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THE WESTIN

DETROIT
2010 proxy statement &
METROPOLITAN
AIRPORT, USA 2009 annual report
MARQUES
DE RISCAL
A LUXURY
COLLECTION
HOTEL, SPAIN
W BARCELONA
SPAIN
LE MERIDIEN RA
BEACH HOTEL
& SPA, SPAIN

ALOFT RICHMOND
WEST, USA
dear fellow
shareholders
What a difference a year makes. As we entered 2009, the Today more than 60% of our hotels are either new or freshly
U.S. economy was on the verge of collapse and a severe renovated. At the same time, we pulled our flags from
global economic contraction had cost nearly 30 million jobs properties that were not up to our brand standards, improving
around the world. By every measure, 2009 was a challenging the consistency of the product throughout the system.
year and the lodging industry was severely affected. But it
was also a year of great progress for Starwood. While the TAKING A HARD LOOK AT EFFICIENCY
global economy struggled, our team remained focused and WHILE DRIVING REVENUE
continued to execute. In 2009 we completed our Activity Value Analysis, a rigorous
process to address costs and lay the foundation for future
Today, macroeconomic conditions remain tenuous but growth, which resulted in run-rate SG&A savings of over $100
Starwood is in excellent shape. Our cost discipline allowed million. We also rolled out our revenue management tools to
us to exceed earnings expectations throughout 2009 and, 80 new properties, allowing us to improve forecasting so we
beginning in the fourth quarter, we were able to achieve can better manage our mix and optimize rates. We initiated
better than expected top-line results. Our brands are efforts to further enhance our global sales force, and through
performing well, emerging markets are outperforming the rationalizing brand standards and improving procurement,
developed ones and guests are beginning to return to luxury. we continued to reduce costs for our owner/partners.
This benefits us as we are the global leader in the four- and Finally, our lean operations team not only beat their margin
five-star categories. goals in 2009, but they did so while achieving record guest
satisfaction scores across our brands.
While our recovery is partly driven by stabilization in
the overall economy, it is also thanks to several critical THROUGH IT ALL, WE KEPT GROWING
decisions we made to manage through the most challenging The bottom of a cycle is actually a great time to open new
environment during our lifetimes. These initiatives included: hotels so the newest product can enjoy the full upswing
as conditions improve. We opened 83 best-in-class hotels
STRENGTHENING OUR FINANCIAL POSITION and signed 77 new deals in 2009. We also reached several
During the year, we continued to cut costs, sell non-strategic milestones, including opening our 500th hotel in North
assets – such as Bliss and the St. Regis retail space, along America and our 150th hotel in Asia. And with plans to open
with the W San Francisco – and generate positive operating over 80 additional hotels in 2010, our third straight year of
cash flow. This allowed us to reduce our total debt by roughly 8% gross unit additions, we are on the cusp of opening our
$1.1 billion from peak levels. In fact, we beat our target and 1000th hotel in our 100th country.
ended the year with less than $3 billion in debt. At the same
time, we extended our maturities and now have no debt We would never have been able to achieve all of this
coming due until 2012. without the hard work of our talented team. Thanks to
their commitment to excellence and their confidence in
FOCUSING ON INNOVATION Starwood’s long-term success, we ended the year in a better
AND INVESTING IN OUR BRANDS place than we anticipated.
Innovation is core to who we are and gives us our competitive
edge. We continued to push our innovation agenda in the The big story for 2010 is that the business traveler is
face of a poor economy, delivering excellent results and an coming back. After a year of hunkering down and cutting
outstanding response from our guests. At Sheraton, we costs, companies are sending people back onto the road to
reinvented the hotel lobby by introducing the Link@Sheraton SM
do business. We are seeing occupancies begin to improve
experienced with Microsoft® in 95% of our hotels around from a deep drop-off as business and consumer confidence
the world. We opened 40 Aloft Hotels since the summer of rebounds. Leisure travel came back this summer, corporate
2008 – the fastest launch in the history of select serve. transient began to return in the fourth quarter, and by the
We also introduced Element, the world’s first major hotel end of 2009 we saw early signs of life on the group side. The
brand to mandate that all of its properties pursue the U.S. return of business travel and meetings, which account for
Green Building Council’s (USGBC) Leadership in Energy and 75% of our business, is excellent news for our recovery and a
Environmental Design (LEED) certification. To support these driver of our optimism about the future.
new brands, and Four Points by Sheraton, we created a
dedicated select serve organization focusing on the future While we expect 2010 to be another challenging year given
growth we expect from this segment. Together with our the lags inherent in the lodging industry, we have emerged
owner/partners, we also completed a $6 billion revitalization a battle-tested, more mature organization and believe
of Sheraton, and are continuing to grow W internationally the headwinds we faced in 2009 – our upper upscale and
with plans to double its footprint between 2008 and 2011. luxury portfolio, our global footprint and owned hotels – will
once again be tailwinds in the future based on favorable be left with one of the most attractive business models in
long-term demographics. the capitalist world. With long-term contracts and minimal
capital requirements, the fee business generates predictable,
For the first time in decades, the U.S. consumer is not sustainable income streams.
leading the world out of this recession. Asia, Africa and
South America have weathered the recession better and While it is essential to focus on our financial performance,
are already growing. This is another factor that plays to we must also deliver on our responsibility to effect
Starwood’s strengths given our global footprint. Over half environmental change and improve the communities in
of our hotel rooms are already outside of the U.S. And this which we operate around the globe. Now, more than ever,
skew towards international will continue to grow given the private sector needs to step forward and lead by example
more than 80% of our 85,000-room pipeline will be built in the area of environmental stewardship. Starwood has
in international markets. Asia Pacific represents our largest established a Global Citizenship group to cultivate our
source of future growth with 50,000 rooms in the pipeline. ongoing commitment to the earth and implement
economically viable standards across our hotels that will
We are proud to be the world’s most global hotel company help decrease our environmental footprint. We have made
and have been very careful to not let the economic downturn an earnest commitment to integrate sustainable practices
derail our long-term growth strategy. In our view, the into our core business strategies, and we are determined to
crisis has revealed just how unstoppable the trends of truly make a difference.
globalization, capital flows and wealth creation are around
the world, as three billion people enter the global economy Travel is uniquely positioned to create new jobs, stimulate
and more than 70% of the world’s growth over the coming community development and generate tax revenue. In
decade is expected to come from rapidly growing economies. just the U.S. alone, the travel industry employs 7.7 million
people – more than twice the auto industry. In 2010, Starwood
These trends represent a once-in-a-lifetime growth expects to create 12,000 new jobs around the world in
opportunity for infrastructure development around the addition to the 12,000 jobs that we created in 2009 at our
world, not the least of which lies in the demand for more recently opened hotels.
high-end hotels. People are increasingly traveling outside
of their native countries where they are drawn to brands As a final observation, it is becoming increasingly clear that
they recognize and respect. We believe this represents an scale, financial flexibility and great brands are the foundations
exciting opportunity for Starwood as the potential for new of future success, and Starwood has all three. Companies
international travelers at our properties is truly astounding. that can offer global scale to owners and customers will
For example, it is expected that by 2015 there will be 400 have an advantage that is difficult to replicate. Companies
million Chinese and Indians with sufficient incomes to travel with financial flexibility will be able to take advantage of
abroad. That’s seven times the number of international opportunities that create value for shareholders. And great
travelers who visited the U.S. last year! brands take years to establish but can create significant
value through pricing power and growth.
Creating value for shareholders in 2009 was all about
cost-cutting and ‘de-risking’ the company’s balance sheet So while we are cautiously optimistic about the near term,
through debt reduction. In 2010 we are focused on driving we are working hard to own the upswing and are more
top-line growth. This includes driving RevPAR premiums confident than ever in our long-term future. We are in an
and growing our pipeline. enviable position to leverage our great brands, our unique
properties, our innovative edge and our global organization
We are also focused on monetizing the value of our portfolio to take advantage of favorable mega-trends and make the
of owned hotels. The transformation of our business mix is most of the opportunities that lie ahead for Starwood in
ongoing and we have made significant progress in growing 2010 and beyond.
our managed and franchised business and reducing the size
of our owned portfolio. Five years ago, 20% of our profits Thank you for your continued support.
came from fees and today we are at 60%. But there is more
to come given our goal of becoming over 80% fee-driven.
This transformation should generate substantial after-
tax proceeds that will allow us to pursue ongoing growth
opportunities, strengthen our balance sheet and return Frits van Paasschen
cash to you, our shareholders. At the same time, we will Chief Executive Officer
2010 proxy statement &
2009 annual report

Starwood Hotels & Resorts Worldwide, Inc.


2010
ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT

March 29, 2010

Dear Stockholder:
You are cordially invited to attend Starwood’s Annual Meeting of Stockholders, which is being held on
Thursday, May 13, 2010, at 12:00 p.m. (local time), at the Sheraton Suites Philadelphia Airport, 4101 Island
Avenue, Philadelphia, Pennsylvania 19153.
At this year’s Annual Meeting, you will be asked to (i) elect eleven Directors, (ii) ratify the appointment of
Ernst & Young LLP as Starwood’s independent registered public accounting firm for 2010, and (iii) reapprove the
Company’s Annual Incentive Plan for Certain Executives.
As owners of Starwood, your vote is important. Whether or not you are able to attend the Annual Meeting in
person, it is important that your shares be represented. Please vote as soon as possible. Instructions on how to vote
are contained herein.
We appreciate your continued support and interest in Starwood.

Very truly yours,

Frits van Paasschen Bruce W. Duncan


Chief Executive Officer and President Chairman of the Board
NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS
OF
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
A Maryland Corporation

DATE: May 13, 2010


TIME: 12:00 p.m., local time
PLACE: Sheraton Suites Philadelphia Airport
4101 Island Avenue
Philadelphia, Pennsylvania 19153
ITEMS OF BUSINESS: 1. To elect eleven Directors to serve until the next Annual Meeting of
Stockholders and until their successors are duly elected and qualified.
2. To consider and vote upon the ratification of the appointment of Ernst &
Young LLP as Starwood Hotels & Resorts Worldwide, Inc.’s (the
“Company”) independent registered public accounting firm for the fiscal year
ending December 31, 2010.
3. To reapprove the Company’s Annual Incentive Plan for Certain Executives.
4. To transact such other business as may properly come before the meeting or
any postponement or adjournment therof.
RECORD DATE: Holders of record of the Company’s stock at the close of business on March 17,
2010 are entitled to vote at the meeting.
ANNUAL REPORT: The Company’s 2009 Annual Report on Form 10-K, which is not a part of the proxy
soliciting material, is enclosed. The Annual Report may also be obtained from the
Company’s website at www.starwoodhotels.com/corporate/investor_relations.html.
Stockholders may also obtain, without charge, a copy of the Annual Report by
contacting Investor Relations at the Company’s headquarters.
PROXY VOTING: It is important that your shares be represented and voted at the meeting. You can
authorize a proxy to vote your shares by completing and returning the proxy card
sent to you. Most stockholders can authorize a proxy over the Internet or by
telephone. If Internet or telephone authorization is available to you, instructions
are printed on your proxy card. You can revoke a proxy at any time prior to its
exercise at the meeting by following the instructions in the accompanying proxy
statement. Your promptness will assist us in avoiding additional solicitation costs.

Kenneth S. Siegel
Corporate Secretary

March 29, 2010


White Plains, New York
TABLE OF CONTENTS

WHO CAN HELP ANSWER YOUR QUESTIONS? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii


THE ANNUAL MEETING AND VOTING — QUESTIONS AND ANSWERS . . . . . . . . . . . . . . . . . . . 1
CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
REAPPROVAL OF THE ANNUAL INCENTIVE PLAN FOR CERTAIN EXECUTIVES . . . . . . . . . . . . 12
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS. . . . . . . . . . . . . . . . . . . 16
EXECUTIVE AND DIRECTOR COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
COMPENSATION DISCUSSION & ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
COMPENSATION COMMITTEE REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SUMMARY COMPENSATION TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
GRANTS OF PLAN-BASED AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF
PLAN-BASED AWARDS SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
OPTION EXERCISES AND STOCK VESTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
NONQUALIFIED DEFERRED COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL . . . . . . . . . . . . . . . 41
DIRECTOR COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
AUDIT COMMITTEE REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION . . . . . . . . . . . . . . . 50
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SOLICITATION COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
HOUSEHOLDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ANNUAL INCENTIVE PLAN FOR CERTAIN EXECUTIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
WHO CAN HELP ANSWER YOUR QUESTIONS?
If you have any questions about the Annual Meeting, you should contact:
Starwood Hotels & Resorts Worldwide, Inc.
1111 Westchester Avenue
White Plains, New York 10604
Attention: Investor Relations
Phone Number: 1-914-640-8100
If you would like additional copies of this Proxy Statement or the Annual Report, or if you have questions
about the Annual Meeting or need assistance in voting your shares, you should contact:
D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005
Phone Number: 1-800-859-8511 (toll free)

ii
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
1111 WESTCHESTER AVENUE
WHITE PLAINS, NY 10604

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 2010

THE ANNUAL MEETING AND VOTING — QUESTIONS AND ANSWERS

Why did I receive the Notice of Meeting and Internet Availability of Proxy Materials or this Proxy
Statement?

Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (the “Company” or “Starwood”), has
made these materials available to you on the Internet or, upon your request, has delivered printed versions of these
materials to you by mail, in connection with the solicitation of proxies by the Board of Directors (the “Board”) for
use at the Company’s 2010 Annual Meeting of Stockholders (the “Annual Meeting”), and at any postponement or
adjournment of the Annual Meeting. The Company is first making these materials available (and is mailing the
Notice of Meeting and Internet Availability of Proxy Materials) on or about March 29, 2010. This Notice contains
instructions on how to access the Company’s proxy statement and 2009 Annual Report to Stockholders and vote
online. By furnishing this Notice, the Company is lowering the costs and reducing the environmental impact of its
Annual Meeting.

The Company intends to start mailing a paper or electronic copy of its proxy statement and 2009 Annual
Report to those stockholders who have requested a paper or electronic copy on or about March 29, 2010.

When and where will the Annual Meeting be held?

The Annual Meeting will be held on May 13, 2010 at 12:00 p.m. (local time), at the Sheraton Suites
Philadelphia Airport, 4101 Island Avenue, Philadelphia, Pennsylvania 19153. If you plan to attend the Annual
Meeting and have a disability or require special assistance, please contact the Company’s Investor Relations
department at (914) 640-8100.

What proposals will be voted on at the Annual Meeting?

At the Annual Meeting, the stockholders of the Company will consider and vote upon:

1. The election of eleven Directors to serve until the next Annual Meeting of Stockholders and until their
successors are duly elected and qualified.

2. The ratification of the appointment of Ernst & Young LLP (“Ernst & Young”) as the Company’s
independent registered public accounting firm for 2010.

3. The reapproval of the Company’s Annual Incentive Plan for Certain Executives.

4. Such other business as may properly come before the meeting or any adjournment or postponement thereof.

The Board is not aware of any matter that will be presented at the Annual Meeting that is not described above.
If any other matter is presented at the Annual Meeting, the persons named as proxies on the enclosed proxy card
will, in the absence of stockholder instructions to the contrary, vote the shares for which such persons have voting
authority in accordance with their discretion on any such matter.

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Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials
instead of a full set of proxy materials?

Pursuant to the rules adopted by the Securities and Exchange Commission, we are providing access to our
proxy materials over the Internet. Accordingly, we sent a Notice of Meeting and Internet Availability of Proxy
Materials (the “Notice”) to our stockholders of record and beneficial owners as of the close of business on March 17,
2010. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or
request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the
Internet or to request a printed copy may be found on the Notice. In addition, stockholders may request to receive
proxy materials in printed form by mail or electronically by email on an ongoing basis.

How can I get electronic access to the proxy materials?

The Notice will provide you with instructions regarding how to:

• View our proxy materials for the Annual Meeting on the Internet; and

• Instruct us to send our future proxy materials to you electronically by email.

Choosing to receive your future proxy materials by email will save us the cost of printing and mailing
documents to you and will reduce the impact of our annual stockholders’ meetings on the environment. If you
choose to receive future proxy materials by email, you will receive an email next year with instructions containing a
link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will
remain in effect until you terminate it.

Who is entitled to vote at the Annual Meeting?

If you were a stockholder of the Company at the close of business on March 17, 2010 (the “Record Date”), you
are entitled to notice of, and to vote at, the Annual Meeting. You have one vote for each share of common stock of
the Company (“Shares”) you held at the close of business on the Record Date on each matter that is properly
submitted to a vote at the Annual Meeting, including Shares:

• Held directly in your name as the stockholder of record,

• Held for you in an account with a broker, bank or other nominee, or

• Credited to your account in the Company’s Savings and Retirement Plan (the “Savings Plan”).

On the Record Date there were 188,946,476 Shares outstanding and entitled to vote at the Annual Meeting and
there were 15,414 record holders of Shares. The Shares are the only outstanding class of voting securities of the
Company.

Who may attend the Annual Meeting?

Only stockholders of record, or their duly authorized proxies, may attend the Annual Meeting. Registration
and seating will begin at 11:00 a.m. To gain admittance, you must present valid picture identification, such as a
driver’s license or passport. If you hold Shares in “street name” (through a broker or other nominee), you will also
need to bring a copy of a brokerage statement (in a name matching your photo identification) reflecting your stock
ownership as of the Record Date. If you are a representative of a corporate or institutional stockholder, you must
present valid photo identification along with proof that you are a representative of such stockholder.

