Starwood Reports Second Quarter 2015 Results

STAMFORD, Conn.--(BUSINESS WIRE)-- Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported second quarter 2015 financial results.

Second Quarter 2015 Highlights

• Excluding special items, EPS from continuing operations was $0.84. Including special items, EPS from continuing operations was $0.79.
• Adjusted EBITDA was $311 million.
• Excluding special items, income from continuing operations was $143 million. Including special items, income from continuing operations was $136 million.
• Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.1% in constant dollars (decreased 0.7% in actual dollars) compared to 2014. Systemwide REVPAR for Same-Store Hotels in North America increased 5.3% in constant dollars (4.1% in actual dollars).
• Management fees, franchise fees and other income, which were negatively impacted by foreign exchange rates, decreased 1.5% compared to 2014. Core fees decreased 1.0% compared to 2014.
• Earnings from Starwood’s vacation ownership and residential business decreased approximately $2 million compared to 2014.
• During the quarter, the Company signed 64 hotel management and franchise contracts, representing approximately 14,400 rooms, a 69% increase in signed rooms compared to 2014. The Company also opened 21 hotels and resorts with approximately 4,000 rooms in the second quarter of 2015.
• During the quarter, the Company paid a quarterly dividend of $0.375 per share and repurchased 1.2 million shares at a total cost of $105 million and a weighted average price of $84.24 per share.
• During the quarter, the Company sold three hotels for gross cash proceeds of approximately $533 million, subject to long-term management or franchise contracts.

Second Quarter 2015 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the second quarter of 2015 of $0.79 compared to $0.80 in the second quarter of 2014. Excluding special items, EPS from continuing operations was $0.84 for the second quarter of 2015 compared to $0.77 in the second quarter of 2014.

Special items in the second quarter of 2015 consisted of restructuring and other special charges of $23 million (pre-tax and $12 million after-tax), as well as a $5 million tax benefit on certain non-recurring items. Special items in the second quarter of 2014 totaled a benefit of $6 million (after-tax). Excluding special items, the effective income tax rate in the second quarter of 2015 was 30.1% compared to 33.3% in the second quarter of 2014.

Income from continuing operations was $136 million in the second quarter of 2015, compared to $153 million in the second quarter of 2014. Excluding special items, income from continuing operations was $143 million in the second quarter of 2015 compared to $147 million in the second quarter of 2014.

Net income was $136 million and $0.79 per share in the second quarter of 2015, compared to $153 million and $0.80 per share in the second quarter of 2014.

Adam Aron, Chief Executive Officer of the Company on an interim basis, said, “Starwood delivered strong Adjusted EBITDA and EPS before special items in the second quarter of 2015, even in the face of macroeconomic headwinds. We improved our performance while streamlining our organization and reducing our costs.

“At the same time, we have initiated efforts to reinvigorate our brands with the launch of the new Tribute Portfolio brand and the announcement of Sheraton 2020. Similar efforts to enhance the market strength of all our brands are underway, especially for The Luxury Collection and Aloft. Our pace of hotel footprint growth is also accelerating, with strong signings in the second quarter.

“The sales of the Gritti Palace, the Phoenician and the Element Denver Park Meadows indicate that we are successfully executing against our asset light strategy. Looking ahead, we remain bullish about our long term growth.”

Six Months Ended June 30, 2015 Earnings Summary

Income from continuing operations was $235 million in the six months ended June 30, 2015 compared to $289 million in the same period in 2014. Excluding special items, income from continuing operations was $253 million in the six months ended June 30, 2015 compared to $269 million in the same period in 2014. The decreases primarily reflect the impact of the sales of nine hotels since the second quarter of 2014.

Net income was $235 million and $1.37 per share in the six months ended June 30, 2015 compared to $290 million and $1.52 per share in the same period in 2014.

Adjusted EBITDA was $585 million in the six months ended June 30, 2015 compared to $605 million in the same period in 2014.

Second Quarter 2015 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.1% in constant dollars (decreased 0.7% in actual dollars) compared to the second quarter of 2014. International Systemwide REVPAR for Same-Store Hotels increased 2.7% in constant dollars (decreased 6.6% in actual dollars).

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

						REVPAR
Region						ConstantDollars								ActualDollars
Americas:
North America							5.3	%							4.1	%
Latin America							(3.2	)%							(3.2	)%
Asia Pacific:
Greater China							(0.3	)%							0.1	%
Rest of Asia							7.5	%							(2.4	)%
Europe, Africa & Middle East:
Europe							6.1	%							(14.0	)%
Africa & Middle East							(4.0	)%							(8.2	)%

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

						REVPAR
Brand						Constant Dollars								Actual Dollars
St. Regis/Luxury Collection							5.1	%							(2.8	)%
W Hotels							3.8	%							0.5	%
Westin							5.9	%							1.6	%
Sheraton							2.6	%							(1.5	)%
Le Méridien							2.3	%							(6.5	)%
Four Points by Sheraton							3.4	%							(0.6	)%
Aloft							10.0	%							8.5	%

Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 50 basis points compared to 2014. International gross operating profit margins for Same-Store Company-Operated properties increased approximately 20 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 75 basis points.

Management fees, franchise fees and other income, which were negatively impacted by foreign exchange rates, were $256 million, down $4 million, or 1.5% compared to the second quarter of 2014. Core fees decreased 1.0% to $206 million. Other management and franchise revenues decreased 4.2% or $2 million.

Development

During the second quarter of 2015, the Company signed 64 hotel management and franchise contracts, representing approximately 14,400 rooms, of which 49 are new builds and 15 are conversions from other brands. At June 30, 2015, the Company had approximately 500 hotels in the active pipeline representing approximately 112,000 rooms.

During the second quarter of 2015, 21 new hotels and resorts (representing approximately 4,000 rooms) entered the system, including Sheraton Zhanjiang Hotel (China, 440 rooms), Le Méridien Saigon (Vietnam, 350 rooms), Sheraton Barra Rio de Janeiro Hotel (Brazil, 292 rooms), The Westin Jekyll Island (Georgia, 200 rooms), Aloft South Beach (Florida, 237 rooms), and Augustine, a Luxury Collection Hotel, Prague (Czech Republic, 101 rooms). During the quarter, eight properties (representing approximately 1,800 rooms) were removed from the system.

Owned Hotels

Worldwide REVPAR at Starwood Same-Store Owned Hotels increased 6.8% in constant dollars (decreased 2.6% in actual dollars) when compared to 2014. REVPAR at Starwood Same-Store Owned Hotels in North America increased 8.6% in constant dollars (4.8% actual dollars). Internationally, Starwood Same-Store Owned Hotel REVPAR increased 4.9% in constant dollars (decreased 10.3% in actual dollars).

Revenues at Starwood Same-Store Owned Hotels Worldwide increased 7.3% in constant dollars (decreased 2.0% in actual dollars) while costs and expenses increased 5.6% in constant dollars (decreased 3.0% in actual dollars) when compared to 2014. Margins at these hotels increased approximately 80 basis points compared to 2014.

Revenues at Starwood Same-Store Owned Hotels in North America increased 8.2% in constant dollars (4.4% in actual dollars) while costs and expenses increased 5.8% in constant dollars (2.5% in actual dollars) when compared to 2014. Margins at these hotels increased approximately 150 basis points compared to 2014.

Internationally, revenues at Starwood Same-Store Owned Hotels increased 6.3% in constant dollars (decreased 8.9% in actual dollars) while costs and expenses increased 5.4% in constant dollars (decreased 9.5% in actual dollars) when compared to 2014. Margins at these hotels increased approximately 40 basis points compared to 2014.

Revenues at Owned Hotels, which were negatively impacted by asset sales since the second quarter of 2014, were $356 million, compared to $414 million in 2014. Expenses at Owned Hotels were $265 million compared to $314 million in 2014.

