin St. John St. John, Virgin Islands 2012
Revenues $ 3 $ 5 $ 5 $ 5 $ 18
Properties sold or closed in 2013 and 2012: Expenses (excluding depreciation) $ 3 $ 4 $ 4 $ 4 $ 15

Property

Location

(1) Results consist of three hotels sold in 2013 and eight hotels sold in 2012. These amounts are included in the revenues
Atlanta Perimeter

Atlanta, GA

and expenses from owned, leased and consolidated joint venture hotels in the statements of income for 2013 and 2012.

W Los Angeles - Westwood

Los Angeles, CA These amounts are not impacted from the sale of Caesars Brookdale because it was closed prior to 2012.

W Chicago - Lakeshore

Chicago, IL (2) As of April 2013, this hotel completed a conversion and is now operating as Aloft Tucson University.
Caesars Cove Haven Lakeville, PA (3) Excludes $25 million of revenues and $19 million of expenses in 2012, and excludes $7 million in revenues and
New York - Manhattan at Times Square New York, NY $2 million of expenses in the first quarter of 2013, related to the sale of the W New Orleans in April 2013.
Caesars Paradise Stream Mount Pocono, PA
Caesars Pocono Palace Marshalls Creek, PA
Caesars Brookdale Scotrun, PA
Aloft Lexington Lexington, MA
Element Lexington Lexington, MA
W New Orleans - French Quarter New Orleans, LA
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three Months Ended March 31, 2013
UNAUDITED ($ millions)

  Q1  

Maintenance Capital Expenditures: (1)
Owned, Leased and Consolidated Joint Venture Hotels 7
Corporate/IT 10
Subtotal17
Vacation Ownership and Residential Capital Expenditures:
Net capital expenditures for inventory (excluding St. Regis Bal Harbour) (2)

(15

)

Capital expenditures for inventory - St. Regis Bal Harbour

2

Subtotal

(13

)

Development Capital81
Total Capital Expenditures85

(1) Maintenance capital expenditures include improvements that extend the useful life of the

asset.

(2) Represents gross inventory capital expenditures of $7 million in the three months ended

March 31, 2013, less cost of sales of $22 million in the three months ended March 31, 2013.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
2013 Divisional Hotel Inventory Summary by Ownership by Brand
As of March 31, 2013
AmericasNorth AmericaLatin AmericaAsia PacificGreater ChinaRest of Asia

Europe, Africa &

Middle East

EuropeAfrica &

Middle East

TOTAL
Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms
Owned & Leased
Sheraton 11 6,228 6 3,529 5 2,699 2 821 - - 2 821 4 705 4 705 - - 17 7,754
Westin 6 3,131 3 2,229 3 902 1 273 - - 1 273 3 650 3 650 - - 10 4,054
Four Points 2 327 2 327 - - - - - - - - - - - - - - 2 327
W 2 919 2 919 - - - - - - - - 2 665 2 665 - - 4 1,584
Luxury Collection 2 824 1 643 1 181 - - - - - - 5 577 5 577 - - 7 1,401
St. Regis 3 716 3 716 - - 1 160 - - 1 160 2 261 2 261 - - 6 1,137
Le Meridien - - - - - - - - - - - - - - - - - - - -
Aloft 2 388 2 388 - - - - - - - - - - - - - - 2 388
Element - - - - - - - - - - - - - - - - - - - -
Other 1 135 1 135 - - - - - - - - - - - - - - 1 135
Total Owned & Leased2912,668208,88693,78241,254--41,254162,858162,858--4916,780
Managed & UJV
Sheraton 51 28,895 36 25,941 15 2,954 82 32,505 54 24,404 28 8,101 72 20,740 40 11,517 32 9,223 205 82,140
Westin 60 30,790 57 29,904 3 886 31 10,340 15 5,341 16 4,999 15 5,046 12 4,097 3 949 106 46,176
Four Points 4 597 1 171 3 426 22 7,060 18 5,543 4 1,517 13 2,342 5 779 8 1,563 39 9,999
W 27 8,076 25 7,643 2 433 9 2,229 3 1,114 6 1,115 4 805 3 364 1 441 40 11,110
Luxury Collection 11 1,938 4 1,648 7 290 10 1,991 4 811 6 1,180 25 4,599 20 3,215 5 1,384 46 8,528
St. Regis 11 2,117 9 1,808 2 309 8 2,032 5 1,380 3 652 5 1,108 2 223 3 885 24 5,257
Le Meridien 4 469 3 309 1 160 26 7,306 7 2,534 19 4,772 47 12,954 19 5,808 28 7,146 77 20,729
Aloft 2 292 - - 2 292 7 1,801 5 1,023 2 778 4 943 3 535 1 408 13 3,036
Element - - - - - - - - - - - - - - - - - - - -
Other 1 151 1 151 - - - - - - - - 1 165 1 165 - - 2 316
Total Managed & UJV17173,32513667,575355,75019565,26411142,1508423,11418648,70210526,7038121,999552187,291
Franchised
Sheraton 176 51,897 165 49,047 11 2,850 13 6,124 3 1,836 10 4,288 19 4,937 17 4,534 2 403 208 62,958
Westin 64 20,422 59 18,895 5 1,527 9 2,730 2 496 7 2,234 3 1,176 3 1,176 - - 76 24,328
Four Points 122 19,249 113 17,920 9 1,329 8 1,441 1 126 7 1,315 5 835 5 835 - - 135 21,525
W - - - - - - - - - - - - - - - - - - - -
Luxury Collection 9 1,748 7 1,500 2 248 10 3,071 - - 10 3,071 12 1,673 12 1,673 - - 31 6,492
St. Regis - - - - - - - - - - - - - - - - - - - -
Le Meridien 11 2,717 10 2,606 1 111 3 715 1 160 2 555 5 1,446 3 623 2 823 19 4,878
Aloft 48 6,926 48 6,926 - - 4 564 - - 4 564 - - - - - - 52 7,490
Element 10 1,641 10 1,641 - - - - - - - - - - - - - - 10 1,641
Other - - - - - - - - - - - - - - - - - - - -
Total Franchised440