Please note that cameras, recording devices and other electronic devices will not be permitted at the Annual
Meeting.

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How many Shares must be present to hold the Annual Meeting?

The presence in person or by proxy of holders of a majority of the outstanding Shares entitled to vote at the
Annual Meeting constitutes a quorum for the transaction of business. Your Shares are counted as present at the
meeting if you:

• are present in person at the Annual Meeting, or

• have properly executed and submitted a proxy card, or authorized a proxy over the telephone or the Internet,
prior to the Annual Meeting.

Abstentions and broker non-votes are counted for purposes of determining whether a quorum is present at the
Annual Meeting.

If a quorum is not present when the Annual Meeting is convened, or if for any other reason the presiding officer
believes that the Annual Meeting should be adjourned, the Annual Meeting may be adjourned by the presiding
officer. If a motion is made to adjourn the Annual Meeting, the persons named as proxies on the enclosed proxy card
will have discretion to vote on such adjournment all Shares for which such persons have voting authority.

What are broker non-votes?

If you have Shares that are held by a broker, you may give the broker voting instructions and the broker must
vote as you directed. If you do not give the broker any instructions, the broker may vote at its discretion on all
routine matters (i.e., the ratification of an independent registered public accounting firm). For non-routine matters
and on the election of Directors, however, the broker may NOT vote using its discretion. This is referred to as a
broker non-vote.

How many votes are required to approve each proposal?

Directors will be elected by a plurality of the votes cast at the Annual Meeting, either in person or represented
by properly authorized proxy. This means that the eleven nominees who receive the largest number of “FOR” votes
cast will be elected as Directors. Stockholders cannot cumulate votes in the election of Directors. Broker non-votes
will not have any effect on the election of Directors. See “What happens if a Director nominee does not receive a
majority of the votes cast?” below for information concerning our director resignation policy.

Ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting
firm requires “FOR” votes from a majority of the votes cast on the matter at the Annual Meeting, either in person or
represented by properly completed or authorized proxy. Abstentions and broker non-votes will have no effect on the
matter. If a majority of the votes cast at the Annual Meeting vote “AGAINST” ratification of the appointment of
Ernst & Young, the Board and the Audit Committee will reconsider its appointment.

Reapproval of the Company’s Annual Incentive Plan for Certain Executives requires “FOR” votes from a
majority of the votes cast at the Annual Meeting on the matter, either in person or represented by properly completed
or authorized proxy. Abstentions and broker non-votes will have no effect on the matter. If a majority of the votes
cast at the Annual Meeting vote “AGAINST” the reapproval of the Company’s Annual Incentive Plan for Certain
Executives, the Board of Directors and its Compensation and Option Committee will reconsider the plan.

What happens if a Director nominee does not receive a majority of the votes cast?

Under our Bylaws, a Director nominee, running uncontested, who receives more “Withheld” than “For” votes
is required to tender his or her resignation for consideration by the Board. The Corporate Governance and
Nominating Committee will recommend to the Board whether to accept or reject the resignation. The Board will act
on the tendered resignation and publicly disclose its decision within 90 days following certification of the election
results. The Director who tenders his or her resignation will not participate in the Board’s decision with respect to
that resignation.

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How do I vote?
If you are a stockholder of record, you may vote in person at the Annual Meeting. We will give you a ballot
when you arrive. If you do not wish to vote in person or if you will not be attending the Annual Meeting, you may
vote by proxy. You can vote your shares by authorizing a proxy over the Internet by following the instructions
provided in the Notice, or, if you request printed copies of the proxy materials by mail, you can also authorize a
proxy to vote your shares by mail or by telephone.
Each Share represented by a properly completed written proxy or properly authorized proxy by telephone or
over the Internet will be voted at the Annual Meeting in accordance with the stockholder’s instructions specified in
the proxy, unless such proxy has been revoked. If no instructions are specified, such Shares will be voted FOR the
election of each of the nominees for Director, FOR ratification of the appointment of Ernst & Young as the
Company’s independent registered public accounting firm for 2010, and FOR the reapproval of the Company’s
Annual Incentive Plan for Certain Executives and, in the discretion of the proxy holder, on any other business that
may properly come before the meeting.
If you participate in the Savings Plan and have contributions invested in Shares, the proxy card will serve as a
voting instruction for the trustee of the Savings Plan. You must return your proxy card to the transfer agent on or
prior to May 7, 2010. If your proxy card is not received by the transfer agent by that date or if you sign and return
your proxy card without instructions marked in the boxes, the trustee will vote your Shares in the same proportion as
other Shares held in the Savings Plan for which the trustee received timely instructions unless contrary to ERISA
(Employee Retirement Income Security Act).

How can I revoke a previously submitted proxy?


You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. You
may submit a proxy again on a later date on the Internet or by telephone (only your latest Internet or telephone proxy
submitted prior to the meeting will be counted), or by signing and returning a new proxy card with a later date, or by
attending the meeting and voting in person. However, your attendance at the Annual Meeting will not automatically
revoke your proxy unless you vote at the meeting or specifically request in writing that your prior proxy be revoked.

What does it mean if I receive more than one proxy card?


If you receive more than one proxy card from the Company, it means your Shares are not all registered in the
same way (for example, some are held in your name and others are held jointly with a spouse) and are in more than
one account. Please sign and return all proxy cards you receive to ensure that all Shares held by you are voted.

How does the Board recommend that I vote?


The Board recommends that you vote FOR each of its Director nominees, FOR ratification of the appointment
of Ernst & Young as the Company’s independent registered public accounting firm for 2010, and FOR the
reapproval of the Company’s Annual Incentive Plan for Certain Executives.

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CORPORATE GOVERNANCE

Starwood is committed to maintaining the highest standards of business conduct and corporate governance,
which we believe are essential to running our business efficiently, serving our stockholders well and maintaining
our Company’s integrity in the marketplace.

Board Leadership Structure and Risk Oversight

We believe that the composition of our Board of Directors (the “Board”) and its committees result in a strong
leadership structure for our Company. As of the date of this proxy statement, our Board has eleven directors, comprised
of one chairman (who is not the Chief Executive Officer and President of the Company), nine additional non-employee
members, and the Chief Executive Officer and President of the Company. Biographies of our Directors can be found in
the Election of Directors section beginning on page 7. The Board has the following four standing committees:
(1) Audit, (2) Capital, (3) Compensation and Option and (4) Corporate Governance and Nominating. The current
committee membership, the number of meetings held during the last fiscal year and the function of each of the standing
committees are described in the Board Meetings and Committees section beginning on page 10. Each of the standing
committees operates under a written charter adopted by the Board. All of the committee charters are available on the
Company’s website at www.starwoodhotels.com/corporate/investor_relations.html.

As part of its general oversight duties, the Board oversees the Company’s risk management. The Board
regularly invites key members of the Company’s management to its meetings in order to inform the Board of any
operational and/or financial risks that the Company is facing, and the Board reviews and directs management to
address and mitigate such risks. In addition, one of the responsibilities of the Audit Committee is to discuss and
review the systems of internal controls over financial reporting, accounting, legal compliance and our ethics
policies, as established by the Board and/or management, in order to assess risk and oversee risk management. In
setting compensation practices, the Compensation and Option Committee considers the risks to our stockholders,
and the Company as a whole, and structures our incentive compensation to discourage the taking of excessive risks.

Corporate Governance Policies

In addition to our charter and Bylaws, we have adopted Corporate Governance Guidelines (the “Guidelines”),
which are posted on our website at www.starwoodhotels.com/corporate/investor_relations.html, to address sig-
nificant corporate governance matters. The Guidelines provide a framework for the Company’s corporate gov-
ernance and cover topics including, but not limited to, Board and committee composition, Director Share ownership
guidelines, and Board evaluations. The Corporate Governance and Nominating Committee is responsible for
overseeing and reviewing the Guidelines and reporting and recommending to the Board any changes to the
Guidelines.

The Company has adopted a Finance Code of Ethics applicable to its Chief Executive Officer, Chief Financial
Officer, Corporate Controller, Corporate Treasurer, Senior Vice President-Taxes and persons performing similar
functions. The Finance Code of Ethics is posted on the Company’s website at www.starwoodhotels.com/corporate/
investor_relations.html. The Company intends to post amendments to, and waivers from, the Finance Code of
Ethics that require disclosure under applicable Securities and Exchange Commission (the “SEC”) rules on its
website. In addition, the Company has a Code of Business Conduct and Ethics (the “Code of Conduct”) applicable
to all employees and Directors that addresses legal and ethical issues employees may encounter in carrying out their
duties and responsibilities. Subject to applicable law, employees are required to report any conduct they believe to
be a violation of the Code of Conduct. The Code of Conduct is posted on the Company’s website at
www.starwoodhotels.com/corporate/investor_relations.html.

The Company has a Disclosure Committee, comprised of certain senior executives, to design, establish and
maintain the Company’s internal controls and other procedures with respect to the preparation of periodic reports
filed with the SEC, earnings releases and other written information that the Company will disclose to the investment
community. The Disclosure Committee evaluates the effectiveness of the Company’s disclosure controls and
procedures on a regular basis and maintains written records of its meetings.

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The Board has a policy under which Directors who are not employees of the Company or any of its subsidiaries
may not stand for re-election after reaching the age of 72. In addition, under this policy, Directors who are
employees of the Company must retire from the Board upon their retirement from the Company. Pursuant to the
Guidelines, the Board also has a policy that Directors who change their principal occupation (including through
retirement) should voluntarily tender their resignation to the Board.
The Company expects all Directors to attend the Annual Meeting and believes that attendance at the Annual
Meeting is as important as attendance at meetings of the Board of Directors and its committees. In fact, the
Company typically schedules Board of Directors’ and committee meetings to coincide with the dates of its Annual
Meetings. However, from time to time, other commitments prevent all Directors from attending each meeting. All
Directors who were Board members at the time attended the most recent annual meeting of stockholders, which was
held on May 6, 2009.
The Company indemnifies its Directors and officers to the fullest extent permitted by law so that they will be
free from undue concern about personal liability in connection with their service to the Company. This is required
under the Company’s charter, and the Company has also signed agreements with each of those individuals
contractually obligating it to provide this indemnification to them.

Director Independence
In accordance with New York Stock Exchange (the “NYSE”) rules, the Board makes an annual determination as
to the independence of the Directors and nominees for election as a Director. No Director will be deemed to be
independent unless the Board affirmatively determines that the Director has no material relationship with the
Company, directly or as an officer, stockholder or partner of an organization that has a relationship with the Company.
A material relationship is one that impairs or inhibits — or has the potential to impair or inhibit — a director’s exercise
of critical and disinterested judgment on behalf of the Company and its stockholders. The Board observes all criteria
for independence established by the NYSE listing standards and other governing laws and regulations. In its annual
review of Director independence, the Board considers any commercial, banking, consulting, legal, accounting,
charitable or other business relationships each Director may have with the Company. In addition, the Board consults
with the Company’s counsel to ensure that the Board’s determinations are consistent with all relevant securities and
other laws and regulations regarding the definition of “independent director,” including but not limited to those set
forth in pertinent listing standards of the NYSE in effect from time to time. As a result of its annual review, the Board
has determined that all of the Directors, with the exception of Mr. van Paasschen, are independent directors. Mr. van
Paasschen is not independent because he is serving as the Chief Executive Officer and President of the Company.
In making this determination, the Board took into account that three of the non-employee Directors,
Messrs. Aron and Daley and Ms. Galbreath, have no relationship with the Company except as a Director and
stockholder of the Company and that the remaining seven non-employee Directors have relationships with
companies that do business with the Company that are consistent with the NYSE independence standards. With
respect to Mr. Duncan, the Board considered the fact that Mr. Duncan served as Chief Executive Officer on an
interim basis from April 1, 2007 to September 24, 2007 and received a salary and other benefits for his services.
Prior to serving as Chief Executive Officer on an interim basis, the Board determined that Mr. Duncan was an
independent director.
Yahoo! Inc., Amazon.com, Inc., Burger King Holdings, Inc., The Gap, Inc., American Express Company, and
Intel Corporation are the only companies to transact business with the Company over the past three years in which
any of the Company’s independent directors served as a director, executive officer or is a partner, principal or greater
than 10% stockholder. Mr. Hippeau is a director of Yahoo! Inc.; Mr. Ryder is a director of Amazon.com, Inc.;
Mr. Youngblood is a director of Burger King Holdings, Inc. and The Gap, Inc.; and Ambassador Barshefsky is a
director of American Express Company and Intel Corporation. In the case of each company other than American
Express Company, the combined annual payments from the Company to each such entity and from each such entity
to the Company has been less than .05% of the Company’s and/or each such other entity’s annual consolidated
revenues for each of the past three years. In the case of American Express Company, with which the Company co-
brands the American Express Starwood Preferred Guest credit card, the combined annual payments from the
Company to American Express Company and from American Express Company to the Company has been less than

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1% of American Express Company’s annual consolidated revenues for each of the past three years and payments
from American Express Company were less than 9.5% of the Company’s annual consolidated revenues for 2009,
less than 4% for 2008 and less than 2% for 2007. Ambassador Barshefsky serves solely as a director of American
Express Company and derives no personal benefit from these payments. These relationships are consistent with the
NYSE independence standards. In addition, in the case of Mr. Quazzo, the Board considered that in January 2008 a
fund managed by Transwestern Investment Company, LLC, of which Mr. Quazzo is the Chief Executive Officer,
purchased the office building in Phoenix where the Company maintains an office. The Company’s lease for the
office space was negotiated and entered into prior to the acquisition with unaffiliated third parties at arms-length and
was not amended in connection with the acquisition of the building by the fund. Mr. Quazzo has informed the
Company that he did not derive any direct personal benefit from the office space lease, although his compensation
does depend, in part, on Transwestern Investment Company, LLC’s results of operations.

Mr. Duncan, who was an independent Director prior to his interim appointment as Chief Executive Officer, has
served as non-executive Chairman of the Board from May 2005 until March 31, 2007 when he was appointed Chief
Executive Officer on an interim basis, and from September 24, 2007 to the present. Prior to March 31, 2007 and
following September 24, 2007, Mr. Duncan, as Chairman, ran meetings of the Board. During Mr. Duncan’s
appointment as Chief Executive Officer on an interim basis, the Chairman of the Corporate Governance and
Nominating Committee presided at the meetings of the Board held in executive session. Mr. Quazzo, an
independent Director, served as the Chairman of the Corporate Governance and Nominating Committee in 2009.

Communications with the Board

The Company has adopted a policy which permits stockholders and other interested parties to contact the
Board of Directors. If you are a stockholder or interested party and would like to contact the Board of Directors you
may send a letter to the Board of Directors, c/o the Corporate Secretary of the Company, 1111 Westchester Avenue,
White Plains, New York 10604 or online at www.hotethics.com. You should specify in the communication that you
are a stockholder or an interested party. If the correspondence contains complaints about Starwood’s accounting,
internal or auditing matters or directed to the non-management directors, the Corporate Secretary will forward that
correspondence to a member of the Audit Committee. If the correspondence concerns other matters, the Corporate
Secretary will forward the correspondence to the Director to whom it is addressed or otherwise as would be
appropriate under the circumstances, attempt to handle the inquiry directly (for example where it is a request for
information or a stock-related matter), or not forward the communication if it is primarily commercial in nature or
relates to an improper or irrelevant topic. At each regularly scheduled Board meeting, the Corporate Secretary or his
designee will present a summary of all such communications received since the last meeting that were not
forwarded and shall make those communications available to the Directors upon request. This policy is also posted
on the Company’s website at www.starwoodhotels.com/corporate/investor_relations.html.

Posted Documents

You may also obtain a free copy of any of the aforementioned posted documents by sending a letter to the
Company’s Investor Relations Department, 1111 Westchester Avenue, White Plains, New York 10604. Please note
that the information on the Company’s website is not incorporated by reference in this Proxy Statement.

ELECTION OF DIRECTORS

Under the Company’s charter, each of the Company’s Directors is elected to serve until the next annual
meeting of stockholders and until his or her successor is duly elected and qualified. If a nominee is unavailable for
election, proxy holders and stockholders may vote for another nominee proposed by the Board or, as an alternative,
the Board may reduce the number of Directors to be elected at the meeting. Each nominee has agreed to serve on the
Board if elected. Set forth below is information as of March 17, 2010 regarding the nominees for election, which has
been confirmed by each of them for inclusion in this Proxy Statement.

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Directors Nominated at the Annual Meeting will be Elected to Serve Until the 2011 Annual Meeting of
Stockholders and Until his or her Successor is Duly Elected and Qualified

Frits van Paasschen, 49, has been Chief Executive Officer and President of the Company since September
2007. From March 2005 until September 2007, he served as President and CEO of Molson Coors Brewing
Company’s largest division, Coors Brewing Company, prior to its merger with Miller Brewing Company and the
formation of MillerCoors LLC. Prior to joining Coors, from April 2004 until March 2005, Mr. van Paasschen
worked independently through FPaasschen Consulting and Mercator Investments, evaluating, proposing, and
negotiating private equity transactions. Prior thereto, Mr. van Paasschen spent seven years at Nike, Inc., most
recently as Corporate Vice President/General Manager, Europe, Middle East and Africa from 2000 to 2004. From
1995 to 1997, Mr. van Paasschen served as Vice President, Finance and Planning at Disney Consumer Products and
earlier in his career was a management consultant for eight years at McKinsey & Company and the Boston
Consulting Group. Mr. van Paasschen has been a Director of the Company since September 2007.