Vacation Ownership

Vacation ownership revenues for the three months ended June 30, 2015 increased 5.6%, to $169 million, compared to the corresponding period in 2014 primarily due to the timing of deferred revenues and an increase in revenues from resort operations. Originated contract sales of vacation ownership intervals remained flat for the three months ended June 30, 2015, compared to the corresponding period in 2014, with a 1.8% increase in the number of contracts signed, offset by a decrease in the average price per vacation ownership unit sold to approximately $14,800.

Residential

During the second quarter of 2015, the Company’s residential revenues were $1 million compared to $11 million in 2014 as the St. Regis Bal Harbour residential project sold out in early 2014.

Selling, General, Administrative and Other

During the second quarter of 2015, selling, general, administrative and other expenses (“SG&A”) decreased 2.9% to $99 million compared to $102 million in 2014, primarily due to an acceleration of the implementation of the Company’s previously announced cost savings initiatives and timing of expenses. The Company now targets a decrease of 2% to 4% for the full year.

Capital

Gross capital spending during the quarter included approximately $37 million of maintenance capital and $38 million of development capital.

Asset Sales

During the second quarter of 2015, the Company completed the sales of The Phoenician, a Luxury Collection Resort, Scottsdale, for gross cash proceeds of $400 million and The Gritti Palace, a Luxury Collection Hotel, Venice, for gross cash proceeds of approximately $117 million, both of which were sold subject to long-term management contracts. Additionally, during the second quarter of 2015, the Company sold the Element Denver Park Meadows for gross cash proceeds of approximately $16 million, subject to a long-term franchise contract. Year to date through June 30, 2015, the Company has received gross cash proceeds from asset sales of approximately $566 million, including approximately $33 million from the sale of minority interests in two hotels.

Restructuring and Other Special Charges

During the second quarter of 2015, the Company recorded $13 million of restructuring charges associated with its previously announced cost savings initiatives and $10 million of other special charges. Other special charges primarily consist of costs associated with the planned spin-off of the Company’s vacation ownership business.

Dividend

On May 28, 2015, the Company declared a regular quarterly dividend of $0.375 per share, which was paid on June 17, 2015. The total dividends paid in the second quarter of 2015 were approximately $64 million.

Share Repurchase

In the second quarter of 2015, the Company repurchased 1.2 million shares at a total cost of approximately $105 million and a weighted average price of $84.24 per share. As of June 30, 2015, approximately $601 million remained available under the Company’s share repurchase authorization. Year to date through June 30, 2015, the Company has repurchased 2.8 million shares at a total cost of $228 million and an average price of $80.91.

Balance Sheet

At June 30, 2015, the Company had gross debt of $2.1 billion, cash and cash equivalents of $769 million (including $34 million of restricted cash) and net debt of $1.4 billion, compared to net debt of $1.7 billion as of December 31, 2014, in each case excluding debt and restricted cash associated with securitized vacation ownership notes receivable. Net debt at June 30, 2015, including $208 million of debt and $11 million of restricted cash associated with securitized vacation ownership notes receivable, was $1.6 billion.

Outlook

• The following outlook assumes the planned spin-off of the vacation ownership business occurs on December 31, 2015. Transaction costs related to the planned spin-off are not included in full year SG&A guidance.

For the full year 2015:

• Adjusted EBITDA is expected to be approximately $1.175 billion to $1.200 billion (based on the assumptions below).
  • REVPAR increases at Same-Store Systemwide Hotels Worldwide of 4% to 6% in constant dollars (approximately 400 basis points lower in actual dollars at current exchange rates).
  • REVPAR increases at Same-Store Owned Hotels Worldwide of 5% to 7% in constant dollars (approximately 650 basis points lower in actual dollars at current exchange rates).
  • Margins at Same-Store Owned Hotels Worldwide increase 50 to 100 basis points.
  • Core fees increase approximately 2% to 4%.
  • Management fees, franchise fees and other income are expected to be approximately flat.
  • Earnings from the Company’s vacation ownership and residential business of approximately $155 million to $165 million.
  • SG&A decreases approximately 2% to 4%.
  • Significant non-recurring items in 2014 Adjusted EBITDA include $35 million related to five large one-time termination fees received by the Company and $11 million from the St. Regis Bal Harbour residential project, which is sold out.
  • Shifts in exchange rates since 2014 will negatively impact full year earnings by approximately $41 million if exchange rates stay at current levels.
• Depreciation and amortization is expected to be approximately $307 million.
• Interest expense is expected to be approximately $135 million.
• Full year effective tax rate is expected to be approximately 32%, and cash taxes from operating earnings are expected to be approximately $135 million.
• EPS before special items is expected to be approximately $2.93 to $3.03 (based on the assumptions above).
• Cash flow from operations is expected to be approximately $740 million to $840 million (based on the assumptions above). Cash flow from operations includes vacation ownership investment in inventory expected to be approximately $160 million which includes approximately $80 million related to the development of the Westin Nanea Ocean Villas, the third phase of the Westin Ka’anapali Ocean Resort Villas.
• Full year capital expenditures (excluding vacation ownership 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 $200 million.

For the three months ended September 30, 2015:

• Adjusted EBITDA is expected to be approximately $285 million to $295 million (based on the assumptions below).
  • REVPAR increases at Same-Store Systemwide Hotels Worldwide of 4% to 6% in constant dollars (approximately 550 basis points lower in actual dollars at current exchange rates).
  • REVPAR increases at Same-Store Owned Hotels Worldwide of 4% to 6% in constant dollars (approximately 800 basis points lower in actual dollars at current exchange rates).
  • Core fees increase approximately 1% to 3%.
  • Management fees, franchise fees and other income increase 2% to 4%.
  • Earnings from the Company’s vacation ownership and residential business of approximately $35 million to $40 million.
  • Shifts in exchange rates since the third quarter of 2014 will negatively impact third quarter 2015 earnings by approximately $11 million if exchange rates stay at current levels.
• EPS is expected to be approximately $0.69 to $0.73 (based on the assumptions above).

Special Items

The Company’s special items included a pre-tax charge of $23 million ($7 million charge after-tax) in the second quarter of 2015 compared to a pre-tax and after-tax benefit of $6 million in the same period of 2014.

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 EndedJune 30,																					Six Months EndedJune 30,
2015								2014													2015									2014
$			143					$			147					Income from continuing operations before special items					$				253					$				269
$			0.84					$			0.77					EPS before special items					$				1.48					$				1.40
																Special Items
			(23	)							3					Restructuring and other special (charges) credits, net (a)									(54	)								3
			—								3					Gain (loss) on asset dispositions and impairments, net (b)									14									(33	)
			—								—					Gain on sale of an unconsolidated joint venture hotel (c)									4									—
			(23	)							6					Total special items – pre-tax									(36	)								(30	)
			13								—					Income tax benefit (expense) for special items (d)									13									(2	)
			3								—					Income tax benefit - other non-recurring items (e)									5									52
			(7	)							6					Total special items – after-tax									(18	)								20
$			136					$			153					Income from continuing operations					$				235					$				289
$			0.79					$			0.80					EPS including special items					$				1.37					$				1.51

a)			During the three months ended June 30, 2015, the net charge relates to costs associated with the Company’s previously announced cost savings initiatives of $12 million, $10 million in costs associated with the planned spin-off of the vacation ownership business, and a $6 million charge for technology related costs and expenses that the Company no longer deems recoverable, partially offset by the reversal of $5 million of reserves as a result of the favorable resolutions of an exposure from a previous disposition, and a dispute with a foreign taxing authority. During the six months ended June 30, 2015, the net charge further includes $15 million in severance costs, including $7 million associated with the resignation of the Company’s former CEO, the establishment of a $6 million reserve related to potential liabilities assumed in connection with the 2005 acquisition of Le Méridien, and $6 million in costs associated with the planned spin-off of the vacation ownership business.
b)			During the six months ended June 30, 2015, the net benefit primarily relates to the sale of a minority partnership interest in a hotel. During the three months ended June 30, 2014, the net gain is primarily due to the conversion of a leased hotel to a managed hotel discussed below. During the six months ended June 30, 2014, the net loss primarily relates to the impairment of two hotels, one of which was sold subject to a long-term franchise contract and the other of which represents a leased hotel that was converted to a managed hotel. In addition, during the six months ended June 30, 2014, the Company recorded an impairment charge associated with one of its foreign unconsolidated joint ventures.
c)			During the six months ended June 30, 2015, the net benefit relates to a gain recognized on the sale of a hotel by a joint venture in which the Company holds a minority interest. This gain is included in the equity earnings and gains from unconsolidated ventures, net line item in the statement of income.
d)			During the three and six months ended June 30, 2015 and 2014, the amounts primarily relate to the tax benefit (expense) on the pre-tax special items.
e)			During the three months ended June 30, 2015, the $3 million benefit primarily relates to favorable tax law changes. During the six months ended June 30, 2015, the net benefit further includes a change in tax reserves. During the six months ended June 30, 2014, the net benefit primarily relates to the settlement of a foreign tax audit.