104,600

41298,535286,0654714,64572,6184012,0274410,067408,84141,226531129,312
Systemwide
Sheraton 238 87,020 207 78,517 31 8,503 97 39,450 57 26,240 40 13,210 95 26,382 61 16,756 34 9,626 430 152,852
Westin 130

54,343

119 51,028 11 3,315 41 13,343 17 5,837 24 7,506 21 6,872 18 5,923 3 949 192 74,558
Four Points 128 20,173 116 18,418 12 1,755 30 8,501 19 5,669 11 2,832 18 3,177 10 1,614 8 1,563 176 31,851
W 29 8,995 27 8,562 2 433 9 2,229 3 1,114 6 1,115 6 1,470 5 1,029 1 441 44 12,694
Luxury Collection 22 4,510 12 3,791 10 719 20 5,062 4 811 16 4,251 42 6,849 37 5,465 5 1,384 84 16,421
St. Regis 14 2,833 12 2,524 2 309 9 2,192 5 1,380 4 812 7 1,369 4 484 3 885 30 6,394
Le Meridien 15 3,186 13 2,915 2 271 29 8,021 8 2,694 21 5,327 52 14,400 22 6,431 30 7,969 96 25,607
Aloft 52 7,606 50 7,314 2 292 11 2,365 5 1,023 6 1,342 4 943 3 535 1 408 67 10,914
Element 10 1,641 10 1,641 - - - - - - - - - - - - - - 10 1,641
Other 2 286 2 286 - - - - - - - - 1 165 1 165 - - 3 451
Vacation Ownership 14 7,532 13 6,952 1 580 - - - - - - - - - - - - 14 7,532
Total Systemwide654198,125581

181,948

7316,17724681,16311844,76812836,39524661,627161

38,402

8523,2251,146340,915
Note: Includes Vacation Ownership properties
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership Inventory Pipeline
As of March 31, 2013
UNAUDITED
# Resorts# of Units (1)

Total (2)

In

Operations

In Active

Sales

Completed (3)

Pre-sales/

Development (4)

Future

Capacity (5),(6)

Total at

Buildout

Brand
Sheraton 7 7 6 3,079 - 712 3,791
Westin 9 9 9 1,584 22 37 1,643
St. Regis 2 2 - 56 - - 56
The Luxury Collection 1 1 - 6 - - 6
Unbranded 2 2 1 99 - 1 100
Total SVO, Inc.2121164,824227505,596
Unconsolidated Joint Ventures (UJV's) 1 1 1 198 - - 198
Total including UJV's2222175,022227505,794
Total Intervals Including UJV's (7)261,1441,14439,000301,288

(1)

Lockoff units are considered as one unit for this analysis.

(2)

Includes resorts in operation, active sales or future development.

(3)

Completed units include those units that have a certificate of occupancy.

(4)

Units in Pre-sales/Development are in various stages of development (including the permitting stage), most of which are currently being offered for sale to customers.

(5)

Based on owned land and average density in existing marketplaces

(6)

Future units indicated above include planned timeshare units on land owned by the Company or applicable UJV that have received all major governmental land use approvals for the development of timeshare. There can be no assurance that such units will in fact be developed and, if developed, the time period of such development (which may be more than several years in the future). Some of the projects may require additional third-party approvals or permits for development and build out and may also be subject to legal challenges as well as a commitment of capital by the Company. The actual number of units to be constructed may be significantly lower than the number of future units indicated.

(7)

Assumes 52 intervals per unit.

Contacts:

Starwood Hotels & Resorts Worldwide, Inc.
Investor Contact
Stephen Pettibone, 203-351-3500
or
Media Contact
KC Kavanagh, 866-478-2777
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