The Corporate Governance and Nominating Committee considered these qualifications, his significant public
company managerial experience, his experience with the Company, and a requirement under his employment
agreement that he serve on the Company’s Board (subject to customary procedures and conditions to Board
membership, including stockholder election) in making the determination that Mr. van Paasschen should be a
nominee for director of the Company.

Bruce W. Duncan, 58, has been President, Chief Executive Officer and Director of First Industrial Realty
Trust, Inc. since January 2009, prior to which time he was a private investor since January 2006. From April to
September 2007, Mr. Duncan served as Chief Executive Officer of the Company on an interim basis. He also has
been a senior advisor to Kohlberg Kravis & Roberts & Co. from July 2008 to January 2009. From May 2005 to
December 2005, Mr. Duncan was Chief Executive Officer and Trustee of Equity Residential (“EQR”), a publicly
traded apartment company, and held various positions at EQR from March 2002 to December 2007, including
President, Chief Executive Officer and Trustee from January 2003 to May 2005, and President and Trustee from
March 2002 to December 2002. Mr. Duncan has served as a Director of the Company since April 1999, and was a
Trustee of Starwood Hotels & Resorts, a real estate investment trust and former subsidiary of the Company (the
“Trust”), since August 1995.

The Corporate Governance and Nominating Committee considered these qualifications, his experience as
Chief Executive Officer of other publicly traded companies, and his tenure with the Company in making the
determination that Mr. Duncan should be a nominee for director of the Company.

Adam M. Aron, 55, has been Chairman and Chief Executive Officer of World Leisure Partners, Inc., a leisure-
related consultancy, since 2006. From 1996 through 2006, Mr. Aron served as Chairman and Chief Executive
Officer of Vail Resorts, Inc., an owner and operator of ski resorts and hotels. Mr. Aron is a director of Norwegian
Cruise Line Limited, Prestige Cruise Holdings, Inc., Cap Juluca Properties Ltd. and E-Miles LLC. In the past
5 years, Mr. Aron also served as a director of FTD Group, Inc., Rewards Network, Inc. and Marathon Acquisition
Corp. Mr. Aron has been a Director of the Company since August 2006.

The Corporate Governance and Nominating Committee considered these qualifications, his significant
experience in the leisure travel industry, and his experience with the Company in making the determination that
Mr. Aron should be a nominee for director of the Company.

Charlene Barshefsky, 59, has been Senior International Partner at the law firm of WilmerHale, LLP,
Washington, D.C. since September 2001. From March 1997 to January 2001, Ambassador Barshefsky was the
United States Trade Representative, the chief trade negotiator and principal trade policymaker for the United States
and a member of the President’s Cabinet. Ambassador Barshefsky is a director of The Estee Lauder Companies, Inc.
since July 2001, American Express Company since July 2001 and Intel Corporation since January 2004.
Ambassador Barshefsky also serves on the Board of Directors of the Council on Foreign Relations and the
Howard Hughes Medical Institute. In the past 5 years Ambassador Barshefsky also served as a director of Idenix
Pharmaceuticals, Inc. She has been a Director of the Company, and was a Trustee of the Trust, since October 2001.

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The Corporate Governance and Nominating Committee considered these qualifications, her significant public
policy experience, and her tenure with the Company in making the determination that Ambassador Barshefsky
should be a nominee for director of the Company.
Thomas E. Clarke, 58, has been President of New Business Ventures of Nike, Inc., a designer, developer and
marketer of footwear, apparel and accessory products, since 2001. Dr. Clarke joined Nike in 1980. He was
appointed Divisional Vice President in charge of marketing in 1987, Corporate Vice President in 1990, and served
as President and Chief Operating Officer from 1994 to 2000. Dr. Clarke previously held various positions with Nike,
primarily in research, design, development and marketing. Dr. Clarke is also a director of Newell Rubbermaid Inc.
since 2003, a global marketer of consumer and commercial products. Dr. Clarke has been a Director of the
Company since April 2008.
The Corporate Governance and Nominating Committee considered these qualifications, his expertise in brand
marketing, and his experience with the Company in making the determination that Dr. Clarke should be a nominee
for director of the Company.
Clayton C. Daley, Jr., 58, spent his entire professional career with The Procter & Gamble Company, joining
the company in 1974, and has held a number of key accounting and finance positions including Chief Financial
Officer and Vice Chair for Procter & Gamble; Comptroller, U.S. Operations for Procter & Gamble USA; Vice
President and Comptroller of Procter & Gamble International and Vice President and Treasurer. Mr. Daley retired
from Procter & Gamble in October 2009. Mr. Daley is also a director of Nucor Corporation since 2001 and Foster
Wheeler, AG since 2009. In addition, Mr. Daley is a director of the Boys Scouts of America — Dan Beard Council,
and is Senior Advisor to TPG Capital. Mr. Daley has been a Director of the Company since November 2008.
The Corporate Governance and Nominating Committee considered these qualifications, his experience in
corporate strategy and planning for a global consumer products company, his financial expertise, and his experience
with the Company in making the determination that Mr. Daley should be a nominee for director of the Company.
Lizanne Galbreath, 52, has been Managing Partner of Galbreath & Company, a real estate investment firm,
since 1999. From April 1997 to 1999, Ms. Galbreath was Managing Director of LaSalle Partners/Jones Lang
LaSalle where she also served as a director. From 1984 to 1997, Ms. Galbreath served as a Managing Director,
Chairman and Chief Executive Officer of The Galbreath Company, the predecessor entity of Galbreath & Company.
Ms. Galbreath has been a Director of the Company, and was a Trustee of the Trust, since May 2005.
The Corporate Governance and Nominating Committee considered these qualifications, her expertise in real
estate, and her tenure with the Company in making the determination that Ms. Galbreath should be a nominee for
director of the Company.
Eric Hippeau, 58, has been Chief Executive Officer of The Huffington Post, a news website, since June 2009.
From 2000 to 2009, he was a Managing Partner of Softbank Capital, a technology venture capital firm. Mr. Hippeau
served as Chairman and Chief Executive Officer of Ziff-Davis Inc., an integrated media and marketing company,
from 1993 to March 2000 and held various other positions with Ziff-Davis from 1989 to 1993. Mr. Hippeau has been
a director of Yahoo! Inc. since January 1996. Mr. Hippeau has been a Director of the Company, and was a Trustee of
the Trust, since April 1999.
The Corporate Governance and Nominating Committee considered these qualifications, his significant
experience as a director including at many privately held companies, and his tenure with the Company in making
the determination that Mr. Hippeau should be a nominee for director of the Company.
Stephen R. Quazzo, 50, is the Chief Executive Officer and has been the Managing Director and co-founder of
Transwestern Investment Company, L.L.C., a real estate principal investment firm, since March 1996. From April
1991 to March 1996, Mr. Quazzo was President of Equity Institutional Investors, Inc., a subsidiary of Equity Group
Investments, Inc. Mr. Quazzo has been a Director of the Company since April 1999, and was a Trustee of the Trust,
since August 1995.
The Corporate Governance and Nominating Committee considered these qualifications, his expertise in real
estate, and his tenure with the Company in making the determination that Mr. Quazzo should be a nominee for
director of the Company.

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Thomas O. Ryder, 65, retired as Chairman of the Board of The Reader’s Digest Association, Inc. in January
2007, a position he had held since January 1, 2006. Mr. Ryder was Chairman of the Board and Chief Executive
Officer of that company from April 1998 through December 31, 2005. In addition, Mr. Ryder was Chairman of the
Board and Chairman of the Audit Committee of Virgin Mobile USA, Inc. from October 2007 to November 2009.
Mr. Ryder was President, American Express Travel Related Services International, a division of American Express
Company, which provides travel, financial and network services, from October 1995 to April 1998. In addition, he
has been a director of Amazon.com, Inc. since November 2002, and World Color Press, Inc. since July 2009.
Mr. Ryder has been a Director of the Company, and was a Trustee of the Trust, since April 2001.
The Corporate Governance and Nominating Committee considered these qualifications, his financial exper-
tise, and his tenure with the Company in making the determination that Mr. Ryder should be a nominee for director
of the Company.
Kneeland C. Youngblood, 54, is a founding partner of Pharos Capital Group, L.L.C., a private equity fund
focused on technology companies, business service companies and health care companies, since January 1998.
From July 1985 to December 1997, he was in private medical practice. He is former Chairman of the Board of the
American Beacon Funds, a mutual fund company managed by AMR Investments, an investment affiliate of
American Airlines. He has also been a director of Burger King Holdings, Inc. since October 2004; The Gap, Inc.
since November 2006; and Energy Future Holdings (formerly TXU Corp.) since October 2007. Mr. Youngblood has
been a Director of the Company, and was a Trustee of the Trust, since April 2001.
The Corporate Governance and Nominating Committee considered these qualifications, his experience as a
director of large public companies, and his tenure with the Company in making the determination that Mr. Young-
blood should be a nominee for director of the Company.
The Board unanimously recommends a vote FOR election of these nominees.

Board Meetings and Committees


The Board of Directors held ten meetings during 2009. In addition to meetings of the full Board, Directors
attended meetings of individual Board committees. Each Director attended at least 75% of the total number of
meetings of the full Board and committees on which he or she serves.
The Board has established Audit, Capital, Compensation and Option and Corporate Governance and Nom-
inating Committees, the principal functions of which are described below:
Audit Committee. The Audit Committee, which has been established in accordance with Section 3(a)(58)(A) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is currently comprised of Messrs. Ryder
(chairperson), Aron, Clarke, Daley and Youngblood, all of whom are “independent” Directors, as determined by the
Board in accordance with the NYSE listing requirements and applicable federal securities laws. The Board has
determined that each of Messrs. Ryder and Daley is an “audit committee financial expert” under federal securities laws
and has adopted a written charter for the Audit Committee. The Audit Committee provides oversight regarding
accounting, auditing and financial reporting practices of the Company. The Audit Committee selects and engages the
independent registered public accounting firm to serve as auditors with whom it discusses the scope and results of their
audit. The Audit Committee also discusses with the independent registered public accounting firm, and with
management, financial accounting and reporting principles, policies and practices and the adequacy of the Company’s
accounting, financial, operating and disclosure controls. The Audit Committee met nine times during 2009.
Capital Committee. The Capital Committee is currently comprised of Ms. Galbreath (chairperson), and
Messrs. Clarke, Hippeau and Quazzo. The Capital Committee was established in November 2005 to exercise some
of the power of the Board relating to, among other things, capital plans and needs, mergers and acquisitions,
divestitures and other significant corporate opportunities between meetings of the Board. The Capital Committee
met seven times during 2009.
Compensation and Option Committee. Under the terms of its charter, the Compensation and Option
Committee (the “Compensation Committee”) is required to consist of three or more members of the Board of
Directors who meet the independence requirements of the NYSE, are “non-employee directors” pursuant to SEC

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Rule 16b-3, and are “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as
amended. The Compensation Committee is currently comprised of Messrs. Aron (chairperson), Daley, Duncan,
Youngblood and Ms. Galbreath, all of whom are “independent” Directors, as determined by the Board in
accordance with the NYSE listing requirements. The Compensation Committee makes recommendations to the
Board with respect to the salaries and other compensation to be paid to the Company’s executive officers and other
members of senior management and administers the Company’s employee benefits plans, including the Company’s
2004 Long-Term Incentive Compensation Plan. The Compensation Committee met five times during 2009.

Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee
is currently comprised of Messrs. Quazzo (chairman), Duncan and Hippeau and Ambassador Barshefsky, all of
whom are “independent” Directors, as determined by the Board in accordance with the NYSE listing requirements.
The Corporate Governance and Nominating Committee was established in May 2004, combining the functions of
the Corporate Governance Committee and the Nominating Committee, to oversee compliance with the Company’s
corporate governance standards and to assist the Board in fulfilling its oversight responsibilities. The Corporate
Governance and Nominating Committee establishes, or assists in the establishment of, the Company’s governance
policies (including policies that govern potential conflicts of interest) and monitors and advises the Company as to
compliance with those policies. The Corporate Governance and Nominating Committee reviews, analyzes, advises
and makes recommendations to the Board with respect to situations, opportunities, relationships and transactions
that are governed by such policies, such as opportunities in which a Director or executive officer or their affiliates
has a personal interest. In addition, the Corporate Governance and Nominating Committee is responsible for
making recommendations for candidates for the Board of Directors, taking into account nominations made by
officers, Directors, employees and stockholders, recommending Directors for service on Board committees,
developing and reviewing background information for candidates, and making recommendations to the Board
for changes to the Corporate Governance Guidelines as they pertain to the nomination or qualifications of Directors
or the size of the Board, if applicable. The Corporate Governance and Nominating Committee met four times during
2009.

There are no firm prerequisites to qualify as a candidate for the Board, although the Board seeks a diverse group
of candidates who possess the background, skills and expertise relevant to the business of the Company or candidates
that possess a particular geographical or international perspective. The Board looks for candidates with qualities that
include strength of character, an inquiring and independent mind, practical wisdom and mature judgment. The Board
seeks to insure that at least two-thirds of the Directors are independent under the Company’s Governance Guidelines,
and that members of the Company’s Audit Committee meet the financial literacy requirements under the rules of the
NYSE and at least one of them qualifies as an “audit committee financial expert” under applicable federal securities
laws. The Corporate Governance and Nominating Committee does not have a set policy for considering or weighing
diversity in identifying nominees but does seek to have a diversity of backgrounds, skills and perspectives among
Board members, and considers how the background, skills and perspectives of the nominee would contribute to the
total mix of backgrounds, skills and perspectives that would be available to the Board as a whole. Annually the
Corporate Governance and Nominating Committee reviews the qualifications and backgrounds of the Directors and
the overall composition of the Board, and recommends to the full Board the slate of Directors to be recommended for
nomination for election at the annual meeting of stockholders.

The Board does not believe that its members should be prohibited from serving on boards and/or committees of
other organizations, and the Board has not adopted any guidelines limiting such activities. However, the Corporate
Governance and Nominating Committee and the full Board will take into account the nature of, and time involved
in, a Director’s service on other boards in evaluating the suitability of individual Directors and making its
recommendations to Company stockholders. Service on boards and/or committees of other organizations should be
consistent with the Company’s conflict of interest policies.

The Corporate Governance and Nominating Committee may from time-to-time utilize the services of a search
firm to help identify and evaluate candidates for Director who meet the qualifications outlined above.

The Corporate Governance and Nominating Committee will consider candidates for nomination recom-
mended by stockholders and submitted for consideration. Although it has no formal policy regarding stockholder

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candidates, the Corporate Governance and Nominating Committee believes that stockholder candidates should be
reviewed in substantially the same manner as other candidates.
Under the Company’s current Bylaws, stockholder nominations to be voted on at an annual meeting of our
stockholders must be made in writing, delivered or mailed by first class United States mail, postage prepaid, to the
Corporate Secretary, 1111 Westchester Avenue, White Plains, New York 10604, and be received by the Corporate
Secretary no later than the close of business on the 75th day nor earlier than the close of business on the 100th day
prior to the first anniversary of the preceding year’s annual meeting. In accordance with the Company’s current
Bylaws, in addition to other required information, such notice shall set forth as to each proposed nominee (i) the
name, age and business address of each nominee proposed in such notice, and a statement as to the qualification of
each nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of Shares which
are beneficially owned by each such nominee and by the nominating stockholder, and (iv) any other information
concerning the nominee that must be disclosed of nominees in proxy solicitations regulated by Regulation 14A of
the Exchange Act, including, without limitation, such person’s written consent to being named in the proxy
statement as a nominee and to serving as a Director if elected.
The Company provides a comprehensive orientation for all new Directors. It includes a corporate overview,
one-on-one meetings with senior management and an orientation meeting. In addition, all Directors are given
written materials providing information on the Company’s business.

Section 16(a) Beneficial Ownership Reporting Compliance


Section 16(a) of the Exchange Act requires that the Company’s Directors and executive officers, and persons
who own more than ten percent of the outstanding Shares, file with the SEC (and provide a copy to the Company)
certain reports relating to their ownership of Shares.
To the Company’s knowledge, based solely on a review of the copies of these reports furnished to the Company
for the fiscal year ended December 31, 2009, and written representations from our Directors and executive officers,
all Section 16(a) filing requirements applicable to its Directors, executive officers and greater than 10 percent
beneficial owners were complied with for the most recent fiscal year, except that, due to an administrative error,
Mr. Avril failed to timely file one Form 4 with respect to one transaction. This transaction was filed late by the
Company on behalf of Mr. Avril.

RATIFICATION OF APPOINTMENT OF INDEPENDENT


REGISTERED PUBLIC ACCOUNTING FIRM
The Board has appointed and is requesting ratification by stockholders of the appointment of Ernst & Young as
the Company’s independent registered public accounting firm. While not required by law, the Board is asking the
stockholders to ratify the selection of Ernst & Young as a matter of good corporate practice. Representatives of
Ernst & Young are expected to be present at the Annual Meeting, will have an opportunity to make a statement, if
they desire to do so, and will be available to respond to appropriate questions. If the appointment of Ernst & Young
is not ratified, the Board and the Audit Committee will reconsider the selection of the independent registered public
accounting firm.
The Board unanimously recommends a vote FOR ratification of the appointment of Ernst & Young as the
Company’s independent registered public accounting firm for 2010.