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 second quarter financial results at 1:00 p.m. Eastern Daylight 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 on the corporate website a few hours after the live event on Thursday, July 30 and will be available for one year. Alternatively, participants may dial into the live call at (866) 921-0636 with conference ID 69941686. Outside the U.S., participants may dial into the live call at (706) 758-8764. Please dial in fifteen minutes early to ensure a timely start. A call replay will be available a few hours after the live event on Thursday, July 30 and will be available for one week; the call replay can be accessed by dialing (855) 859-2056 with conference ID 69941686. Outside the U.S., the call replay can be accessed at (404) 537-3406.

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 and other special charges (credits) 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 Owned or Owned Hotels reflect the Company’s owned, leased, and consolidated joint venture hotels. 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 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. All references to core fees represent total management and franchise fees.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with more than 1,200 properties in some 100 countries and over 180,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences under the renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, Aloft®, Element® and the recently introduced Tribute Portfolio™. The Company also boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG®). Visit www.starwoodhotels.com for more information and stay connected @starwoodbuzz on Twitter and Instagram and facebook.com/Starwood. 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. There can be no assurance as to the development of future hotels in the Company’s pipeline or additional vacation ownership units. 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 EndedJune 30,																														Six Months EndedJune 30,
2015								2014								%Variance														2015								2014								%Variance
																									Revenues
$				356				$				414						(14.0	)						Owned, leased and consolidated joint venture hotels					$				672				$				778						(13.6	)
				170								171						(0.6	)						Vacation ownership and residential sales and services									357								345						3.5
				256								260						(1.5	)						Management fees, franchise fees and other income									496								508						(2.4	)
				699								694						0.7							Other revenues from managed and franchised properties (a)									1,371								1,366						0.4
				1,481								1,539						(3.8	)															2,896								2,997						(3.4	)
																									Costs and Expenses
				265								314						15.6							Owned, leased and consolidated joint venture hotels									527								615						14.3
				126								125						(0.8	)						Vacation ownership and residential									263								253						(4.0	)
				99								102						2.9							Selling, general, administrative and other									190								197						3.6
				23								(3	)			n/m									Restructuring and other special charges (credits), net									54								(3	)			n/m
				65								63						(3.2	)						Depreciation									127								123						(3.3	)
				8								7						(14.3	)						Amortization									15								15						—
				699								694						(0.7	)						Other expenses from managed and franchised properties (a)									1,371								1,366						(0.4	)
				1,285								1,302						1.3																2,547								2,566						0.7
				196								237						(17.3	)						Operating income									349								431						(19.0	)
				11								9						22.2							Equity earnings and gains from unconsolidated ventures,  net									26								18						44.4
				(27	)							(23	)					(17.4	)						Interest expense, net of interest income of $1, $1, $2  and $2									(58	)							(46	)					(26.1	)
				—								3						(100.0	)						Gain (loss) on asset dispositions and impairments, net									14								(33	)			n/m
				180								226						(20.4	)						Income from continuing operations before taxes and  noncontrolling interests									331								370						(10.5	)
				(44	)							(73	)					39.7							Income tax expense									(96	)							(81	)					(18.5	)
				136								153						(11.1	)						Income from continuing operations									235								289						(18.7	)
																									Discontinued Operations:
				—								—						—							Gain on dispositions, net of tax									—								1						(100.0	)
$				136				$				153						(11.1	)						Net income attributable to Starwood					$				235				$				290						(19.0	)
																									Earnings Per Share – Basic
$				0.80				$				0.81						(1.2	)						Continuing operations					$				1.38				$				1.52						(9.2	)
				—								—						—							Discontinued operations									—								0.01						(100.0	)
$				0.80				$				0.81						(1.2	)						Net income					$				1.38				$				1.53						(9.8	)
																									Earnings Per Share – Diluted
$				0.79				$				0.80						(1.3	)						Continuing operations					$				1.37				$				1.51						(9.3	)
				—								—						—							Discontinued operations									—								0.01						(100.0	)
$				0.79				$				0.80						(1.3	)						Net income					$				1.37				$				1.52						(9.9	)
				169								190													Weighted average number of shares									170								190
				170								191													Weighted average number of shares assuming dilution									171								191

(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)
						June 30,2015											December 31,2014
						(unaudited)
Assets
Current assets:
Cash and cash equivalents						$					735						$	935
Restricted cash											42							84
Accounts receivable, net of allowance for doubtful accounts of $72 and $63											675							661
Inventories											246							236
Securitized vacation ownership notes receivable, net of allowance for doubtful accounts of $3 and $4											44							47
Deferred income taxes											171							199
Prepaid expenses and other											182							159
Total current assets											2,095							2,321
Investments											204							214
Plant, property and equipment, net											2,320							2,634
Goodwill and intangible assets, net											1,912							1,956
Deferred income taxes											579							596
Other assets (a)											750							711
Securitized vacation ownership notes receivable, net											193							227
Total assets						$					8,053						$	8,659
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt (b)						$					299						$	297
Accounts payable											94							101
Current maturities of long-term securitized vacation ownership debt											57							73
Accrued expenses											1,324							1,307
Accrued salaries, wages and benefits											373							416
Accrued taxes and other											261							256
Total current liabilities											2,408							2,450
Long-term debt (b)											1,841							2,398
Long-term securitized vacation ownership debt											151							176
Deferred income taxes											35							38
Other liabilities											2,274							2,069
Total liabilities											6,709							7,131
Commitments and contingencies
Stockholders’ equity:
Common stock; $0.01 par value; authorized 1,000,000,000 shares; 170,603,937
and 172,694,299 shares outstanding at June 30, 2015 and
December 31, 2014, respectively											2							2
Additional paid-in capital											74							47
Accumulated other comprehensive loss											(598	)						(508	)
Retained earnings											1,863							1,984
Total Starwood stockholders’ equity											1,341							1,525
Noncontrolling interests											3							3
Total equity											1,344							1,528
Total liabilities and equity						$					8,053						$	8,659

(a)			Includes restricted cash of $3 million and $3 million at June 30, 2015 and December 31, 2014, respectively.
(b)			Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $194 million and $200 million at June 30, 2015 and December 31, 2014, respectively.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Historical Data
(In millions)
Three Months EndedJune 30,																												Six Months EndedJune 30,
2015								2014								%Variance												2015								2014								%Variance
																							Reconciliation of Net Income to EBITDA    and Adjusted EBITDA
$				136				$				153					(11.1	)					Net income					$				235				$				290					(19.0	)
				32								27					18.5						Interest expense (a)									67								54					24.1
				44								73					(39.7	)					Income tax (benefit) expense (b)									96								80					20.0
				68								69					(1.4	)					Depreciation (c)									136								135					0.7
				8								8					—						Amortization (d)									15								16					(6.3	)
				288								330					(12.7	)					EBITDA									549								575					(4.5	)
				—								(3	)				100.0						(Gain) loss on asset dispositions and impairments, net									(14	)							33				n/m
				23								(3	)			n/m							Restructuring and other special charges (credits), net									54								(3	)			n/m
				—								—					—						Gain on sale of a unconsolidated joint venture hotel (e)									(4	)							—				n/m
$				311				$				324					(4.0	)					Adjusted EBITDA					$				585				$				605					(3.3	)