REAPPROVAL OF THE ANNUAL INCENTIVE PLAN FOR CERTAIN EXECUTIVES

Introduction
To further our policy of providing our key employees the opportunity to earn competitive levels of incentive
compensation based primarily on the performance of the Company, in 1999, the Board of Directors adopted and the
stockholders approved the Annual Incentive Plan for Certain Executives (the “Executive Plan”). In 2005, the
stockholders re-approved the Executive Plan, as amended. The Board of Directors amended and restated the

12
Executive Plan in December 2008 for the primary purpose of bringing it into documentary compliance with
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

The Board of Directors adopted the Executive Plan to assure that bonuses made to the Company’s executive
officers would continue to qualify as “other performance-based compensation” under Section 162(m) of the Code
(“Section 162(m)”). Under Section 162(m), no deduction is allowed in any taxable year of the Company for
compensation in excess of $1 million paid to certain executive officers. An exception to this rule applies to certain
performance-based compensation that is paid pursuant to a plan or program approved by our stockholders and that
specifies the performance objectives to be obtained, the class of employees eligible to receive awards and the
maximum amount that can be paid to eligible employees under such plan or program. For certain awards, such as
cash bonus awards under the Executive Plan, to qualify for the exception available for performance-based
compensation, stockholders must approve the performance objectives to which such awards relate.

As set forth below, we are currently seeking reapproval of the Executive Plan, as amended and restated in
December 2008, in order to continue to qualify certain compensation payable thereunder for deductibility by the
Company for federal income tax purposes. Under the applicable federal income tax regulations, stockholders must
reapprove the performance criteria set forth in the Executive Plan every five years to have the compensation that is
paid under the Executive Plan continue to be exempted from the limits under Section 162(m).

The Executive Plan permits the Company to award qualified annual cash bonuses to the Company’s executive
officers based on a determination by the Committee that performance objectives established by the Committee and
based on those criteria set forth in the Executive Plan have been attained. In addition, the Committee may authorize
payment of up to 25% of a participant’s bonus in the form of restricted stock awards, which are valued at 75% of the
fair market value of a Share.

The principal features of the Executive Plan are summarized below. The description is subject to the terms of
the Executive Plan, which is attached as an appendix to this Proxy Statement. The existence of the Executive Plan
shall not preclude the Company from making additional payments outside the Executive Plan to participants therein
or to other employees.

Annual Incentive Plan for Certain Executives

The Executive Plan will be administered by a committee (the “Committee”) comprised solely of two or more
Directors, each of whom is (i) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange
Act, and (ii) an “outside director” within the meaning of Section 162(m). The Compensation Committee is expected
to serve as the Committee. The Company’s Chief Executive Officer, the Company’s Executive Chairman (if any),
and any other executive officer of the Company who is designated by the Committee on or before the 90th day of a
fiscal year will participate in the Executive Plan for such fiscal year. For the 2009 fiscal year, Messrs. van Paasschen,
Avril, Cava, McAveety, Prabhu, Siegel and Turner are the only participants (“Participants”) in the Executive Plan.

Under the Executive Plan, payment of annual bonuses to Participants is subject to the satisfaction of specific
annual performance targets determined under a bonus formula established by the Committee within the first 90 days
of each fiscal year. The performance targets must be directly and specifically tied to one or more of the following
business criteria: earnings before interest, taxes, depreciation and amortization (“EBITDA”), consolidated pre-tax
earnings, net revenues, net earnings, operating income, earnings before interest and taxes, cash flow measures,
return on equity, return on net assets employed or earnings per share for the applicable fiscal year, subject to such
other special rules and conditions as the Committee may establish within the 90-day period (which may include
rules providing for adjustments to performance targets on account of extraordinary or unusual events).

Within the same 90-day period, the Committee will also establish a minimum threshold level of performance
for each fiscal year based on one or more of the targets specified above. The Committee has historically used an
EBITDA performance measure for this purpose. If this minimum threshold is not met, then no payment is made to
any Participant. The Committee also establishes an objective formula or standard for calculating the maximum
bonus payable to each Participant for the fiscal year, subject to the requirement that the maximum bonus payable to
any Participant for any fiscal year may not exceed $9 million.

13
Following the end of a fiscal year and prior to the payment of any bonus to a Participant for the fiscal year, the
Committee must certify in writing that the applicable performance targets and all other factors on which bonuses
were based were met for the fiscal year. The Committee may in its sole discretion, reduce or completely eliminate,
but not increase, the amount of the bonus payable to a Participant for a fiscal year. The Committee may exercise this
discretion by, among other actions, establishing additional conditions for the payment of bonuses, including setting
other financial, strategic or individual goals.
At least 75% of the bonus payable to a Participant for a fiscal year will be paid in cash during the two and one-
half month period following the end of the fiscal year. The Committee may authorize payment of up to 25% of a
Participant’s bonus to be paid in the form of deferred stock awards, which are deemed to be invested in whole and
fractional Shares, at a price equal to 75% of the fair market value of such Shares as of the date the first cash bonus
was paid to the Participant for the fiscal year. These deferred stock awards (as adjusted for deemed dividend and
distribution equivalents) vest ratably over the three-year period beginning at the end of the fiscal year for which the
bonus is paid, except in the case of the Participant’s death, disability (determined to be a total physical disability
which, in the Committee’s judgment, prevents the Participant from performing substantially his/her duties and
responsibilities for a continuous period of at least six months) or retirement (within the meaning of the Company’s
2004 Long-Term Incentive Compensation Plan), in which case such deferred stock becomes fully vested upon such
occurrence.
At the Participant’s election, any portion of a Participant’s bonus for a fiscal year in excess of $3 million may
also be paid in the form of deferred stock awards, in which case no discount from the fair market value of a unit will
be applied to such deferred stock awards. These deferred stock awards (as adjusted for deemed dividend and
distribution equivalents) vest ratably over the remaining term of any employment agreement applicable to the
Participant and shall vest in full upon the Participant’s termination of employment for any reason.
Vested deferred stock awards are paid in the form of whole Shares issuable under the Company’s 2004 Long-
Term Incentive Compensation Plan and cash equal to the fair market value, as determined by the Committee, for any
fractional Shares.
All determinations relating to the satisfaction of performance targets or any cancellation or forfeiture of
restricted stock or restricted stock awards upon a termination of employment with the Company of the holder of
such restricted stock or restricted stock awards shall be made by the Committee, in its sole discretion.
Since actual amounts will depend on actual performance and the Committee may award less than the
maximum bonus to each participant under the Executive Plan, the exact amount of the bonus that may be paid under
the Executive Plan cannot be determined at this time. In the event of a change in control of Starwood, the Committee
may adjust outstanding awards under the Executive Plan as appropriate, including, without limitation, causing
outstanding awards to vest and distribution of the award to be made or the award to be “cashed-out” by Starwood
(subject to certain payment restrictions set out in the Executive Plan in order to comply with Section 409A of the
Code).
The Board recommends a vote FOR reapproval of the Executive Plan.

BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS


The table below shows the number of Shares beneficially owned by principal stockholders who beneficially
own more than five percent of our outstanding Shares as of March 17, 2010. The information in this table is based
upon the latest filings by each principal stockholder of either a Schedule 13D, Schedule 13G or Form 13F as filed by
the respective stockholder with the SEC as of the date stated in the below footnotes.

14
We calculate the stockholder’s percentage of Shares assuming the stockholder beneficially owned that number
of shares on March 17, 2010, the record date for the annual meeting. Unless otherwise indicated, the stockholder
had sole voting and dispositive power over the shares.
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership of Class

FMR LLC(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 20,250,185 10.72%


82 Devonshire Street
Boston, MA 02109
EGI-SSE I L.P.(2) . . . . . . . . . . . . . . . . . . . . . . . ..................... 14,750,000 7.81%
2 North Riverside Plaza, Suite 600
Chicago, IL 60606
BlackRock Inc.(3) . . . . . . . . . . . . . . . . . . . . . . . ..................... 11,683,191 6.18%
55 East 52nd Street
New York, NY 10055
Harris Associates L.P.(4) . . . . . . . . . . . . . . . . . . ..................... 11,299,190 5.98%
Two North LaSalle Street, Suite 500
Chicago, IL 60602-3790

(1) Based on information contained in a Schedule 13G/A, dated February 16, 2010 (the “FMR 13G/A”), filed by
FMR LLC with the SEC, reporting beneficial ownership as of February 12, 2010. The FMR 13G/A reports that
19,198,731 Shares are held by Fidelity Management & Research Company (“Fidelity”), a wholly-owned
subsidiary of FMR LLC (“FMR”); 203,600 Shares are held by Pyramis Global Advisors, LLC, an indirect
wholly-owned subsidiary of FMR; 96,691 Shares are held by Pyramis Global Advisors Trust Company, an
indirect wholly-owned subsidiary of FMR; 751,000 Shares are held by Fidelity International Limited, a foreign
based entity that provides investment advisory and management services to non-U.S. investment companies
(“FIL”) and 163 Shares are held by Strategic Advisers, Inc., a registered investment adviser and wholly owned
subsidiary of FMR. According to the FMR 13G/A, FMR and Edward C. Johnson 3rd, Chairman of FMR, each
have sole dispositive power and sole voting power with respect to 19,198,731 Shares. Through ownership of
voting common stock and the execution of a certain stockholders’ voting agreement, members of the Edward C.
Johnson 3rd family may be deemed, under the Investment Company Act of 1940, to form a controlling group
with respect to FMR.
(2) Based on information contained in a Schedule 13D/A, dated November 17, 2009, filed by EGI-SSE I, L.P., EGI-SSE
I Corp., SZ Investments, L.L.C., and Chai Trust Company, LLC (collectively “SSE”) with the SEC with respect to
the Company, SSE has shared voting power and shared dispositive power over 14,750,000 Shares. On December 29,
2008, the Company and SSE entered into a confidentiality agreement to facilitate the sharing of information between
the Company and SSE. Pursuant to the agreement, SSE agreed to restrictions on its use and disclosure of the
Company’s confidential information and limitations on its ability to effect a change in control of the Company.
(3) Based on information contained in a Schedule 13G, dated January 29, 2010 (the “BlackRock 13G”), filed with
respect to the Company with the SEC, reporting beneficial ownership as of January 20, 2010. The BlackRock
13G is filed by BlackRock, Inc. (“BlackRock”) and reports that BlackRock has sole voting and dispositive
power with respect to 11,683,191 Shares. The BlackRock 13G reports that it amends the most recent
Schedule 13G filing, if any, made by Barclays Global Investors, NA and certain of its affiliates (Barclay’s
Global Investors, NA and such affiliates are collectively referred to as the “BGI Entities”) with respect to the
subject class of securities of the Company. As previously announced, on December 1, 2009, BlackRock
completed its acquisition of Barclays Global Investors, NA from Barclays Bank PLC. As a result, substantially
all of the BGI Entities are now included as subsidiaries of BlackRock for purposes of Schedule 13G filings.
(4) Based on information contained in a Schedule 13G/A, dated February 11, 2010, filed with respect to the
Company with the SEC, reporting beneficial ownership as of December 31, 2009, Harris Associates L.P.
(“Harris”) has been granted the power to vote Shares in circumstances it determines to be appropriate in
connection with assisting its advised clients to whom it renders financial advice in the ordinary course of
business, either by providing information or advice to the persons having such power, or by exercising the
power to vote. Harris has sole voting and sole dispositive power with respect to 11,299,190 Shares.

15
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The table below shows the beneficial ownership of our Shares of (i) each Director, (ii) each nominee for
Director, (iii) our Chief Executive Officer, our Chief Financial Officer and each of the other three most highly paid
executive officers (our “Named Executive Officers”) and (iv) all directors and executive officers as a group, as of
January 31, 2010. Beneficial ownership includes Shares a Director, nominee for Director or executive officer may
acquire pursuant to stock options and other derivative securities that were exercisable at that date or that will
become exercisable within 60 days thereafter. Unless otherwise indicated, the stockholder had sole voting and
dispositive power over the Shares.
Amount and Nature of
Name (Listed alphabetically) Beneficial Ownership Percent of Class

Adam M. Aron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,844(2) (3)


Matthew E. Avril . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187,148(2) (3)
Charlene Barshefsky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,948(1)(2) (3)
Thomas E. Clarke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,538(2) (3)
Clayton C. Daley, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,500(1)(2) (3)
Bruce W. Duncan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,309(1)(2)(4) (3)
Lizanne Galbreath. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,711(1)(2) (3)
Eric Hippeau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,208(1)(2) (3)
Vasant M. Prabhu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433,534(2) (3)
Stephen R. Quazzo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,407(2)(5) (3)
Thomas O. Ryder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,701(1)(2) (3)
Kenneth S. Siegel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382,036(2) (3)
Simon M. Turner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171,328 (3)
Frits van Paasschen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385,945(2) (3)
Kneeland C. Youngblood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,104(2) (3)
All Directors, Nominees for Directors and executive officers as a
group (17 persons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,401,033 (3)

(1) Amount includes the following number of “phantom” stock units received as a result of the following Directors’
election to defer Directors’ Annual Fees: 22,149 for Mr. Hippeau; 17,890 for Mr. Duncan; 17,103 for
Mr. Ryder; 9,147 for Ms. Galbreath; 4,152 for Ambassador Barshefsky; and 2,462 for Mr. Daley.
(2) Includes Shares subject to presently exercisable options, and options and restricted stock units that will become
exercisable or vest within 60 days of January 31, 2010, as follows: 383,011 for Mr. Prabhu; 357,868 for Mr. van
Paasschen; 285,409 for Mr. Siegel; 174,963 for Mr. Avril; 171,048 for Mr. Turner; 73,673 for Mr. Duncan;
57,059 for Messrs. Hippeau and Quazzo; 51,560 for Messrs. Ryder and Youngblood; 46,061 for Ambassador
Barshefsky; 29,564 for Ms. Galbreath; 21,941 for Mr. Aron; 13,831 for Mr. Clarke; and 12,523 for Mr. Daley.
(3) Less than 1%.
(4) Includes 124,984 Shares held by the Walnut Annuity Trust of which Mr. Duncan is a Trustee and beneficiary,
and 38,762 Shares held by The Bruce W. Duncan Revocable Trust of which Mr. Duncan is a Trustee and
beneficiary.
(5) Includes 30,951 Shares held by a trust of which Mr. Quazzo is settlor and over which he shares investment
control, and 397 Shares owned by Mr. Quazzo’s wife in a Retirement Account.

16
The following table provides information as of December 31, 2009 regarding Shares that may be issued under
equity compensation plans maintained by the Company.

Equity Compensation Plan Information-December 31, 2009


Number of Securities
Number of Securities Remaining Available for
to be Issued Upon Weighted-Average Future Issuance Under
Exercise of Exercise Price of Equity Compensation Plans
Outstanding Options, Outstanding Options, (Excluding Securities
Warrants and Rights Warrants and Rights Reflected in Column (a))
Plan Category (a) (b) (c)

Equity compensation plans approved by


security holders. . . . . . . . . . . . . . . . . . 21,138,961 $18.03 53,074,417(1)
Equity compensation plans not approved
by security holders . . . . . . . . . . . . . . . — — —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,138,961 $18.03 53,074,417

(1) Does not include deferred stock units (that vest over three years and may be settled in Shares) that have been
issued pursuant to the Executive Plan. The Executive Plan as it was approved by stockholders at the 2005
Annual Meeting did not limit the number of deferred share units that may be issued. We are asking stockholders
to reapprove the Executive Plan, as amended, at this year’s Annual Meeting which provides that Shares issued
will be awarded under the Company’s 2004 Long-Term Incentive Compensation Plan. Includes
10,275,363 Shares that remain available for issuance under our Employee Stock Purchase Plan, a stock
purchase plan meeting the requirements of Section 423 of the Code.