(a)			Includes $4 million and $3 million of Starwood’s share of interest expense from unconsolidated joint ventures for the three months ended June 30, 2015 and 2014, respectively, and $7 million and $6 million for the six months ended June 30, 2015 and 2014, respectively.
(b)			Includes $0 million of tax expense (benefit) recorded in discontinued operations for the three months ended June 30, 2015 and 2014, and $0 million and $(1) million for the six months ended June 30, 2015 and 2014, respectively.
(c)			Includes $3 million and $6 million of Starwood’s share of depreciation expense from unconsolidated joint ventures for the three months ended June 30, 2015 and 2014, respectively, and $9 million and $12 million for the six months ended June 30, 2015 and 2014, respectively.
(d)			Includes $0 million and $1 million of Starwood’s share of amortization expense from unconsolidated joint ventures for the three months ended June 30, 2015 and 2014, respectively, and $0 million and $1 million for the six months ended June 30, 2015 and 2014, respectively.
(e)			The gain on sale is included in the equity earnings and gains from unconsolidated ventures, net line item in the statement of income.

n/m = not meaningful

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels Worldwide
(In millions)
						Three Months EndedJune 30, 2015
						$  Change									% Variance
Revenue
Revenue increase/(decrease) (GAAP)						$				(6	)					(2.0	)
Impact of changes in foreign exchange rates										29						9.3
Revenue increase/(decrease) in constant dollars						$				23						7.3
Expense
Expense increase/(decrease) (GAAP)						$				(7	)					(3.0	)
Impact of changes in foreign exchange rates										20						8.6
Expense increase/(decrease) in constant dollars						$				13						5.6
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels North America
(In millions)
						Three Months EndedJune 30, 2015
						$  Change									% Variance
Revenue
Revenue increase/(decrease) (GAAP)						$				7						4.4
Impact of changes in foreign exchange rates										6						3.8
Revenue increase/(decrease) in constant dollars						$				13						8.2
Expense
Expense increase/(decrease) (GAAP)						$				3						2.5
Impact of changes in foreign exchange rates										4						3.3
Expense increase/(decrease) in constant dollars						$				7						5.8
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels International
(In millions)
						Three Months Ended June 30, 2015
						$  Change									% Variance
Revenue
Revenue increase/(decrease) (GAAP)						$				(13	)					(8.9	)
Impact of changes in foreign exchange rates										22						15.2
Revenue increase/(decrease) in constant dollars						$				9						6.3
Expense
Expense increase/(decrease) (GAAP)						$				(11	)					(9.5	)
Impact of changes in foreign exchange rates										17						14.9
Expense increase/(decrease) in constant dollars						$				6						5.4

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Future Performance
(In millions, except per share data)
						Low Case
Three Months EndedSeptember 30, 2015											Year EndedDecember 31, 2015
$	118					Net income					$	480
	35					Interest expense						135
	55					Income tax expense						217
	77					Depreciation and amortization						307
	285					EBITDA						1,139
	-					Gain on asset dispositions and impairments, net						(14	)
	-					Gain on sale of a unconsolidated joint venture hotel						(4	)
	-					Restructuring and other special charges, net						54
$	285					Adjusted EBITDA					$	1,175
Three Months EndedSeptember 30, 2015											Year EndedDecember 31, 2015
$	118					Income from continuing operations before special items					$	498
$	0.69					EPS before special items					$	2.93
						Special Items
	-					Restructuring and other special charges, net						(54	)
	-					Gain on asset dispositions and impairments, net						14
	-					Gain on sale of a unconsolidated joint venture hotel						4
	-					Total special items – pre-tax						(36	)
	-					Income tax benefit on special items						13
	-					Income tax benefit – other non-recurring items						5
	-					Total special items – after-tax						(18	)
$	118					Income from continuing operations					$	480
$	0.69					EPS including special items					$	2.82
						High Case
Three Months EndedSeptember 30, 2015											Year EndedDecember 31, 2015
$	124					Net income					$	497
	35					Interest expense						135
	59					Income tax expense						225
	77					Depreciation and amortization						307
	295					EBITDA						1,164
	-					Gain on asset dispositions and impairments, net						(14	)
	-					Gain on sale of a unconsolidated joint venture hotel						(4	)
	-					Restructuring and other special charges, net						54
$	295					Adjusted EBITDA					$	1,200
Three Months EndedSeptember 30, 2015											Year EndedDecember 31, 2015
$	124					Income from continuing operations before special items					$	515
$	0.73					EPS before special items					$	3.03
						Special Items
	-					Restructuring and other special charges, net						(54	)
	-					Gain on asset dispositions and impairments, net						14
	-					Gain on sale of a unconsolidated joint venture hotel						4
	-					Total special items – pre-tax						(36	)
	-					Income tax benefit on special items						13
	-					Income tax benefit – other non-recurring items						5
	-					Total special items – after-tax						(18	)
$	124					Income from continuing operations					$	497
$	0.73					EPS including special items					$	2.93

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses
(In millions)
Three Months EndedJune 30,																												Six Months EndedJune 30,
2015								2014								% Variance							Same-Store Owned HotelsWorldwide					2015							2014							% Variance
																							Revenue
$				302				$				308					(2.0	)					Same-Store Owned Hotels (a)					$				547			$				546				0.2
				34								83					(59.0	)					Hotels Sold or Closed in 2015 and 2014									82							179				(54.2	)
				15								16					(6.3	)					Hotels Without Comparable Results									34							40				(15.0	)
				5								7					(28.6	)					Other ancillary hotel operations									9							13				(30.8	)
$				356				$				414					(14.0	)					Total Owned, Leased and Consolidated Joint Venture  Hotels Revenue					$				672			$				778				(13.6	)
																							Costs and Expenses
$				232				$				239					3.0						Same-Store Owned Hotels (a)					$				447			$				450				0.6
				21								57					63.2						Hotels Sold or Closed in 2015 and 2014									50							124				59.7
				8								11					27.3						Hotels Without Comparable Results									22							28				21.4
				4								7					42.9						Other ancillary hotel operations									8							13				38.5
$				265				$				314					15.6						Total Owned, Leased and Consolidated Joint Venture  Hotels Costs and Expenses					$				527			$				615				14.3
Three Months EndedJune 30,																												Six Months EndedJune 30,
2015								2014								% Variance							Same-Store Owned HotelsNorth America					2015							2014							% Variance
																							Revenue
$				166				$				159					4.4						Same-Store Owned Hotels (a)					$				318			$				303				4.9
				30								36					(16.7	)					Hotels Sold or Closed in 2015 and 2014									74							91				(18.7	)
				1								—				n/m							Hotels Without Comparable Results									1							1				—
				—								—					—						Other ancillary hotel operations									—							—				—
$				197				$				195					1.0						Total Owned, Leased and Consolidated Joint Venture  Hotels Revenue					$				393			$				395				(0.5	)
																							Costs and Expenses
$				132				$				128					(2.5	)					Same-Store Owned Hotels (a)					$				261			$				254				(3.1	)
				19								27					29.6						Hotels Sold or Closed in 2015 and 2014									45							62				27.4
				1								1					—						Hotels Without Comparable Results									1							1				—
				—								—					—						Other ancillary hotel operations									—							—				—
$				152				$				156					2.6						Total Owned, Leased and Consolidated Joint Venture  Hotels Costs and Expenses					$				307			$				317				3.2
Three Months EndedJune 30,																												Six Months EndedJune 30
2015								2014								% Variance							Same-Store Owned HotelsInternational					2015							2014							% Variance
																							Revenue
$				136				$				149					(8.9	)					Same-Store Owned Hotels (a)					$				229			$				243				(5.7	)
				4								47					(91.5	)					Hotels Sold or Closed in 2015 and 2014									8							88				(90.9	)
				14								16					(12.5	)					Hotels Without Comparable Results									33							39				(15.4	)
				5								7					(28.6	)					Other ancillary hotel operations									9							13				(30.8	)
$				159				$				219					(27.4	)					Total Owned, Leased and Consolidated Joint Venture  Hotels Revenue					$				279			$				383				(27.2	)
																							Costs and Expenses
$				100				$				111					9.5						Same-Store Owned Hotels (a)					$				186			$				196				5.4
				2								30					93.3						Hotels Sold or Closed in 2015 and 2014									5							62				91.9
				7								10					30.0						Hotels Without Comparable Results									21							27				22.2
				4								7					42.9						Other ancillary hotel operations									8							13				38.5
$				113				$				158					28.5						Total Owned, Leased and Consolidated Joint Venture  Hotels Costs and Expenses					$				220			$				298				26.2

(a)			Same-Store Owned Hotel results exclude 11 hotels sold or closed, two leased hotels converted to managed or franchised hotels and two hotels without comparable results for the three months ended June 30, 2015 and 12 hotels sold or closed, two leased hotels converted to managed or franchised hotels and three hotels without comparable results for the six months ended June 30, 2015.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Systemwide(1) Statistics - Same Store
For the Three Months Ended June 30,
UNAUDITED
						Systemwide - Worldwide																						Systemwide - North America																						Systemwide - International
						2015								2014						Var. USD								2015								2014						Var. USD								2015								2014						Var. USD
TOTAL HOTELS
REVPAR ($)							124.87								125.72						-0.7	%							140.96								135.38						4.1	%							107.83								115.47						-6.6	%
ADR ($)							172.88								177.49						-2.6	%							180.04								174.70						3.1	%							163.86								181.07						-9.5	%
Occupancy (%)							72.2	%							70.8	%					1.4								78.3	%							77.5	%					0.8								65.8	%							63.8	%					2.0
SHERATON
REVPAR ($)							104.16								105.77						-1.5	%							120.35								115.90						3.8	%							87.57								95.38						-8.2	%
ADR ($)							148.27								152.76						-2.9	%							157.43								152.79						3.0	%							137.03								152.72						-10.3	%
Occupancy (%)							70.3	%							69.2	%					1.1								76.4	%							75.9	%					0.5								63.9	%							62.5	%					1.4
WESTIN
REVPAR ($)							145.90								143.60						1.6	%							153.07								146.63						4.4	%							132.24								137.83						-4.1	%
ADR ($)							189.48								190.37						-0.5	%							191.42								185.79						3.0	%							185.34								200.35						-7.5	%
Occupancy (%)							77.0	%							75.4	%					1.6								80.0	%							78.9	%					1.1								71.3	%							68.8	%					2.5
ST. REGIS/LUXURY COLLECTION
REVPAR ($)							201.75								207.46						-2.8	%							278.86								267.89						4.1	%							174.91								186.32						-6.1	%
ADR ($)							301.66								318.60						-5.3	%							383.46								362.66						5.7	%							269.73								300.24						-10.2	%
Occupancy (%)							66.9	%							65.1	%					1.8								72.7	%							73.9	%					-1.2								64.8	%							62.1	%					2.7
LE MERIDIEN
REVPAR ($)							131.30								140.44						-6.5	%							228.20								220.26						3.6	%							114.45								126.56						-9.6	%
ADR ($)							186.41								201.65						-7.6	%							267.71								259.58						3.1	%							168.66								188.90						-10.7	%
Occupancy (%)							70.4	%							69.6	%					0.8								85.2	%							84.9	%					0.3								67.9	%							67.0	%					0.9
W
REVPAR ($)							241.46								240.23						0.5	%							251.57								241.11						4.3	%							223.37								238.66						-6.4	%
ADR ($)							299.30								302.42						-1.0	%							296.26								289.06						2.5	%							305.61								329.86						-7.4	%
Occupancy (%)							80.7	%							79.4	%					1.3								84.9	%							83.4	%					1.5								73.1	%							72.4	%					0.7
FOUR POINTS
REVPAR ($)							77.37								77.82						-0.6	%							90.02								89.34						0.8	%							62.90								64.63						-2.7	%
ADR ($)							110.70								114.45						-3.3	%							117.76								118.33						-0.5	%							100.81								108.79						-7.3	%
Occupancy (%)							69.9	%							68.0	%					1.9								76.4	%							75.5	%					0.9								62.4	%							59.4	%					3.0
ALOFT
REVPAR ($)							86.92								80.13						8.5	%							110.66								101.71						8.8	%							48.18								44.94						7.2	%
ADR ($)							117.47								114.67						2.4	%							137.11								129.02						6.3	%							76.44								81.30						-6.0	%
Occupancy (%)							74.0	%							69.9	%					4.1								80.7	%							78.8	%					1.9								63.0	%							55.3	%					7.7

(1)			Includes same-store Owned, managed and franchised hotels.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Three Months Ended June 30,
UNAUDITED
						Systemwide (1)																									Company Operated (2)
						2015								2014							Var. USD										2015								2014							Var. USD
TOTAL WORLDWIDE
REVPAR ($)							124.87								125.72							-0.7	%									137.42								140.00							-1.8	%
ADR ($)							172.88								177.49							-2.6	%									193.34								201.23							-3.9	%
Occupancy (%)							72.2	%							70.8	%						1.4										71.1	%							69.6	%						1.5
AMERICAS
REVPAR ($)							136.22								131.44							3.6	%									172.68								166.99							3.4	%
ADR ($)							178.07								174.05							2.3	%									222.99								217.81							2.4	%
Occupancy (%)							76.5	%							75.5	%						1.0										77.4	%							76.7	%						0.7
North America
REVPAR ($)							140.96								135.38							4.1	%									180.98								174.29							3.8	%
ADR ($)							180.04								174.70							3.1	%									227.07								220.47							3.0	%
Occupancy (%)							78.3	%							77.5	%						0.8										79.7	%							79.1	%						0.6
Latin America
REVPAR ($)							90.84								93.86							-3.2	%									107.40								109.61							-2.0	%
ADR ($)							153.19								165.46							-7.4	%									180.17								189.27							-4.8	%
Occupancy (%)							59.3	%							56.7	%						2.6										59.6	%							57.9	%						1.7
ASIA PACIFIC
REVPAR ($)							92.22								93.18							-1.0	%									93.94								94.11							-0.2	%
ADR ($)							143.27								151.07							-5.2	%									145.30								152.44							-4.7	%
Occupancy (%)							64.4	%							61.7	%						2.7										64.7	%							61.7	%						3.0
Greater China
REVPAR ($)							86.07								86.02							0.1	%									85.44								85.06							0.4	%
ADR ($)							139.35								144.84							-3.8	%									137.82								143.01							-3.6	%
Occupancy (%)							61.8	%							59.4	%						2.4										62.0	%							59.5	%						2.5
Rest of Asia Pacific
REVPAR ($)							101.42								103.87							-2.4	%									113.34								114.73							-1.2	%
ADR ($)							148.58								159.55							-6.9	%									160.26								171.57							-6.6	%
Occupancy (%)							68.3	%							65.1	%						3.2										70.7	%							66.9	%						3.8
EAME
REVPAR ($)							136.20								155.31							-12.3	%									143.72								163.59							-12.1	%
ADR ($)							194.71								224.86							-13.4	%									205.01								235.44							-12.9	%
Occupancy (%)							69.9	%							69.1	%						0.8										70.1	%							69.5	%						0.6
Europe
REVPAR ($)							147.86								171.87							-14.0	%									164.41								190.88							-13.9	%
ADR ($)							199.78								239.00							-16.4	%									216.90								259.59							-16.4	%
Occupancy (%)							74.0	%							71.9	%						2.1										75.8	%							73.5	%						2.3
Africa & Middle East
REVPAR ($)							114.93								125.19							-8.2	%									115.16								126.06							-8.6	%
ADR ($)							183.78								195.92							-6.2	%									185.03								197.22							-6.2	%
Occupancy (%)							62.5	%							63.9	%						-1.4										62.2	%							63.9	%						-1.7