17
EXECUTIVE AND DIRECTOR COMPENSATION

I. EXECUTIVE OFFICERS
Our executive officers and their positions as of March 17, 2010 are:
Name
(listed alphabetically, after
Chief Executive Officer) Position

Frits van Paasschen . . . . . . . . . . . . . . . . Chief Executive Officer and President and a Director
Matthew E. Avril . . . . . . . . . . . . . . . . . . President, Hotel Group
Jeffrey M. Cava. . . . . . . . . . . . . . . . . . . Executive Vice President and Chief Human Resources
Officer
Philip P. McAveety . . . . . . . . . . . . . . . . Executive Vice President and Chief Brand Officer
Vasant M. Prabhu . . . . . . . . . . . . . . . . . Vice Chairman and Chief Financial Officer
Kenneth S. Siegel . . . . . . . . . . . . . . . . . Chief Administrative Officer, General Counsel and
Secretary
Simon M. Turner . . . . . . . . . . . . . . . . . . President, Global Development
The biography for Mr. van Paasschen, our Chief Executive Officer and President, follows the table listing our
Directors under Election of Directors beginning on page 7 above. Biographies for our other executive officers are:
Matthew E. Avril. Mr. Avril, 49, has been President, Hotel Group since September 2008. From May 2005
until August 2008, he was President and Managing Director of Operations for Starwood Vacation Ownership
(“SVO”); and immediately prior, from September 2002 to May 2005, served as Senior Vice President for SVO.
Mr. Avril was with Vistana, Inc. (SVO’s predecessor entity) for the ten year period from January 1989 to December
1998, serving as its Executive Vice President and Chief Operating Officer and, prior to that, as the company’s Chief
Financial Officer. Prior to joining Vistana, Mr. Avril, a certified public accountant, spent five years with KPMG Peat
Marwick.
Jeffrey M. Cava. Mr. Cava, 58, has been Executive Vice President and Chief Human Resources Officer since
May 2008. Mr. Cava served as Executive Vice President and Chief Human Resources Officer for Wendy’s
International, Inc. from June 2003 to May 2008. Prior to joining Wendy’s, Mr. Cava was Vice President and Chief
Human Resources Officer for Nike, Inc.; Vice President Human Resources for The Walt Disney Company,
Consumer Products Group; and Vice President of Global Staffing, Training and Development for ITT Sheraton
Corporation. Mr. Cava is also a member of the board of directors for The Society for Human Resources
Management, a non-profit global human resources professional organization.
Philip P. McAveety. Mr. McAveety, 43, has been Executive Vice President and Chief Brand Officer since
April 2008. Prior to joining the company, Mr. McAveety was Global Brand Director of Camper, SL, a fashion
footwear company, from January 2007 until March 2008. From July 1997 until December 2006, he served as Vice
President, Brand Marketing, Europe, Middle East and Africa at Nike, Inc.
Vasant M. Prabhu. Mr. Prabhu, 50, has been Executive Vice President and Chief Financial Officer since
January 2004. In February 2010, he was also appointed as Vice Chairman of the Company. Prior to joining the
Company, Mr. Prabhu served as Executive Vice President and Chief Financial Officer for Safeway Inc., from
September 2000 through December 2003. Mr. Prabhu was previously the President of the Information and Media
Group at the McGraw-Hill Companies, Inc., from June 1998 to August 2000, and held several senior positions at
divisions of PepsiCo, Inc. from June 1992 to May 1998. From August 1983 to May 1992 he was a partner at Booz
Allen Hamilton Inc., an international management consulting firm. Mr. Prabhu is a director of Mattel, Inc.
Kenneth S. Siegel. Mr. Siegel, 54, has been Chief Administrative Officer and General Counsel since May
2006. From November 2000 to May 2006, Mr. Siegel held the position of Executive Vice President and General
Counsel. In February 2001, he was also appointed as the Secretary of the Company. Mr. Siegel was formerly the
Senior Vice President and General Counsel of Gartner, Inc., a provider of research and analysis on information
technology industries, from January 2000 to November 2000. Prior to that time, he served as Senior Vice President,
General Counsel and Corporate Secretary of IMS Health Incorporated, an information services company, and its

18
predecessors from February 1997 to December 1999. Prior to that time, Mr. Siegel was a Partner in the law firm of
Baker & Botts, LLP. Mr. Siegel is also a Trustee and Chairman of Cancer Hope Network, a non-profit entity, a
Trustee of Minority Corporate Counsel Association, and a Trustee of the American Hotel & Lodging Educational
Foundation.
Simon M. Turner. Mr. Turner, 48, has been President, Global Development since May 2008. From June
1996 to April 2008, he was a principal of Hotel Capital Advisers, Inc., a hotel investment advisory firm. During this
period, Mr. Turner served on the board of directors of Four Season Hotels, Inc., serving as a member of the Human
Resources Committee and the Audit Committee. He was also a member of the board of directors of Fairmont
Raffles Hotels International and was chairman of the Audit Committee. From July 1987 to May 1996, Mr. Turner
was a member of the Investment Banking Department of Salomon Brothers, based in both New York and London.

II. COMPENSATION DISCUSSION AND ANALYSIS


Introduction
The Company’s compensation programs are designed to align compensation with its business objectives and
performance, enabling the Company to attract, retain, and reward executive officers and other key employees who
contribute to the Company’s long-term success and motivate executive officers to enhance long-term stockholder
value. The Compensation Committee reviews and sets the Company’s overall compensation strategy for all
employees on an annual basis. In the course of this review, the Compensation Committee considers the Company’s
current compensation programs and whether to modify them or introduce new programs or elements of compen-
sation in order to better meet the Company’s overall compensation objectives.

A. Overview of Starwood’s Executive Compensation Program


1. Program Objectives and Other Considerations
Objectives. As a consumer lifestyle company with a branded hotel portfolio at its core, the Company
operates in a competitive, dynamic and challenging business environment. In step with this mission and environ-
ment, the Company’s executive compensation program for our principal executive officer, principal financial
officer and other executive officers has the following key objectives:
• Attract and Retain: We seek to attract and retain talented executives from within and outside the
hospitality industry who understand the importance of innovation, brand enhancement and consumer
experience. We are working to reinvent the hospitality industry, and one element of this endeavor is to bring
in key talent from other industries. Therefore, overall program competitiveness must take these other
markets into account.
• Motivate: We seek to motivate our executives to sustain high performance and achieve Company financial
and strategic/operational goals over the course of business cycles and various market conditions.
• Align Interests: We endeavor to align the interests of stockholders and our executives by tying executive
compensation to the Company’s business results and stock performance. Moreover, we strive to keep the
executive compensation program transparent, easily understood, in line with market practices and consistent
with high standards of good corporate governance.
In its review of the overall compensation strategy and program in 2008, the Compensation Committee made
several key changes, most of which became effective for the 2009 performance year. The Compensation Committee
changed its philosophy on tax gross-ups in change in control agreements and eliminated gross-ups for arrangements
put in place in 2008 and thereafter with senior executives. The Compensation Committee also revised the structure
of determining annual incentive compensation under the Company’s Executive Plan: with respect to the goal based
upon the Company’s financial performance, the Compensation Committee eliminated a floor below which
compensation could not fall; and with respect to bonus pool funding, the Compensation Committee made structural
changes to fund the pool entirely based upon the Company’s financial performance goals. Further, when translating
dollar-denominated long-term equity incentive awards into a number of stock options to be granted under the
Company’s 2004 Long-Term Incentive Compensation Plan (“LTIP”), the Compensation Committee lowered the
ratio from three times as many options as the number of Shares whose aggregate value on the grant date equals the

19
dollar-denominated award (i.e., a 3-to-1 ratio) to two and one-half times (i.e., a 2.5-to-1 ratio). These changes were
designed to better align compensation with (i) the creation and preservation of stockholder value and (ii) the
Company’s financial performance.

What the Program Intends to Reward. Our executive compensation program is strongly weighted toward
variable compensation tied to Company results. Specifically, our compensation program for our Named Executive
Officers is designed to ensure the following:

• Alignment with Stockholders: A significant portion of Named Executive Officer compensation is delivered
in the form of equity, ensuring that long-term compensation is strongly tied to stockholder returns.

• Achievement of Company Financial Objectives: A portion of Named Executive Officer compensation is


tied directly to the Company’s financial performance.

• Achievement of Strategic/Operational Objectives: A portion of Named Executive Officer compensation is


tied to achievement of specific individual objectives that are directly aligned with the execution of our
business strategy. These objectives may be related to, among others, operational excellence, brand
enhancement, innovation, growth, cost containment/efficiency, customer experience and/or teamwork.

• Overall Leadership and Stewardship of the Company: Leadership, teambuilding, and development of
future talent are key success factors for the Company and a portion of compensation for the Named
Executive Officers is dependent on satisfaction of core leadership competencies.

2. Roles and Responsibilities

The Compensation Committee is responsible for, among other things, the establishment and review of
compensation policies and programs for our executive officers and ensuring that these executive officers are
compensated in a manner consistent with the objectives and principles outlined above. It also monitors the
Company’s executive succession plan, and reviews and monitors the Company’s performance as it affects the
Company’s employees and the overall compensation policies for the Company’s employees.

The Compensation Committee makes all compensation decisions for our Named Executive Officers. Our
Chief Executive Officer, together with the Chief Human Resources Officer, reviews the performance of each other
Named Executive Officer and presents to the Compensation Committee his conclusions and recommendations,
including salary adjustments and annual incentive compensation amounts (as described in more detail in the
Annual Incentive Compensation section below). The Compensation Committee may exercise its discretion in
modifying any recommended salary adjustments or awards to these executives.

The role of the Company’s management is to provide reviews and recommendations for the Compensation
Committee’s consideration, and to manage operational aspects of the Company’s compensation programs, policies
and governance. Direct responsibilities include, but are not limited to, (i) providing an ongoing review of the
effectiveness of the compensation programs, including competitiveness, and alignment with the Company’s
objectives, (ii) recommending changes, if necessary, to ensure achievement of all program objectives and
(iii) recommending pay levels, payout and/or awards for executive officers other than the Chief Executive Officer.
Management also prepares tally sheets which describe and quantify all components of total compensation for our
Named Executive Officers, including salary, annual incentive compensation, long-term incentive compensation,
deferred compensation, outstanding equity awards, benefits, perquisites and potential severance and change in
control payments. The Compensation Committee reviews and considers these tally sheets in making compensation
decisions for our Named Executive Officers.

The Compensation Committee retained Pearl Meyer & Partners to assist in the review and determination of
annual fees or other compensation paid to our Board and the compensation awards to the Named Executive Officers
(including the Chief Executive Officer) for the 2009 performance period. Pearl Meyer & Partners worked with
management and the Compensation Committee in reviewing the compensation structure of the Company and of the
companies in the peer group. The fees paid to Pearl Meyer & Partners for services performed for the Compensation
Committee during 2009 were $122,573. Pearl Meyer & Partners does not provide any other services to the

20
Company and no other fees were paid to Pearl Meyer & Partners by the Company during 2009; however the Federal
Policy Group, an affiliate consulting firm of Pearl Meyer & Partners, provided services to the Company’s tax group.
The fees paid to the Federal Policy Group for services performed for the Company’s tax group during 2009 were
$320,004. The Compensation Committee believes that the services provided by the Federal Policy Group do not
impair the ability of Pearl Meyer & Partners to provide objective advice to the Compensation Committee regarding
Named Executive Officer compensation.

3. Risk Assessment.
In setting compensation, our Compensation Committee also considers the risks to our stockholders, and the
Company as a whole, arising out of our compensation programs. In March 2010, management held a special
meeting to discuss and assess the risk profile of our compensation programs. The Chief Human Resources Officer,
our Chief Administrative Officer and General Counsel, our Chief Financial Officer, and the Company’s external
legal counsel for compensation matters were among the participants in the special meeting. Their review considered
risk-determining characteristics of the overall structure and individual components of our Company-wide com-
pensation program, including our base salaries, incentive plans (both at the executive and property levels) and
equity plans. A report of the findings was provided to the Compensation Committee for its review and consid-
eration. Following this assessment, we believe that the Company has instituted policies that align our executive
officers’ interests with those of our stockholders without creating incentives for our executive officers to take risks
that are reasonably likely to have a material adverse effect on the Company. For example,
• Balance of Compensation: Across the Company, individual elements of our compensation program include
base salaries, incentive compensation, and for certain of our employees, equity-based awards. By providing a
mix of different elements of compensation which reward both short-term and long-term performance, the
Company’s compensation programs as a whole provide a balanced approach to incentivizing and retaining
employees, without placing an inappropriate emphasis on any particular form of compensation.
• Objective Formula and Pre-established Performance Measures Dictate Annual Incentives: Under the
Executive Plan, payment of annual incentives to our Named Executive Officers is subject to the satisfaction
of specific annual performance targets determined under an incentive formula established by our Com-
pensation Committee within the first 90 days of each fiscal year. Similarly, the Company’s employees other
than the Named Executive Officers that are eligible to receive an annual incentive receive such incentive
subject to the satisfaction of specific annual performance targets determined under an incentive formula
established by our Compensation Committee. These performance targets are directly and specifically tied to
one or more of the following business criteria: EBITDA, consolidated pre-tax earnings, net revenues, net
earnings, operating income, earnings before interest and taxes, cash flow measures, return on equity, return
on net assets employed or earnings per share for the applicable fiscal year.
• Minimum and Maximum Thresholds For Annual Incentives: Each year our Compensation Committee
establishes within the first 90 days of any fiscal year a threshold level of EBITDA that the Company must
achieve in order for any bonus to be paid to our Named Executive Officers or other Company employees
eligible to receive an annual incentive for any given year. The Executive Plan also specifies a maximum
incentive amount, in dollars, that may be paid to any executive officer for any 12-month performance period.
As a result of this threshold performance requirement and the design of our Executive Plan, incentive
compensation is payable under our incentive plans only upon the attainment of performance targets related
to business criteria that are in the interests of our stockholders.
• Use of Long-Term Incentive Compensation: Equity-based long-term incentive compensation that vests
over a period of years is a key component of total compensation of our executive employees. This vesting
period encourages our executives to focus on sustaining the Company’s long-term performance. These
grants are also made annually, so executives always have unvested awards that could decrease significantly
in value if our business is not managed for the long term.
• Alignment with Competitive Practice: Our Compensation Committee sets total compensation at a target
that is relative to the Company’s peer group. For the 2009 fiscal year, this target was set at approximately the
65th percentile, subject to both the Company’s and an individual’s performance.

21
• Share Ownership Guidelines: Our Share ownership guidelines require our executive officers, including the
Named Executive Officers, to hold that number of Shares having a market value equal to or greater than a
multiple of each executive’s base salary. For the Chief Executive Officer, the multiple is five times base
salary and for the other Named Executive Officers, the multiple is four times base salary. A retention
requirement of 35% is applied to restricted Shares upon vesting (net Shares after tax withholding) and Shares
obtained from option exercises until the executive meets the target, or if an executive falls out of compliance.
See the section entitled Share Ownership Guidelines on page 32 for a description of the securities that count
towards meeting the target and other considerations.
• Internal Processes Further Restrict Risk: The Company has in place additional processes to limit risk to
the Company from our compensation programs. Specifically, the Company has financial policies that restrict
the amount of capital that any individual may deploy absent obtaining internal approvals, which reduces the
risk of inappropriate expenditures by an individual. Further, our human resources executives meet peri-
odically with our internal audit personnel to review various controls in place with respect to our compen-
sation programs. In addition, the Company engages an external compensation consulting firm for design and
review of our compensation programs, as well as external legal counsel to assist with the periodic review of
our compensation plans to ensure compliance with applicable laws and regulations.

B. Elements of Compensation

1. Primary Elements
The primary elements of the Company’s compensation program for our Named Executive Officers are:
• Base Salary
• Incentive Compensation
O Annual Incentive Compensation
O Long-Term Incentive Compensation
• Benefits and Perquisites
Mr. van Paasschen’s compensation structure was established in 2007 pursuant to his employment agreement.
Mr. van Paasschen and the Company agreed to a compensation structure which was heavily weighted towards
performance and long-term incentives, including equity awards in the form of restricted stock and stock options and
restrictions on selling equity awards for two years (other than to satisfy tax withholding obligations). As a result, in
the event of strong financial and individual performance, Mr. van Paasschen would benefit greatly in the form of
long-term incentive compensation (stock options and restricted stock), but his compensation would be significantly
lower if the Company did not perform well or if his employment with the Company was terminated after a short
period of time (due to the vesting requirements of the equity awards under which there is generally no acceleration
of equity awards for a termination with or without cause). For the other Named Executive Officers, pay is structured
to award performance upon achievement of pre-established financial and strategic performance goals.
Total compensation for this group is evaluated against the peer group identified in this proxy statement. Evaluated
on this basis, the Compensation Committee believes the actual cash and equity compensation delivered for the 2009
performance year was appropriate in light of the Company’s overall performance and individual executive performance.
We describe each of the compensation elements below and explain why we pay each element and how we
determine the amount of each element.
Base Salary. The Company believes it is essential to provide our Named Executive Officers with com-
petitive base salaries that will enable the Company to continue to attract and retain critical senior executives from
within and outside the hospitality industry. In the case of Named Executive Officers other than the Chief Executive
Officer, base salary typically accounts for approximately 20% of total compensation at target (i.e., total compen-
sation assuming performance goals are satisfied at targeted levels, but excluding benefits and perquisites) and is

22
generally targeted at the median of the Company’s peer group. In the case of Mr. van Paasschen, base salary for 2009
was $1 million. As a result, base salary accounted for approximately 13% of total compensation at target for Mr. van
Paasschen. Base salary serves as a minimum level of compensation to Named Executive Officers in circumstances
when achieving Company financial and strategic/operational objectives becomes challenging and the level of
incentive compensation is impacted. Salaries for Named Executive Officers are generally based on the respon-
sibilities of each position and are reviewed annually against similar positions among a group of peer companies
developed by the Company and its advisors consisting of similarly-sized hotel and hospitality companies as well as
other companies representative of markets in which the Company competes for key executive talent. See the
Background Information on the Executive Compensation Program — Use of Peer Data section beginning on
page 31 below for a list of the peer companies used in this analysis. The Company generally seeks to position base
salaries of our Named Executive Officers at or near the market median for similar positions. Consequently, as a
result of an evaluation of executive salaries in the Company’s peer group, the compensation committee approved an
increase in February 2010 in Mr. van Paasschen’s base salary to $1,250,000, which sets his salary at the median of
salaries of Chief Executive Officers of the Company’s peer group. Similarly, in February 2010, the Compensation
Committee approved an increase in Mr. Prabhu’s base salary from $640,658 to $751,750.
Incentive Compensation. Incentive compensation includes annual bonus awards under the Company’s
Executive Plan as well as long-term incentive compensation in the form of equity awards under the Company’s
LTIP. Incentive compensation typically accounts for approximately 80% of total compensation at target (87% for
Mr. van Paasschen in 2009), with annual bonus compensation and long-term incentive compensation accounting for
20% and 60%, respectively (25% and 62% for Mr. van Paasschen, respectively, in 2009). The Company’s emphasis
on incentive compensation results in total compensation at target level that is set at approximately the 65th
percentile relative to the Company’s peer group, but that is highly dependent on performance. The Company
believes that this structure allows it to provide each Named Executive Officer with substantial incentive com-
pensation opportunities if performance objectives are met. The Company believes that the allocation between base
and incentive compensation is appropriate and beneficial because:
• it promotes the Company’s competitive position by allowing it to provide Named Executive Officers with
above-median total competitive compensation if targets are met;
• it targets and attracts highly motivated and talented executives within and outside the hospitality industry;
• it aligns senior management’s interests with those of stockholders;
• it promotes achievement of business and individual performance objectives; and
• it provides long-term incentives for Named Executive Officers to remain in the Company’s employ.
Annual Incentive Compensation. Annual bonuses are a key part of the Company’s executive com-
pensation program. The bonuses directly link the achievement of Company financial and strategic/operational
performance objectives to executive pay. Annual bonuses also provide a complementary balance to equity
incentives (discussed below). Each Named Executive Officer has an annual opportunity to receive an incentive
award under the stockholder-approved Executive Plan. If and when earned, awards are typically paid to Named
Executive Officers partly in cash and, unless the Compensation Committee otherwise elects, partly as deferred
stock awards (under the Executive Plan). The deferred stock awards generally vest over a three-year period.
See additional detail regarding these deferred stock awards in the Long-Term Incentive Compensation section
below.
Viewed on a combined basis once minimum performance is attained, the annual incentive payments
attributable to both Company financial and strategic/operational performance can range from 0% - 275% of
target for the Named Executive Officers, other than the Chief Executive Officer.