(1)			Includes same-store Owned, managed, and franchised hotels.
(2)			Includes same-store Owned and managed hotels.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned Hotel Results - Same Store
For the Three Months Ended June 30,
UNAUDITED
						Worldwide																							North America																							International
						2015								2014							Var. USD								2015								2014							Var. USD								2015								2014							Var. USD
TOTAL HOTELS						31 Hotels																							11 Hotels																							20 Hotels
REVPAR ($)							185.60								190.53							-2.6	%							189.85								181.15							4.8	%							180.69								201.38							-10.3	%
ADR ($)							239.13								252.24							-5.2	%							235.78								229.60							2.7	%							243.33								281.04							-13.4	%
Occupancy (%)							77.6	%							75.5	%						2.1								80.5	%							78.9	%						1.6								74.3	%							71.7	%						2.6
Total Revenue*							301,993								308,302							-2.0	%							165,989								158,962							4.4	%							136,003								149,340							-8.9	%
Total Expenses*							232,053								239,351							3.0	%							131,676								128,469							-2.5	%							100,377								110,882							9.5	%

*				Revenues and Expenses above are represented in '000s

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended June 30,
UNAUDITED ($ millions)
						Worldwide
						2015										2014								Variance							% Variance
Management Fees
Base Fees									93									98							(5	)						(5.1	)%
Incentive Fees									46									48							(2	)						(4.2	)%
Total Management Fees									139									146							(7	)						(4.8	)%
Franchise Fees									67									62							5							8.1	%
Total Management and Franchise Fees (Core Fees)									206									208							(2	)						(1.0	)%
Other Management and Franchise Revenues (1)									46									48							(2	)						(4.2	)%
Total Management and Franchise Revenues									252									256							(4	)						(1.6	)%
Other									4									4							-							-
Management Fees, Franchise Fees and Other Income									256									260							(4	)						(1.5	)%

(1)			Other Management and Franchise Revenues includes the amortization of the deferred gains of approximately $22 million in 2015 and 2014 resulting from the sales of hotels subject to long-term management contracts and termination fees.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership and Residential Revenues and Expenses
For the Three Months Ended June 30,
UNAUDITED ($ millions)
								2015										2014								$ Variance							% Variance
Originated Sales Revenues (1) — Vacation Ownership Sales									79										79								—							—
Other Sales and Services Revenues (2)									91										85								6							7.1	%
Deferred Revenues — Percentage of Completion									3										(2	)							5						n/m
Deferred Revenues — Other (3)									(4	)									(2	)							(2	)						(100.0	%)
Vacation Ownership Sales and Services Revenues									169										160								9							5.6	%
Residential Sales and Services Revenues (4)									1										11								(10	)						(90.9	%)
Total Vacation Ownership & Residential Sales and Services    Revenues									170										171								(1	)						(0.6	%)
Originated Sales Expenses (5) — Vacation Ownership Sales									57										55								(2	)						(3.6	%)
Other Expenses (6)									66										64								(2	)						(3.1	%)
Deferred Expenses — Percentage of Completion									1										(2	)							(3	)					n/m
Deferred Expenses — Other									2										2								—							—
Vacation Ownership Expenses									126										119								(7	)						(5.9	%)
Residential Expenses (4)									—										6								6							100.0	%
Total Vacation Ownership & Residential Expenses									126										125								(1	)						(0.8	%)

(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 2015 and 2014, includes $0 and $7 million of revenues and $0 and $6 million expenses associated with the St. Regis Bal Harbour residential project, respectively.
(5)			Timeshare cost of sales and sales and 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.
Systemwide(1) Statistics - Same Store
For the Six Months Ended June 30,
UNAUDITED
						Systemwide - Worldwide																							Systemwide - North America																					Systemwide - International
						2015							2014								Var. USD								2015							2014						Var. USD								2015							2014						Var. USD
TOTAL HOTELS
REVPAR ($)							120.63								120.12							0.4	%							133.14							126.91						4.9	%							107.44							112.95						-4.9	%
ADR ($)							172.84								176.40							-2.0	%							177.52							172.23						3.1	%							167.09							181.60						-8.0	%
Occupancy (%)							69.8	%							68.1	%						1.7								75.0	%						73.7	%					1.3								64.3	%						62.2	%					2.1
SHERATON
REVPAR ($)							100.36								101.38							-1.0	%							112.41							107.82						4.3	%							88.18							94.87						-7.1	%
ADR ($)							147.94								151.95							-2.6	%							153.72							149.38						2.9	%							141.10							155.02						-9.0	%
Occupancy (%)							67.8	%							66.7	%						1.1								73.1	%						72.2	%					0.9								62.5	%						61.2	%					1.3
WESTIN
REVPAR ($)							139.69								135.98							2.7	%							144.16							136.87						5.3	%							131.16							134.27						-2.3	%
ADR ($)							187.42								187.41							0.0	%							188.24							182.54						3.1	%							185.72							197.67						-6.0	%
Occupancy (%)							74.5	%							72.6	%						1.9								76.6	%						75.0	%					1.6								70.6	%						67.9	%					2.7
ST. REGIS/LUXURY COLLECTION
REVPAR ($)							205.48								206.55							-0.5	%							296.05							281.01						5.4	%							172.53							179.38						-3.8	%
ADR ($)							310.68								322.38							-3.6	%							401.26							382.48						4.9	%							272.31							295.81						-7.9	%
Occupancy (%)							66.1	%							64.1	%						2.0								73.8	%						73.5	%					0.3								63.4	%						60.6	%					2.8
LE MERIDIEN
REVPAR ($)							123.77								130.39							-5.1	%							200.15							194.20						3.1	%							111.32							119.99						-7.2	%
ADR ($)							185.01								198.57							-6.8	%							247.62							243.71						1.6	%							172.25							189.32						-9.0	%
Occupancy (%)							66.9	%							65.7	%						1.2								80.8	%						79.7	%					1.1								64.6	%						63.4	%					1.2
W
REVPAR ($)							238.10								233.53							2.0	%							243.75							232.20						5.0	%							228.71							235.73						-3.0	%
ADR ($)							301.00								303.75							-0.9	%							296.89							288.67						2.8	%							308.56							332.13						-7.1	%
Occupancy (%)							79.1	%							76.9	%						2.2								82.1	%						80.4	%					1.7								74.1	%						71.0	%					3.1
FOUR POINTS
REVPAR ($)							74.46								73.87							0.8	%							84.11							81.53						3.2	%							63.48							65.16						-2.6	%
ADR ($)							111.52								114.30							-2.4	%							116.16							115.22						0.8	%							105.19							113.02						-6.9	%
Occupancy (%)							66.8	%							64.6	%						2.2								72.4	%						70.8	%					1.6								60.3	%						57.7	%					2.6
ALOFT
REVPAR ($)							83.25								75.18							10.7	%							103.66							93.89						10.4	%							49.55							44.31						11.8	%
ADR ($)							116.85								113.00							3.4	%							134.75							125.63						7.3	%							80.11							83.59						-4.2	%
Occupancy (%)							71.2	%							66.5	%						4.7								76.9	%						74.7	%					2.2								61.9	%						53.0	%					8.9