Minimum Threshold.
For the Named Executive Officers, an annual bonus award for 2009 was paid under the Executive Plan.
Under the Executive Plan, each year, the Compensation Committee establishes in advance a threshold level of
EBITDA that the Company must achieve in order for any bonus to be paid under the Executive Plan for that

23
year (the “EP Threshold”). The Executive Plan also specifies a maximum bonus amount, in dollars, that may
be paid to any executive for any 12-month performance period. When the threshold is established at the
beginning of a year, the achievement of the threshold is considered substantially uncertain for purposes of
Section 162(m), which is one of the requirements for compensation paid under the Executive Plan to be
deductible as performance-based compensation under Section 162(m). For 2009, the EP Threshold was
$680,000,000.

Generally, a Named Executive Officer will receive payment of a bonus award under the Executive Plan
only if he remains employed by the Company on the award payment date. However, subject to attaining the EP
Threshold in the relevant year, pro rata awards may be paid at the discretion of the Compensation Committee in
the event of death, disability, retirement or other termination of employment.

Once the EP Threshold is achieved, the maximum annual bonus amount specified in the Executive Plan
becomes available for each Named Executive Officer and the Compensation Committee may apply its
discretion to reduce such amount to the actual bonus amount for each individual. To determine the actual bonus
to be paid for a year under the Executive Plan, the Compensation Committee also establishes specific annual
Company financial and strategic/operational performance goals and a related target bonus amount for each
executive. These financial and strategic/operational goals are described below.

Additional Performance Criteria.

If the EP Threshold under the Executive Plan is met for a year, the Company’s performance in comparison
to the financial and strategic/operational goals for the year set by the Compensation Committee are then used
to determine a Named Executive Officer’s actual bonus, as follows:

Financial Goals.

The Company financial goals for Named Executive Officers under the Executive Plan consist of EBITDA
and earnings per share targets, with each criteria accounting for half of the financial goal portion of the annual
bonus. As the Company generally sets target bonus award opportunities above market median, the Company
financial and strategic/operational goals to achieve such award levels are considered challenging but
achievable, representing a superior level of performance. Consistent with maintaining these high standards
and subject to achieving the EP Threshold, the Compensation Committee retains the ability to consider
whether an adjustment of the financial goals for any year is necessitated by exceptional circumstances, e.g., an
unanticipated and material downturn in the business cycle that triggers, in response, an increased focus by the
Compensation Committee on the Company’s performance relative to the industry. This ability is intended to be
narrowly and infrequently used and, if applicable, the basis for its use would be detailed in the Company’s
annual meeting proxy statement.

Performance against the financial goals determined 60% of Mr. van Paasschen’s total target annual bonus
opportunity and 50% of the total target opportunities for the other Named Executive Officers. Subject to
achieving the EP Threshold, actual bonuses paid to Named Executive Officers for financial performance may
range from 0% to 200% of the pre-determined target bonus for this category of performance. For Named
Executive Officers, the Company financial performance portion is based 50% on earnings per share and 50%
on EBITDA of the Company.

As noted above, once the EP Threshold is achieved, the maximum annual bonus amount specified in the
Executive Plan becomes available and the Compensation Committee may apply its discretion to reduce such
amount to the actual bonus amount for each Named Executive Officer. Further, the bonus payout for the
applicable Company financial performance metric is limited to 200% of target (i.e., the “Maximum”). The
table below sets forth for each metric the performance levels for 2009 which would have resulted in 100%
bonus pool payout (i.e. “Target”), the minimum performance level (i.e., the “Minimum”) that would have
resulted in a 20% bonus pool payout following achievement of the EP Threshold and the Maximum that would

24
have resulted in a 200% payout. In addition, the table sets forth the approximate mid-points of payout between
the Minimum to Target and from Target to Maximum and indicates the related required performance level:
Minimum Mid-point Target(1) Mid-point Maximum
(20%) (75%) (100%) (150%) (200%)
Earnings per Share . . . . . . . $ 0.80 $ 0.90 $ 1.05 $ 1.23 $ 1.38
Company EBITDA . . . . . . . $680,000,000 $765,000,000 $862,500,000 $985,000,000 $1,094,000,000

(1) Reflects the average of the range of Target amounts: for earnings per Share, the range was $1.00 to $1.10;
for Company EBITDA, the range was $850,000,000 to 875,000,000.
For the 2009 performance period, EBITDA (which exceeded the EP Threshold) for purposes of
determining annual bonuses was $798,000,000, which reflects an adjusted EBITDA amount that is normalized
to exclude the potential impact of asset sales and/or foreign exchange swings. Actual results for earnings per
Share for purposes of determining annual bonuses were $0.985, which reflects earnings before special items.
Using the metrics described above resulted in a payout at 85% of target for the Company financial portion of
the annual bonus for the 2009 fiscal year for the Named Executive Officers.

Strategic/Operational Goals.
The strategic/operational performance goals for Named Executive Officers under the Executive Plan
consists of “Big 5” and leadership competency objectives that link individual contributions to execution of our
business strategy and major financial and operating goals. “Big 5” refers to each executive’s specific
deliverables within the Company’s critical performance categories — win with talent, execute brilliantly,
build great brands, deliver global growth, and drive outstanding results. As part of a structured process that
cascades down throughout the Company, these objectives are developed at the beginning of the year, and they
integrate and align an executive with the Company’s strategic and operational plan. Achievement of “Big 5”
objectives typically accounts for 80% of the strategic/operational performance evaluation, and achievement of
leadership competency objectives typically accounts for 20% of such evaluation. The portion of annual bonus
awards attributable to strategic/operational management performance represents 40% of Mr. van Paasschen’s
total target opportunity and 50% of the total target opportunities for the other Named Executive Officers.
Actual bonuses paid to Named Executive Officers for strategic/operational performance may range from 0% to
175% of the pre-determined target amount for this category of performance.

Evaluation Process.
In the case of Mr. van Paasschen, the Compensation Committee conducts a formal performance review
process each year during which the Compensation Committee evaluates how Mr. van Paasschen performed
against the strategic/operational/talent management performance goals established for the prior year. The
Compensation Committee also determines the extent to which the Company’s financial performance goals were
achieved and whether the Company achieved the applicable minimum threshold(s) required to pay awards.
With respect to the other Named Executive Officers, Mr. van Paasschen, together with the Chief Human
Resources Officer and with oversight and input from the Compensation Committee, conducts a formal
performance review process each year to evaluate performance against the officer’s strategic/operational
performance goals for the prior year. The Chief Executive Officer conducts this evaluation through the
Performance Management Process (“PMP”), which results in a PMP rating for each executive. This PMP
rating corresponds to a payout range under the Executive Plan determined annually by the Compensation
Committee for that rating. As noted, for 2009 the portion of the Executive Plan payouts based on PMP ratings
could range from 0% to 175% of target once the target has been adjusted to reflect the Company’s
performance. Where necessary to preserve the competitive position of the Company’s compensation scale,
the Chief Executive Officer may recommend a market adjustment to the base amount that is subjected to this
percentage. At the conclusion of his review, the Chief Executive Officer submits his recommendations to the
Compensation Committee for final review and approval. In determining the actual award payable to a Named
Executive Officer under the Executive Plan, the Compensation Committee reviews the Chief Executive
Officer’s evaluation and makes a final determination as to how the executive performed against his strategic/

25
operational goals for the year. The Compensation Committee also determines, based on management’s report,
the extent to which the Company’s financial performance goals were achieved and whether the Company
achieved the applicable minimum threshold(s) required to pay awards. The Chief Executive Officer also meets
in executive session with the Board of Directors to inform the Board of his performance assessments regarding
the Named Executive Officers and the basis for the compensation recommendations he presented to the
Compensation Committee.
The evaluation of Mr. van Paasschen and the other Named Executive Officers with respect to each
executive’s strategic/operational goals for 2009 is described below.
Mr. van Paasschen’s accomplishments for the 2009 performance year included the following:
• Strengthened the Company’s financial position by reducing the Company’s total debt by approximately
$1 billion (from $4 billion to $3 billion) through multiple assets sales and lower capital expenditures, and
extended the Company’s maturities so that no debt is due before 2012;
• Continued cost reduction efforts within the organization, including a redesign of the expatriate benefit
structure and our healthcare and other benefits programs offered in the United States;
• Progressed an innovation agenda that included a revitalization of the Sheraton brand, global roll-out of the
W brand, and the introductions of our newest brands Aloft and Element, the latter of which is the world’s first
major hotel brand to mandate that all its properties pursue the U.S. Green Building Council’s (USGBC)
Leadership in Energy and Environmental Design (LEED) certification;
• Furthered strong growth in the Company’s hotel portfolio by opening 83 new hotels and signing agreements
for an additional 77 new hotels and 36 re-engagements or changes to ownership involving existing
hotels; and
• Achieved increased employee satisfaction scores despite the economic climate, built a sense of identity and
cohesion among the Company’s top 100 managers and maintained stability of personnel in our key positions.
In light of Mr. van Paasschen’s accomplishments and impact on the Company, the Compensation
Committee awarded him a payout at 85% of target for the strategic/operational portion of the annual bonus, for
a total annual bonus of $1,700,000 for 2009, representing 85% of his overall annual bonus target. In addition,
Mr. van Paasschen was awarded a special bonus enhancement of $800,000 for addressing the Company’s
liquidity, balance sheet, cost structure and competitive positioning as the Company navigated through an
industry recession. In awarding this special bonus enhancement, the Compensation Committee also consid-
ered Mr. van Paasschen’s accomplishments for the 2009 performance year, as well as the maximum incentive
amount, in dollars, that could be awarded to Mr. van Paasschen for such period under the Executive Plan
(which amount has not been exceeded).
Mr. Avril’s accomplishments for the 2009 performance year included the following:
• Led cost reduction efforts of overhead expenses at our divisional offices and owned properties in light of the
difficult economic climate and recession in the hotel industry, which resulted in cost savings of approx-
imately $74 million beyond expected savings from lower occupancies;
• Effectively managed issues arising from distressed properties within the Company’s hotel network to
provide needed assistance to our owners while minimizing financial exposure to the Company;
• Led global initiatives to strengthen the Company’s revenue management capabilities, including improving
the Company’s proprietary software known as TLPe, enhancing the training and development of revenue
managers and accelerating the global deployment and installation of the improved system at our hotels;
• Achieved increased customer satisfaction scores with both retail consumers and meeting planners in
Company survey measures despite the tough economic climate; and
• Developed key relationships with hotel owners, joint venture partners and our Company’s personnel to drive
an enhanced guest experience, better owner relations, and the retention of essential personnel.

26
In light of Mr. Avril’s accomplishments in 2009, he received a “meets expectations” performance rating
and was awarded a payout at 85% of target for the strategic/operational portion of the annual bonus, for a total
annual bonus equal to 85% of his overall annual bonus target.

Mr. Prabhu’s accomplishments for the 2009 performance year included the following:
• Orchestrated a comprehensive strategy to substantially enhance the Company’s liquidity position and reduce
leverage: raised over $1.6 billion in cash, reduced the Company’s debt by approximately $1 billion, repaid
all of the Company’s maturities that were coming due in 2009 through 2011 and reduced the Company’s
obligation under 2012 and 2013 maturities by approximately $300 million;
• Led a major restructuring and cost containment effort of the Company’s finance and IT teams to drive
effectiveness and efficiency;

• Successfully delivered a company income tax rate well below budget;

• Exceeded operating cash flow goals by approximately $155 million; and

• Completed and rolled out a new Global Reservation System for the Company’s hotel network.
In light of Mr. Prabhu’s accomplishments, he received an “exceeds expectations” performance rating and the
Compensation Committee awarded him a payout at 85% of target for the strategic/operational portion of the annual
bonus, for a total annual bonus equal to 85% of his overall annual bonus target. In addition, Mr. Prabhu was awarded
a special bonus enhancement of $207,191 for addressing the Company’s liquidity, balance sheet, cost structure and
competitive positioning as the Company navigated through an industry recession. In awarding this special bonus
enhancement, the Compensation Committee also considered Mr. Prabhu’s accomplishments for the 2009 perfor-
mance year, as well as the maximum incentive amount, in dollars, that could be awarded to Mr. Prabhu for such
period under the Executive Plan (which amount has not been exceeded).

Mr. Siegel’s individual accomplishments for the 2009 performance year included the following:
• Commenced litigation against certain former Company employees and their employer to mitigate the effects
of a substantial theft of intellectual property from the Company;
• Identified and negotiated a deal for new headquarters office space which will result in average annual cost
savings to the Company of over $2 million and include over $85 million in Connecticut state incentives to
facilitate the move;

• Successfully managed the legal department in handling multiple transactions, including asset dispositions,
such as the sale of the Bliss business, bond financings, securitizations, real estate dispositions and over
125 hotel management and franchise transactions, with minimal use of outside counsel;

• Continued cost reduction efforts by negotiating an average 10% reduction in law firm rates for outside
counsel; and

• Designed our new Global Citizenship program by identifying a partner for environmental sustainability,
repositioning our long-standing relationship with UNICEF, instituting environmental programs at our
properties and divisional offices worldwide and implementing our new Sustainability Resource Center.

In light of Mr. Siegel’s accomplishments, he received a “meets expectations” performance rating and was
awarded a payout at 85% of target for the strategic/operational portion of the annual bonus, for a total annual
bonus equal to 85% of his overall annual bonus target.

Mr. Turner’s accomplishments for the 2009 performance year included the following:

• Successfully managed the global development team in achieving an additional 77 new hotels and
36 re-engagements or changes to ownership involving existing hotels;

• Completed hotel and other non-core property transactions generating pre-tax proceeds of $226 million
despite the depressed economic environment;

27
• Upgraded our global pipeline tracking system and ongoing processes to provide a more effective man-
agement tool to monitor and drive global development activities and to enhance the accuracy of public
reporting of our pipeline activity;
• Completed a global assessment of strengths and weaknesses of our brands and orchestrated a global multi-
disciplinary analysis of growth prospects and hurdles in respect of certain brands; and
• Increased stability among the global development team, championed a team-focused personnel environ-
ment, and effected strategic transitions in key positions to improve team performance.
In light of Mr. Turner’s accomplishments in 2009, he received a “meets expectations” performance rating
and was awarded a payout at 85% of target for the strategic/operational portion of the annual bonus, for a total
annual bonus equal to 85% of his overall annual bonus target.
Overall, the Compensation Committee paid the Named Executive Officers individual bonuses under the
Executive Plan at 85% of target, which reflected the target payout based upon the Company’s financial
performance goals, and the contribution made by each of the Named Executive Officers under his strategic/
operational goals. In addition, the Compensation Committee awarded Messrs. van Paasschen and Prabhu
special one-time cash bonus enhancements in respect of their individual contributions in 2009.
Annual awards made to our Named Executive Officers under the Executive Plan with respect to 2009
performance are reflected in the Summary Compensation Table on page 34 and described in the accom-
panying narrative.
Long-Term Incentive Compensation. Like the annual incentives described above, long-term incentives
are a key part of the Company’s executive compensation program. Long-term incentives are strongly tied to
returns achieved by stockholders, providing a direct link between the interests of stockholders and the Named
Executive Officers. Long-term incentive compensation for our Named Executive Officers consists primarily of
equity compensation awards granted annually (in February of each year following the announcement of the
Company’s earnings for the previous year) under the Company’s LTIP and secondarily of the portion of the
Executive Plan awards that are deferred in the form of deferred stock awards. Taken together, approximately
63% of total compensation at target award levels is equity-based long-term incentive compensation.
The Compensation Committee grants awards under the LTIP to Mr. van Paasschen that are a combination
of stock options and restricted stock. Mr. van Paasschen’s employment agreement, which reflects an emphasis
on performance and long-term incentives, provides that in the event of strong financial and individual
performance Mr. van Paasschen benefits greatly in the form of long-term incentive compensation that, for the
2009 fiscal year, would not be less than $5,000,000. The Compensation Committee generally grants awards
under the LTIP to all other Named Executive Officers that are a combination of stock options and restricted
stock awards. For the other Named Executive Officers, compensation is also geared towards performance and
long-term incentives, but to a lesser degree than Mr. van Paasschen. The Compensation Committee believes an
emphasis on long-term equity compensation (i.e., stock options and restricted stock) is particularly appropriate
for the leader of a management team committed to the creation of stockholder value.
In 2009, for all Named Executive Officers the Compensation Committee used a grant approach in which
the award is articulated as a dollar value. Under this approach, an overall award value, in dollars, was
determined for each executive based upon our compensation strategy and competitive market positioning. The
Compensation Committee generally targeted the value of these awards so that total compensation at target
levels is set at the 65th percentile of our peer group, though individual awards may have been higher or lower
based on individual performance (determined as described in the Annual Incentive Compensation assessment
above).
The Compensation Committee determines the appropriate mix of restricted stock and stock options to be
given to our Named Executive Officers. For 2009, the Compensation Committee determined that a split of 75%
of restricted stock awards and 25% of stock options was the appropriate balance to maximize cost effectiveness
and encourage equity ownership among our management. The number of shares of restricted stock was
calculated by dividing 75% of the award value by the fair market value of the Company’s stock on the grant

28
date. The number of stock options was determined by dividing the remaining 25% of the award value by the
fair market value of the Company’s stock on the grant date and multiplying the result by two and one-half. The
Named Executive Officers are able to elect a greater portion of options (up to 100% options). Based on the
factors set forth above, including the Company’s performance and individual performance of each Named
Executive Officer in 2009, the Compensation Committee believes that equity award grants in 2009 were
appropriate.
The exercise price for each stock option is equal to fair market value of the Company’s common stock on
the option grant date. See the section entitled Equity Grant Practices on page 32 below for a description of the
manner in which we determine fair market value for this purpose. Currently, most stock options vest in 25%
increments annually starting with the first anniversary of the date of grant. For stock options granted in 2009,
awards granted to associates who are retirement eligible, as defined in the LTIP, vest in 16 equal quarterly
periods. Unexercised stock options expire 8 years from the date of grant, or earlier in the event of termination
of employment. Stock options provide compensation only when vested and only if the Company’s stock price
appreciates and exceeds the exercise price of the option. Therefore, during business downturns, option awards
may not represent any economic value to an executive.
Named Executive Officers have a mandatory deferral of 25% of their awards under the Executive Plan in
the form of deferred stock awards, unless reduced in the discretion of the Compensation Committee. As such,
the awards combine performance-based compensation with a further link to stockholder interests. First,
amounts must be earned based on annual Company financial and strategic/operational performance under the
Executive Plan. Second, these already earned amounts are put at risk through a vesting schedule. Vesting
occurs in installments for employment over a three-year period. Third, these earned amounts become subject to
share price performance. Primarily in consideration of this vesting risk being applied to already earned
compensation (but also taking into account the enhanced stockholder alignment that results from being subject
to share performance), the deferred amount is increased by 33% of value. For awards granted in 2009 or later,
vesting will accelerate in the event of death, disability or retirement.
Restricted stock awards and restricted stock provide some measure of mitigation of business cyclicality
while maintaining a direct tie to share price. The Company seeks to enhance the link to stockholder performance
by building a strong retention incentive into the equity program. Consequently, for 2009 grants, 100% of
restricted stock units and awards vest on the third anniversary of the date of grant. For restricted stock granted in
2009, awards granted to associates who are retirement eligible, as defined in the LTIP, vest in twelve equal
quarterly periods. This delayed vesting places an executive’s long-term compensation at risk to share price
performance for a significant portion of the business cycle, while encouraging long-term retention of executives.
Pursuant to his employment agreement, Mr. van Paasschen agreed not to sell any Company stock awards
or Shares received on exercise of options (except as may be withheld for taxes) without prior consultation with
the Board of Directors.
Benefits and Perquisites. Base salary and incentive compensation are supplemented by benefits and
perquisites.
Current Benefits. The Company believes the employee benefits it provides are consistent with local
practices and competitive markets, including group health benefits, life and disability insurance, dependent
care flexible spending accounts, health savings account, and a pre-tax premium payment arrangement. Each of
these benefits is provided to a broad group of employees within the Company and our Named Executive
Officers participate in the arrangements on the same basis as other employees.
Perquisites. As reflected in the Summary Compensation Table below, the Company provides certain
limited perquisites to select Named Executive Officers when necessary to provide an appropriate compen-
sation package, particularly in connection with enabling the executives and their families to smoothly
transition from previous positions which may require relocation. For example, Mr. van Paasschen and his
immediate family had access to a Company owned or leased airplane on an “as available” basis for personal
travel, i.e., assuming such plane was not needed for business purposes, with an obligation to reimburse for
personal use based upon the Company’s operating cost. The Company also reimburses Named Executive

29
Officers generally for travel expenses and other out-of-pocket costs incurred with respect to attendance by their
spouses at one meeting of the Board each year.
Retirement Benefits. The Company maintains a tax-qualified retirement savings plan pursuant to Code
section 401(k) for a broadly-defined group of eligible employees that includes the Company’s Named
Executive Officers. Eligible employees may contribute a portion of their eligible compensation to the plan on a
before-tax basis, subject to certain limitations prescribed by the Code. Prior to 2008, the Company matched
100% of the first 2% of eligible compensation and 50% of the next 2% of eligible compensation that an eligible
employee contributes. Beginning in 2008, the Company matches 100% of the first 1% of eligible compen-
sation and 50% of the next 6% of eligible compensation that an eligible employee contributes. These matching
contributions, as adjusted for related investment returns, become fully vested upon the eligible employee’s
completion of three years of service with the Company. Our Named Executive Officers, in addition to certain
other eligible employees, were permitted to make additional deferrals of base pay and regular annual incentive
awards under our nonqualified deferred compensation plan. This plan is discussed in further detail under the
heading Nonqualified Deferred Compensation on page 40.

2. Change in Control Arrangements


On March 25, 2005, the Company adopted a policy proscribing certain terms of severance agreements
triggered upon a change in control of the Company. Pursuant to the policy, the Company is required to seek
stockholder approval of severance agreements with executive officers that provide Benefits (as defined in the
policy) in excess of 2.99 times base salary plus such officer’s most recent annual incentive award.
In 2006, the Board reviewed the change in control arrangements then in place with the Named Executive Officers
and decided to enter into new change in control agreements with the Named Executive Officers at that time, which
included Messrs. Prabhu and Siegel. In connection with the hiring of Mr. Turner and the promotion of Mr. Avril in
September 2008 to President, Hotel Group, the Company entered into change in control arrangements with them that
were similar to the arrangements in place for the other Named Executive Officers (other than the Chief Executive
Officer). Pursuant to the Company’s 2008 policy decision to cease paying tax gross-ups in change in control agreements,
the arrangements with Messrs. Turner and Avril, however, do not provide for a tax gross-up if the benefits payable
thereunder are subject to the excise tax under Section 280G of the Code. Instead, the benefits provided are reduced to the
point that it would be more advantageous to the executive to pay the excise tax rather than reduce benefits further. The
Company also included change in control arrangements in Mr. van Paasschen’s employment agreement.
These change in control arrangements are described in more detail beginning on page 41 under the heading
entitled Potential Payments Upon Termination or Change in Control. The change in control severance agreements
are intended to promote stability and continuity of senior management. The Company believes that the provision of
severance pay to these Named Executive Officers upon a change in control aligns their interests with those of
stockholders. By making severance pay available, the Company is able to mitigate executive concern over employ-
ment termination in the event of a change in control that benefits stockholders. In addition, the acceleration of equity
compensation vesting in connection with a change in control provides these Named Executive Officers with protection
against equity forfeiture due to termination and ample incentive to achieve Company goals, including facilitating a
sale of the Company at the highest possible price per share, which would benefit both stockholders and executives. In
addition, the Company acknowledges that seeking a new senior position is a long and time-consuming process. Lastly,
each severance agreement permits the executive to maintain certain benefits for a period of two years following
termination and to receive outplacement services. The aggregate effect of our change in control provisions is intended
to focus executives on maximizing value to stockholders. In addition, should a change in control occur, benefits will be
paid after a “double trigger” event as described in Potential Payments Upon Termination or Change in Control. The
Company believes benefit levels have been set to be competitive with peer group practices.
In connection with Section 409A of the Code (“Section 409A), in 2008 the Company amended the employ-
ment arrangements with each of the Named Executive Officers (including the Chief Executive Officer). These
amendments made several technical changes designed to make the employment arrangements with such officers
comply with Section 409A and the final regulations issued thereunder, and generally affect the timing, but not the
amount of compensation of such officers under specified circumstances.

30
3. Additional Severance Arrangements

In 2007, the Company entered into a letter agreement with Mr. Prabhu clarifying that his severance included
the acceleration of 50% of unvested restricted stock and options in the event that his employment was terminated
without cause or by him for good reason. The clarification formally documented Mr. Prabhu’s existing severance
arrangements as part of his employment with the Company.

This additional severance arrangement is described in more detail beginning on page 41 under the heading
entitled Potential Payments Upon Termination or Change in Control.

C. Background Information on the Executive Compensation Program

1. Use of Peer Data

In determining competitive compensation levels, the Compensation Committee reviews data from several
major compensation consulting firms that reflects compensation practices for executives in comparable positions in
a peer group consisting of companies in the hotel and hospitality industries and companies with similar revenues in
other industries relevant to key talent recruitment needs. The executive team and Compensation Committee review
the peer group bi-annually to ensure it represents a relevant market perspective. The Compensation Committee
utilizes the peer group for a broad set of comparative purposes, including levels of total compensation, pay mix,
incentive plan and equity usage and other terms of employment. The Compensation Committee also reviews
Company performance against the performance of companies in this peer group. The Company believes that by
conducting the competitive analysis using a broad peer group, which includes companies outside the hospitality
industry, it is able to attract and retain talented executives from outside the hospitality industry. The Company’s
experience has proven that key executives with diversified experience prove to be major contributors to its
continued growth and success.

The peer group approved by the Compensation Committee for 2009 is set out below. We expect that it will be
necessary to update the list periodically.
Avon Products MGM Mirage
Carnival Corp. Nike, Inc.
Colgate Palmolive Corporation Simon Property Group Inc.
Estee Lauder Cos. Inc. Staples Inc.
Federal Express Corp. Starbucks Corp.
Host Hotels & Resorts Williams Sonoma Inc.
Kellogg Corporation Walt Disney Co.
Limited Brands Inc. Wyndham Worldwide Corporation
Marriott International, Inc. Yum Brands Inc.
McDonald’s Corp.

In performing its competitive analysis, the Compensation Committee typically reviews:

• base pay;

• target and actual total cash compensation, consisting of salary and target and actual annual incentive awards
in prior years; and

• direct total compensation consisting of salary, target and actual annual incentive awards, and the value of
option and restricted stock/restricted stock unit awards.

When establishing target compensation levels for 2009, the Compensation Committee reviewed peer group
data paid to named executive officers reported in proxy statements available as of February 2009 as provided by
Pearl Meyer & Partners.

31
2. Tax Considerations
Section 162(m) generally disallows a federal income tax deduction to public companies for compensation in
excess of $1,000,000 paid to the chief executive officer and the four other most highly compensated executive
officers. Qualified performance-based compensation is not subject to the deduction limit if certain requirements are
met. The Company believes that compensation paid under the Executive Plan for 2009 meets these requirements
and is generally fully deductible for federal income tax purposes, except with respect to the special bonus
enhancement awarded to Mr. van Paasschen.
In designing the Company’s compensation programs, the Compensation Committee carefully considers the
effect of this provision together with other factors relevant to its business needs. Therefore, in certain circumstances
the Company may approve compensation that does not meet these requirements in order to advance the long-term
interests of its stockholders and for the 2010 fiscal year the Compensation Committee approved an increase in
Mr. van Paasschen’s base salary from $1,000,000 to $1,250,000. The Company has historically taken, and intends to
continue taking, reasonably practicable steps to minimize the impact of Section 162(m). Accordingly, the
Compensation Committee has determined that each of the Named Executive Officers will participate under the
Executive Plan for 2010.
On October 22, 2004, the American Jobs Creation Act of 2004 was signed into law, adding Section 409A to the
Code and thereby changing the tax rules applicable to nonqualified deferred compensation arrangements effective
January 1, 2005. While final Section 409A regulations were not effective until January 1, 2009, the Company
believes it was operating in good faith compliance with Section 409A and the interpretive guidance thereunder. The
Company entered into amendments to the employment arrangements with its senior officers, including the Chief
Executive Officer and Named Executive Officers, and amended its bonus and compensation plans in December
2008 to meet the requirements of these regulations. A more detailed discussion of the Company’s nonqualified
deferred compensation plan is provided on page 40 under the heading Nonqualified Deferred Compensation.

3. Share Ownership Guidelines


The Company has adopted share ownership guidelines for our executive officers, including the Named
Executive Officers. Pursuant to the guidelines, the Named Executive Officers, including the Chief Executive
Officer, are required to hold that number of Shares having a market value equal to or greater than a multiple of each
executive’s base salary. For the Chief Executive Officer, the multiple is five times base salary and for the other
Named Executive Officers, the multiple is four times base salary. A retention requirement of 35% is applied to
restricted Shares upon vesting (net Shares after tax withholding) and Shares obtained from option exercises until the
executive meets the target, or if an executive falls out of compliance. Shares owned, stock equivalents (vested/
unvested units), and unvested restricted stock (pre-tax) count towards meeting ownership targets. However, stock
options do not count towards meeting the target. Officers have five years from the date of hire or, if later, the date
they first become subject to the policy to meet the ownership requirements.

4. Equity Grant Practices


Determination of Option Exercise Prices. The Compensation Committee grants stock options with an
exercise price equal to the fair market value of a Share on the grant date. Under the LTIP, the fair market value of our
common stock on a particular date is determined as the average of the high and low trading prices of a Share on the
NYSE on that date.
Timing of Equity Grants. The Compensation Committee generally makes annual equity compensation
grants to Named Executive Officers following its first regularly scheduled meeting that occurs after the release of
the Company’s earnings for the prior year (typically the grant date is the last business day in February). The timing
of this meeting is determined based on factors unrelated to the pricing of equity grants.
The Compensation Committee approves equity compensation awards to a newly hired Executive Officer at the
time that the Board meets to approve the executive’s employment package. Generally, the date on which the Board
approves the employment package becomes the grant date of the newly-hired Executive Officer’s equity com-
pensation awards. However, if the Company and the new Executive Officer enter into an employment agreement

32
regarding the employment relationship, the Company requires the Executive Officer to sign his employment
agreement shortly following the date of Board approval of the employment package; the later of the date on which
the Executive Officer signs his employment agreement or the date that the Executive Officer begins employment
becomes the grant date of these equity compensation awards.
The Company’s policy is that the grant date of equity compensation awards is always on or shortly after the
date the Compensation Committee approves the grants, which is generally in February. However, the Compensation
Committee has the discretion under unusual circumstances to award grants at other times in the year.

III. COMPENSATION COMMITTEE REPORT


The Compensation and Option Committee of the Board of Directors of Starwood Hotels & Resorts Worldwide,
Inc. (the “Company”) has reviewed and discussed the Compensation Discussion and Analysis required by
Item 402(b) of Regulation S-K with management and, based on such review and discussions, recommended to
the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Proxy
Statement for the 2010 Annual Meeting of Stockholders.
COMPENSATION AND OPTION COMMITTEE
Adam M. Aron, Chairman
Clayton C. Daley, Jr.
Bruce W. Duncan
Lizanne Galbreath
Kneeland C. Youngblood

33
IV. SUMMARY COMPENSATION TABLE

The table below sets forth a summary of the compensation received by the Named Executive Officers for the
past three years, except for Mr. Avril, who became a Named Executive Officer in 2008, and Mr. Turner, who was
hired in 2008:
Non-equity
Name and principal Position Stock Option incentive plan All other
(listed alphabetically following the Salary Bonus awards awards compensation compensation Total
Chief Executive Officer) Year ($) ($) ($)(1) ($)(2) ($)(3) ($)(4) ($)
Frits van Paasschen . . . . . . . . . . 2009 1,000,000 600,000(5) 150,125 5,151,077 1,275,000 63,832 8,240,034
Chief Executive Officer and 2008 1,000,000 — 44,421 1,742,402 1,365,000 522,538 4,674,361
President since September 24, 2007 2007 270,833 1,500,000 5,249,997 1,331,521 403,800 347,402 9,103,553
Matthew E. Avril . . . . . . . . . . . . 2009 725,000 — 44,269 1,545,324 462,187 82,908 2,859,688
President, Hotel 2008 601,896 — 2,621,756 376,360 402,375 188,103 4,190,490
Group since September 2008
Vasant M. Prabhu . . . . . . . . . . . 2009 640,658 155,393(5) 1,298,096 1,287,769 408,419 112,271 3,902,606
Vice Chairman and 2008 638,054 — 1,335,578 1,332,945 437,249 93,380 3,837,206
Chief Financial Officer 2007 617,927 — 2,312,459 715,804 550,809 85,896 4,282,895
Kenneth S. Siegel . . . . . . . . . . . . 2009 615,039 — 46,166 1,957,411 392,088 116,139 3,126,843
Chief Administrative 2008 612,539 — 1,564,371 522,721 419,764 102,515 3,221,910
Officer, General Counsel and 2007 583,232 — 2,305,559 715,804 585,037 51,908 4,241,540
Secretary
Simon M. Turner . . . . . . . . . . . . 2009 625,000 — 34,369 2,575,538 398,437 27,910 3,661,254
President, Global 2008 407,197 500,000 — 2,497,898 312,500 30,013 3,747,608
Development Group since
May 2008

(1) Represents the grant date fair value for restricted stock and unit awards granted during the year computed in
accordance with ASC 718. For additional information, refer to Note 21 of the Company’s financial statements
filed with the SEC as part of the Form 10-K for the year ended December 31, 2009. These amounts reflect the
grant date fair value for these awards and do not correspond to the actual value that will be recognized by the
Named Executive Officers. See the Grants of Plan-Based Awards Table on page 36 for information on awards
granted in 2009.
(2) Represents the grant date fair value for stock option awards granted during the year computed in accordance
with ASC 718. For additional information, refer to Note 21 of the Company’s financial statements filed with the
SEC as part of the Form 10-K for the year ended December 31, 2009. These amounts reflect the grant date fair
value for these awards and do not correspond to the actual value that will be recognized by the Named Executive
Officers. See the Grants of Plan-Based Awards Table on page 36 for information on awards granted in 2009.
(3) Represents cash awards paid in March 2010, 2009 and 2008 with respect to performance in 2009, 2008 and
2007, respectively, determined under the Executive Plan, as discussed under the Annual Incentive
Compensation section beginning on page 23. Cash incentive awards exclude the following amounts that
were deferred into deferred stock units and increased by 33% in accordance with the Executive Plan:
Name 2009 Amount Deferred 2008 Amount Deferred 2007 Amount Deferred

van Paasschen . . . . . . . . . . . . . 625,000(A) 455,000 134,600


Avril . . . . . . . . . . . . . . . . . . . . . 154,063 134,125 —
Prabhu . . . . . . . . . . . . . . . . . . . 187,938(B) 145,750 183,603
Siegel . . . . . . . . . . . . . . . . . . . . 130,696 139,922 195,013
Turner . . . . . . . . . . . . . . . . . . . 132,813 104,167 —
(A) This amount is an aggregate of cash incentive awards deferred in respect of the 2009 fiscal year, which
includes $200,000 deferred from a special one-time cash bonus enhancement awarded by the Compen-
sation Committee.
(B) This amount is an aggregate of cash incentive awards deferred in respect of the 2009 fiscal year, which includes
$51,798 deferred from a special one-time cash bonus enhancement awarded by the Compensation Committee.