(1)			Includes same-store Owned, managed and franchised hotels.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Six Months Ended June 30,
UNAUDITED
						Systemwide (1)																						Company Operated (2)
						2015								2014						Var. USD								2015							2014						Var. USD
TOTAL WORLDWIDE
REVPAR ($)							120.63								120.12						0.4	%							134.37							135.11						-0.5	%
ADR ($)							172.84								176.40						-2.0	%							194.47							200.84						-3.2	%
Occupancy (%)							69.8	%							68.1	%					1.7								69.1	%						67.3	%					1.8
AMERICAS
REVPAR ($)							130.29								124.54						4.6	%							166.95							159.99						4.4	%
ADR ($)							176.63								172.26						2.5	%							221.58							216.40						2.4	%
Occupancy (%)							73.8	%							72.3	%					1.5								75.3	%						73.9	%					1.4
North America
REVPAR ($)							133.14								126.91						4.9	%							172.59							165.22						4.5	%
ADR ($)							177.52								172.23						3.1	%							224.39							218.50						2.7	%
Occupancy (%)							75.0	%							73.7	%					1.3								76.9	%						75.6	%					1.3
Latin America
REVPAR ($)							103.17								101.92						1.2	%							122.79							119.00						3.2	%
ADR ($)							166.39								172.65						-3.6	%							194.77							195.95						-0.6	%
Occupancy (%)							62.0	%							59.0	%					3.0								63.0	%						60.7	%					2.3
ASIA PACIFIC
REVPAR ($)							95.07								96.05						-1.0	%							96.94							97.25						-0.3	%
ADR ($)							149.03								156.79						-4.9	%							152.03							159.43						-4.6	%
Occupancy (%)							63.8	%							61.3	%					2.5								63.8	%						61.0	%					2.8
Greater China
REVPAR ($)							86.35								87.29						-1.1	%							85.64							86.35						-0.8	%
ADR ($)							143.88								151.42						-5.0	%							142.42							149.82						-4.9	%
Occupancy (%)							60.0	%							57.6	%					2.4								60.1	%						57.6	%					2.5
Rest of Asia Pacific
REVPAR ($)							108.12								109.16						-1.0	%							123.26							122.62						0.5	%
ADR ($)							155.71								163.74						-4.9	%							170.64							178.16						-4.2	%
Occupancy (%)							69.4	%							66.7	%					2.7								72.2	%						68.8	%					3.4
EAME
REVPAR ($)							127.38								141.86						-10.2	%							135.92							150.30						-9.6	%
ADR ($)							193.63								219.59						-11.8	%							204.05							229.44						-11.1	%
Occupancy (%)							65.8	%							64.6	%					1.2								66.6	%						65.5	%					1.1
Europe
REVPAR ($)							126.64								145.01						-12.7	%							140.20							159.45						-12.1	%
ADR ($)							188.23								223.53						-15.8	%							202.46							239.73						-15.5	%
Occupancy (%)							67.3	%							64.9	%					2.4								69.2	%						66.5	%					2.7
Africa & Middle East
REVPAR ($)							128.81								135.83						-5.2	%							129.72							137.10						-5.4	%
ADR ($)							204.68								211.95						-3.4	%							206.58							214.05						-3.5	%
Occupancy (%)							62.9	%							64.1	%					-1.2								62.8	%						64.1	%					-1.3

(1)			Includes same-store Owned, managed, and franchised hotels.
(2)			Includes same-store Owned and managed hotels.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned Hotel Results - Same Store
For the Six Months Ended June 30,
UNAUDITED
						Worldwide																						North America																						International
						2015								2014						Var. USD								2015								2014						Var. USD								2015								2014						Var. USD
TOTAL HOTELS						30 Hotels																						11 Hotels																						19 Hotels
REVPAR ($)							170.04								170.88						-0.5	%							180.22								172.72						4.3	%							157.76								168.67						-6.5	%
ADR ($)							228.42								238.49						-4.2	%							233.21								229.89						1.4	%							222.13								250.03						-11.2	%
Occupancy (%)							74.4	%							71.7	%					2.7								77.3	%							75.1	%					2.2								71.0	%							67.5	%					3.5
Total Revenue*							547,083								545,847						0.2	%							317,983								303,019						4.9	%							229,100								242,828						-5.7	%
Total Expenses*							447,373								449,947						0.6	%							261,633								253,707						-3.1	%							185,740								196,240						5.4	%

*				Revenues and Expenses above are represented in '000s

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Six Months Ended June 30,
UNAUDITED ($ millions)
					Worldwide
					2015									2014								Variance						%Variance
Management Fees
Base Fees									178								184						(6	)					(3.3	)%
Incentive Fees									94								97						(3	)					(3.1	)%
Total Management Fees									272								281						(9	)					(3.2	)%
Franchise Fees									125								115						10						8.7	%
Total Management and Franchise Fees (Core Fees)									397								396						1						0.3	%
Other Management and Franchise Revenues (1)									91								101						(10	)					(9.9	)%
Total Management and Franchise Revenues									488								497						(9	)					(1.8	)%
Other									8								11						(3	)					(27.3	)%
Management Fees, Franchise Fees and Other Income									496								508						(12	)					(2.4	)%

(1)			Other Management and Franchise Revenues includes the amortization of the deferred gains of approximately $44 million in 2015 and $43 million in 2014 resulting from the sales of hotels subject to long-term management contracts and termination fees.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership and Residential Revenues and Expenses
For the Six Months Ended June 30,
UNAUDITED ($ millions)
								2015										2014								$ Variance							% Variance
Originated Sales Revenues (1) – Vacation Ownership Sales									162										163								(1	)						(0.6	%)
Other Sales and Services Revenues (2)									191										172								19							11.0	%
Deferred Revenues – Percentage of Completion									4										(16	)							20						n/m
Deferred Revenues – Other (3)									(2	)									—								(2	)					n/m
Vacation Ownership Sales and Services Revenues									355										319								36							11.3	%
Residential Sales and Services Revenues (4)									2										26								(24	)						(92.3	%)
Total Vacation Ownership and Residential Sales and Services    Revenues									357										345								12							3.5	%
Originated Sales Expenses (5) – Vacation Ownership Sales									121										121								—							—
Other Expenses (6)									135										128								(7	)						(5.5	%)
Deferred Expenses – Percentage of Completion									2										(10	)							(12	)					n/m
Deferred Expenses – Other									5										5								—							—
Vacation Ownership Expenses									263										244								(19	)						(7.8	%)
Residential Expenses (4)									—										9								9							100.0	%
Total Vacation Ownership and Residential Expenses									263										253								(10	)						(4.0	%)

(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 2015 and 2014, includes $0 and $20 million of revenues and $0 and $9 million expenses associated with the St. Regis Bal Harbour residential project, respectively.
(5)			Timeshare cost of sales and sales and 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.
Owned Hotels without Comparable Results and Other Selected Items
As of June 30, 2015
UNAUDITED ($ millions)
Owned Hotels without comparable results in 2015 and 2014:
Hotel							Location
The Westin Excelsior, Florence							Florence, Italy
The Westin Resort & Spa, Los Cabos							Los Cabos, Mexico
Sheraton Maria Isabel Hotel & Towers							Mexico City, Mexico
Owned Hotels sold in 2015 and 2014:
Hotel							Location
Aloft Philadelphia Airport							Philadelphia, PA
Aloft Tucson University							Tucson, AZ
Element Denver Park Meadows							Denver, CO
Four Points by Sheraton Philadelphia Airport							Philadelphia, PA
Sheraton Ambassador Hotel							Monterrey, Mexico
Sheraton on the Park							Sydney, Australia
Sheraton Santa Maria de El Paular							Madrid, Spain
Sheraton Suites Philadelphia Airport							Philadelphia, PA
The Gritti Palace, a Luxury Collection Hotel, Venice							Venice, Italy
The Park Lane Hotel							London, England
The Phoenician, a Luxury Collection Resort, Scottsdale							Scottsdale, AZ
The St. Regis Bal Harbour Resort							Miami Beach, FL
The St. Regis Rome							Rome, Italy
The Westin Dublin Hotel							Dublin, Ireland

Revenues and Expenses Associated with Hotels Sold in 2015 and 2014: (1)
									Q1											Q2												Q3											Q4											Full Year
Hotels Sold in 2014:
2014
Revenues									$					50						$					44							$					37						$					20						$					151
Expenses (excluding depreciation)									$					38						$					31							$					27						$					12						$					108
Hotels Sold in 2015:
2015
Revenues									$					48						$					34												—											—						$					82
Expenses (excluding depreciation)									$					29						$					21												—											—						$					50
2014
Revenues									$					46						$					39							$					24						$					34						$					143
Expenses (excluding depreciation)									$					29						$					26							$					22						$					26						$					103

(1)			Results consist of nine hotels sold or closed in 2014, two leased hotels converted to managed or franchised hotels in 2014, and three hotels sold in 2015. These amounts are included in the revenues and expenses from owned, leased, and consolidated joint venture hotels in the statements of income for 2015 and 2014.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three and Six Months Ended June 30, 2015
UNAUDITED ($ millions)
								Q2										YTD
Maintenance Capital Expenditures: (1)
Owned, Leased and Consolidated Joint Venture Hotels									15										27
Corporate/IT									22										40
Subtotal									37										67
Net capital expenditures for Vacation Ownership inventory (2)									8										17
Development Capital									38										72
Total Capital Expenditures									83										156

(1)			Maintenance capital expenditures include improvements that extend the useful life of the asset.
(2)			Represents gross inventory capital expenditures of $24 million and $55 million in the three and six months ended June 30, 2015, less cost of sales of $16 million and $38 million in the three and six months ended June 30, 2015.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Divisional Hotel Inventory Summary by Ownership by Brand
As of June 30, 2015
			Americas							North America							Latin America							Asia Pacific							Greater China							Rest of Asia							Europe, Africa &Middle East							Europe							Africa &Middle East							TOTAL
			Hotels			Rooms				Hotels			Rooms				Hotels			Rooms				Hotels			Rooms				Hotels			Rooms				Hotels			Rooms				Hotels			Rooms				Hotels			Rooms				Hotels			Rooms				Hotels			Rooms
Owned
Sheraton			9			5,792				5			3,328				4			2,464				1			297				—			—				1			297				2			358				2			358				—			—				12			6,447
Westin			5			2,734				2			1,832				3			902				1			246				—			—				1			246				2			487				2			487				—			—				8			3,467
Four Points			—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—
W			1			509				1			509				—			—				—			—				—			—				—			—				2			665				2			665				—			—				3			1,174
Luxury Collection			1			180				—			—				1			180				—			—				—			—				—			—				4			495				4			495				—			—				5			675
St. Regis			2			498				2			498				—			—				1			160				—			—				1			160				1			100				1			100				—			—				4			758
Le Meridien			—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—
Aloft			—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—
Element			—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—
Other			1			135				1			135				—			—				—			—				—			—				—			—				—			—				—			—				—			—				1			135
Total Owned			19			9,848				11			6,302				8			3,546				3			703				—			—				3			703				11			2,105				11			2,105				—			—				33			12,656
Managed & UJV
Sheraton			47			27,024				29			23,095				18			3,929				96			36,391				65			27,949				31			8,442				74			21,255				42			11,880				32			9,375				217			84,670
Westin			52			26,859				49			25,973				3			886				37			12,450				20			7,047				17			5,403				14			4,790				9			3,451				5			1,339				103			44,099
Four Points			5			672				1			134				4			538				32			9,071				22			6,629				10			2,442				13			2,568				5			673				8			1,895				50			12,311
W			28			8,311				24			7,554				4			757				10			2,740				4			1,464				6			1,276				5			941				4			499				1			442				43			11,992
Luxury Collection			12			2,581				5			2,291				7			290				12			2,478				6			1,306				6			1,172				27			4,891				22			3,301				5			1,590				51			9,950
St. Regis			12			2,332				9			1,884				3			448				9			2,309				6			1,659				3			650				9			1,973				5			806				4			1,167				30			6,614
Le Meridien			5			879				4			719				1			160				31			8,147				9			3,131				22			5,016				41			12,194				14			4,694				27			7,500				77			21,220
Aloft			—			—				—			—				—			—				12			3,071				9			2,101				3			970				4			943				3			535				1			408				16			4,014
Element			—			—				—			—				—			—				1			188				1			188				—			—				—			—				—			—				—			—				1			188
Other			—			—				—			—				—			—				—			—				—			—				—			—				1			250				—			—				1			250				1			250
Total Managed & UJV			161			68,658				121			61,650				40			7,008				240			76,845				142			51,474				98			25,371				188			49,805				104			25,839				84			23,966				589			195,308
Franchised
Sheraton			177			51,435				162			47,748				15			3,687				12			5,841				3			1,836				9			4,005				22			5,458				19			4,880				3			578				211			62,734
Westin			76			24,509				69			22,224				7			2,285				8			2,531				1			288				7			2,243				7			1,985				7			1,985				—			—				91			29,025
Four Points			132			20,029				117			17,932				15			2,097				11			1,804				1			126				10			1,678				7			1,085				7			1,085				—			—				150			22,918
W			—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—
Luxury Collection			13			2,177				9			1,691				4			486				12			3,212				—			—				12			3,212				13			2,003				13			2,003				—			—				38			7,392
St. Regis			—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—				—			—
Le Meridien			17			3,864				16			3,753				1			111				5			1,209				1			160				4			1,049				3			575				3			575				—			—				25			5,648
Aloft			71			10,806				66			9,892				5			914				6			1,001				—			—				6			1,001				1			116				1			116				—			—				78			11,923
Element			16			2,489				16			2,489				—			—				—			—				—			—				—			—				1			133				1			133				—			—				17			2,622
Other			2			513				2			513				—			—				—			—				—			—				—			—				—			—				—			—				—			—				2			513
Total Franchised			504			115,822				457			106,242				47			9,580				54			15,598				6			2,410				48			13,188				54			11,355				51			10,777				3			578				612			142,775
Systemwide
Sheraton			233			84,251				196			74,171				37			10,080				109			42,529				68			29,785				41			12,744				98			27,071				63			17,118				35			9,953				440			153,851
Westin			133			54,102				120			50,029				13			4,073				46			15,227				21			7,335				25			7,892				23			7,262				18			5,923				5			1,339				202			76,591
Four Points			137			20,701				118			18,066				19			2,635				43			10,875				23			6,755				20			4,120				20			3,653				12			1,758				8			1,895				200			35,229
W			29			8,820				25			8,063				4			757				10			2,740				4			1,464				6			1,276				7			1,606				6			1,164				1			442				46			13,166
Luxury Collection			26			4,938				14			3,982				12			956				24			5,690				6			1,306				18			4,384				44			7,389				39			5,799				5			1,590				94			18,017
St. Regis			14			2,830				11			2,382				3			448				10			2,469				6			1,659				4			810				10			2,073				6			906				4			1,167				34			7,372
Le Meridien			22			4,743				20			4,472				2			271				36			9,356				10			3,291				26			6,065				44			12,769				17			5,269				27			7,500				102			26,868
Aloft			71			10,806				66			9,892				5			914				18			4,072				9			2,101				9			1,971				5			1,059				4			651				1			408				94			15,937
Element			16			2,489				16			2,489				—			—				1			188				1			188				—			—				1			133				1			133				—			—				18			2,810
Other			3			648				3			648				—			—				—			—				—			—				—			—				1			250				—			—				1			250				4			898
Vacation Ownership			15			7,662				14			7,082				1			580				—			—				—			—				—			—				—			—				—			—				—			—				15			7,662
Total Systemwide			699			201,990				603			181,276				96			20,714				297			93,146				148			53,884				149			39,262				253			63,265				166			38,721				87			24,544				1,249			358,401

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership Inventory Pipeline
As of June 30, 2015
UNAUDITED
							# Resorts																	# of Units (1)
Brand							Total (2)					InOperations							In ActiveSales					Completed (3)					Pre-sales/ Development (4)					Future Capacity (5),(6)						Total atBuildout
Sheraton								7					7							6					3,079					—					712							3,791
Westin								10					9							9					1,676					412					43							2,131
St. Regis								2					2							—					56					—					—							56
The Luxury Collection								1					1							—					6					—					—							6
Unbranded								2					2							1					99					—					—							99
Total SVO, Inc.								22					21							16					4,916					412					755							6,083
Unconsolidated Joint Ventures   (UJV's)								1					1							1					198					—					—							198
Total including UJV's								23					22							17					5,114					412					755							6,281
Total Intervals Including UJV's (7)																									265,928					21,424					39,260							326,612

(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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150730005392/en/

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

Source: Starwood Hotels & Resorts Worldwide, Inc.