34
(4) Pursuant to SEC rules, perquisites and personal benefits are not reported for any Named Executive Officer for
whom such amounts were less than $10,000 in the aggregate for 2009, 2008 and 2007 but must be identified by
type for each Named Executive Officer for whom such amounts were equal to or greater than $10,000 in the
aggregate. In that regard, the All Other Compensation column of the Summary Compensation Table includes
perquisites and other personal benefits consisting of the following: annual physical examinations, COBRA
premiums paid by the Company, Company contributions to the Company’s tax-qualified 401(k) plan, dividends
on restricted stock, life insurance premiums, legal fees paid by the Company, spousal accompaniment while on
business travel, and tax and financial planning services. SEC rules require specification of the cost of any
perquisite or personal benefit when this cost exceeds $25,000. This applies to Mr. van Paasschen’s personal
travel (discussed below). These amounts are included in the All Other Compensation column.
The net aggregate incremental cost to the Company of Mr. van Paasschen’s personal use of the Company-
owned plane and chartered aircraft was $3,746 in 2009, all of which he reimbursed to the Company in January
2010; $329,480 in 2008; and $165,606 in 2007. With respect to expenses incurred in 2008 and 2007, Mr. van
Paasschen’s employment agreement provides that the Company would provide Mr. van Paasschen with up to a
$500,000 credit for personal use of the Company’s aircraft during the first 12 months of his employment with
the Company. The amount for 2007 also includes relocation benefits which had an aggregate cost of $132,275
and the reimbursement of $44,556 for legal fees incurred in connection with the negotiation of his employment
agreement. These amounts (other than the reimbursed expenses for use of the Company-owned plane and
chartered aircraft in 2009) are included in the All Other Compensation column.
The cost of the Company-owned plane includes the cost of fuel, ground services and landing fees, navigation
and telecommunications, catering and aircraft supplies, crew expenses, aircraft cleaning and an allocable share
of maintenance. Pursuant to SEC rules, the following table specifies the value for each element of All Other
Compensation not specified above (other than perquisites and personal benefits) that is valued in excess of
$10,000.
Dividend Dividend Dividend
Equivalents on Equivalents on Equivalents on
Restricted Stock Relocation Restricted Stock Relocation Restricted Stock
Name ($) (2009) ($) (2009) ($) (2008) ($) (2008) ($) (2007)

van Paasschen . . . . . . . — 31,438 — 165,328 —


Avril . . . . . . . . . . . . . . . 57,254 — 150,728 — —
Prabhu . . . . . . . . . . . . . 85,186 — 69,917 — 63,530
Siegel . . . . . . . . . . . . . . 89,225 — 76,538 — 24,199
Turner . . . . . . . . . . . . . — — — — —
(5) Represents special one-time cash bonus enhancements, less deferred amounts, awarded by the Compensation
Committee in recognition of 2009 accomplishments.

35
V. GRANTS OF PLAN-BASED AWARDS
The table below sets forth a summary of the grants of plan-based incentive awards to the Named Executive
Officers made during 2009:
All Other All Other
Grant Stock Option
date (or Awards: Awards: Exercise Grant Date
Name year with Compensation Number of Number of or Base Fair Value
(listed alphabetically respect to Committee Estimated Future Payouts Under Shares of Securities Price of of Stock
by name following the non-equity Approval Non-Equity Incentive Plan Awards(1) Stock or Underlying Option and Option
Chief Executive incentive plan date Threshold Target Maximum Units Options Awards Awards
Officer) (a) award) (b) (c) ($) (d) ($) (e) ($) (f) (#) (g) (#) (2) (h) ($/Sh) (i) (3) ($) (4) (j)

van Paasschen . . . . . 2/27/2009 2/09/2009 1,097,936 11.39 5,151,077


3/02/2009 (5) 56,715(5) 605,149
2009 0 2,000,000 9,000,000(7)
Avril . . . . . . . . . . . 2/27/2009 2/09/2009 329,381 11.39 1,545,324
3/02/2009 (5) 16,718(5) 178,381
2009 145,000 725,000 1,993,750
Prabhu . . . . . . . . . 2/27/2009 2/09/2009 274,484 11.39 1,287,769
2/27/2009 2/09/2009 109,794(6) 1,250,005
3/02/2009 (5) 18,168(5) 193,853
2009 128,132 640,658 1,761,810
Siegel . . . . . . . . . . 2/27/2009 2/09/2009 417,216 11.39 1,957,411
3/02/2009 (5) 17,441(5) 186,095
2009 123,008 615,039 1,691,357
Turner . . . . . . . . . . 2/27/2009 2/09/2009 548,968 11.39 2,575,538
3/02/2009 (5) 12,984(5) 138,539
2009 125,000 625,000 1,718,750

(1) Represents the potential values of the awards granted to the Named Executive Officers under the Executive Plan
if the threshold, target and maximum goals are satisfied for all applicable performance measures. See detailed
discussion of these awards in section VI. below.
(2) The options generally vest in equal installments on the first, second, third and fourth anniversary of their grant.
(3) The exercise price was determined by using the average of the high and low price of Shares on the grant date.
(4) Represents the fair value of the awards disclosed in columns (g) and (h) on their respective grant dates. For
restricted stock and restricted stock units, fair value is calculated in accordance with ASC 718 using the average
of the high and low price of Shares on the grant date. For stock options, fair value is calculated in accordance
with ASC 718 using a lattice valuation model. For additional information, refer to Note 21 of the Company’s
financial statements filed with the SEC as part of the Form 10-K for the year ended December 31, 2009. There
can be no assurance that these amounts will correspond to the actual value that will be recognized by the Named
Executive Officers. The amount recorded on the summary compensation table related to this benefit only
includes the 33% increase in Shares as the deferral of the bonus amount is disclosed separately.
(5) On March 2, 2009, in accordance with the Executive Plan, 25% of Messrs. van Paasschen, Avril, Prabhu, Siegel
and Turner’s annual bonus with respect to 2008 performance was credited to a deferred stock unit account on
the Company’s balance sheet, and the number of Shares was increased by 33%. These deferred stock units vest
in equal installments on the first, second and third fiscal year-ends following the date of grant, and vested units
are distributed on the earlier of (i) the third fiscal year-end or (ii) a termination of employment. Dividends are
paid to the Named Executive Officers in amounts equal to those paid to holders of Shares. No separate
Compensation Committee approval was required for award of these deferred stock units, which are provided by
plan terms.
(6) This award vests on the third anniversary of the grant date.
(7) Represents the maximum amount payable to any participant under the terms of the Executive Plan.

36
VI. NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF
PLAN-BASED AWARDS SECTION
We describe below the Executive Plan awards granted to our Named Executive Officers for 2009. These
awards are reflected in both the Summary Compensation Table on page 34 and the Grants of Plan-Based Awards
section on page 36.
Each of the Named Executive Officers received an award in March 2010 relating to his 2009 performance. The
table below presents for each Named Executive Officer his salary, target award as both a percentage of salary and a
dollar amount, actual award, the portion of the award that is deferred into restricted stock units and the related 33%
increase in his restricted stock units.
Increased
Award
Award Award Deferred Deferred into
Target into Restricted Restricted
Relative Award Actual Stock/Restricted Stock/Restricted
Salary to Salary Target Award Stock Units Stock Units
Name ($) (%) ($) ($) ($) ($)

van Paasschen(1) . . . . . . 1,000,000 200% 2,000,000 1,700,000 425,000 565,250


Avril . . . . . . . . . . . . . . . 725,000 100% 725,000 616,250 154,063 204,904
Prabhu(2) . . . . . . . . . . . 640,658 100% 640,658 544,559 136,140 181,066
Siegel . . . . . . . . . . . . . . . 615,039 100% 615,039 522,784 130,696 173,826
Turner . . . . . . . . . . . . . . 625,000 100% 625,000 531,250 132,813 176,641

(1) Mr. van Paasschen received an additional one-time special bonus enhancement of $800,000 relating to his 2009
performance, of which 25%, or $200,000, was deferred into restricted stock units. Following the 33% increase,
the amount deferred in respect of the one-time special bonus enhancement was $266,000.
(2) Mr. Prabhu received an additional one-time special bonus enhancement of $207,191 relating to his 2009
performance, of which 25%, or $51,798 was deferred into restricted stock units. Following the 33% increase,
the amount deferred in respect of the one-time special bonus enhancement was $68,891.
The following factors contributed to the Compensation Committee’s determination of the 2009 Executive Plan
awards for the Named Executive Officers:
• the Company’s 2009 financial performance as measured by EBIDTA and earnings per share;
• the strategic and operational performance goals for each Named Executive Officer that link individual
contributions to execution of our business strategy and major financial and operating goals; and
• the bonuses paid to executive officers performing comparable functions in peer companies,
as further described in the Annual Incentive Compensation assessment commencing on page 23 above.

37
VII. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information on the current holdings of stock options and stock awards by the
Named Executive Officers as of December 31, 2009. This table includes unexercised and unvested stock options,
unvested restricted stock and unvested restricted stock units. Each equity grant is shown separately for each Named
Executive Officer. The market value of the stock awards is based on the closing price of a Share on December 31,
2009, which was $36.57.
Option awards Stock awards
Number of Number of Market value
Securities Securities of Shares
Underlying Underlying Number of or Units of
Unexercised Unexercised Option Shares or Stock That
Name Options- Options Exercise Option Units of Stock Have Not
(listed alphabetically following Grant Exercisable Unexercisable Price Expiration That Have Not Vested
the Chief Executive Officer) Date (#)(1)(2) (#)(1)(2) ($)(1) Date Vested (#) ($)

van Paasschen . . . . . . . . . 9/24/2007 31,948 31,947 58.69 9/24/2015


2/28/2008 25,718 77,152 48.61 2/28/2016
2/27/2009 0 1,097,936 11.39 2/27/2017
9/24/2007 63,895(3) 2,336,640
3/03/2008 1,259(4) 46,042
3/02/2009 37,810(4) 1,382,712
Avril . . . . . . . . . . . . . . . . 2/10/2005 19,857 0 48.39 2/10/2013
2/07/2006 30,738 15,369 48.80 2/07/2014
2/28/2007 10,362 10,361 65.15 2/28/2015
2/28/2008 5,555 16,665 48.61 2/28/2016
2/27/2009 0 329,381 11.39 2/27/2017
2/28/2007 20,723(3) 757,840
2/28/2008 22,220(3) 812,585
3/03/2008 1,775(5) 64,912
9/02/2008 40,344(3) 1,475,380
3/02/2009 11,145(4) 407,573
Prabhu . . . . . . . . . . . . . . 2/02/2004 122,300 0 29.02 2/02/2012
2/18/2004 24,440 0 31.71 2/18/2012
2/10/2005 82,485 0 48.39 2/10/2013
2/07/2006 59,935 19,978 48.80 2/07/2014
2/28/2007 17,270 17,268 65.15 2/28/2015
2/28/2008 19,674 59,022 48.61 2/28/2016
2/27/2009 0 274,484 11.39 2/27/2017
2/28/2007 34,538(3) 1,263,055
2/28/2008 26,232(3) 959,304
3/03/2008 1,717(4) 62,791
2/27/2009 109,794(3) 4,015,167
3/02/2009 12,112(4) 442,936

38
Option awards Stock awards
Number of Number of Market value
Securities Securities of Shares
Underlying Underlying Number of or Units of
Unexercised Unexercised Option Shares or Stock That
Name Options- Options Exercise Option Units of Stock Have Not
(listed alphabetically following Grant Exercisable Unexercisable Price Expiration That Have Not Vested
the Chief Executive Officer) Date (#)(1)(2) (#)(1)(2) ($)(1) Date Vested (#) ($)

Siegel . . . . . . . . . . . . . . . 2/18/2004 30,550 0 31.71 2/18/2012


2/10/2005 45,824 0 48.39 2/10/2013
2/07/2006 42,264 21,132 48.80 2/07/2014
2/28/2007 17,270 17,268 65.15 2/28/2015
2/28/2008 7,716 23,145 48.61 2/28/2016
2/27/2009 0 417,216 11.39 2/27/2017
2/28/2007 34,538(3) 1,263,055
2/28/2008 30,861(3) 1,128,587
3/03/2008 1,824(4) 66,704
3/02/2009 11,627(4) 425,199
Turner . . . . . . . . . . . . . . 5/07/2008 33,806 101,418 53.25 5/07/2016
2/27/2009 0 548,968 11.39 2/27/2017
3/02/2009 8,656(4) 316,550

(1) In connection with the sale of 33 hotels to Host Hotels & Resorts, Inc., or Host, Starwood’s stockholders
received 0.6122 Host shares and $0.503 in cash for each of their Class B Shares. Holders of Starwood employee
stock options and restricted stock did not receive this consideration while the market price of Shares was
reduced to reflect the payment of this consideration directly to the holders of the Class B Shares. In order to
preserve the value of the Company’s options immediately before and after the Host transaction, the Company
adjusted its stock options to reduce the strike price and increase the number of stock options using the intrinsic
value method based on the Share price immediately before and after the transaction. The option information
above reflects the number of options granted and the option exercise prices after these adjustments were made.
(2) These options generally vest in equal installments on the first, second, third and fourth anniversary of their
grant.
(3) For awards granted in 2007, the restricted stock or restricted stock units generally vest 50% on each of the third
and fourth anniversaries of their grant date. For awards granted in 2008, the restricted stock or restricted stock
units generally vest 75% on the third anniversary and 25% on the fourth anniversary of the date of grant,
provided that Mr. Avril’s September 2, 2008 award will vest on the third anniversary of the grant date. For
awards granted in 2009, the restricted stock or restricted stock units generally vest 100% on the third
anniversary of their grant.
(4) These deferred restricted stock units vest in equal installments on the first, second and third fiscal year-ends
following the date of grant, and vested units are distributed on the earlier of (i) the third fiscal year-end or (ii) a
termination of employment.
(5) These shares of restricted stock generally vest in equal installments on the first and second anniversary of their
grant.

VIII. OPTION EXERCISES AND STOCK VESTED


The following table discloses, for each Named Executive Officer, (i) Shares acquired pursuant to exercise of
stock options during 2009, (ii) shares of restricted Company stock that vested in 2009, and (iii) Shares acquired in
2009 on account of vesting of restricted stock units. The table also discloses the value realized by the Named

39
Executive Officer for each such event, calculated prior to the deduction of any applicable withholding taxes and
brokerage commissions.
Option Awards Stock Awards
Number of Shares Number of Shares
Acquired on Value Realized Acquired on Value Realized
Exercise on Exercise Vesting on Vesting
Name (#) ($) (#) ($)

van Paasschen . . . . . . . . . . . .. — — — —
Avril . . . . . . . . . . . . . . . . . . .. — — 23,962 348,749
Prabhu . . . . . . . . . . . . . . . . .. — — 32,681 489,300
Siegel . . . . . . . . . . . . . . . . . .. — — 34,005 510,240
Turner . . . . . . . . . . . . . . . . .. — — — —

IX. NONQUALIFIED DEFERRED COMPENSATION


The Company’s Deferred Compensation Plan (the “Plan”) permits eligible executives, including our Named
Executive Officers, to defer up to 100% of their Executive Plan bonus, as applicable, and up to 75% of their base
salary for a calendar year. The Company does not contribute to the Plan.
Executive Registrant Aggregate Aggregate Aggregate
Contributions in Contributions Earnings Withdrawals/ Balance at
Last FY in Last FY in Last FY Distributions Last FYE
Name ($) ($) ($) ($) ($)

van Paasschen . . . . . . . . . . — — 130,418 — 501,732


Avril . . . . . . . . . . . . . . . . . . — — — — —
Prabhu . . . . . . . . . . . . . . . . — — — — —
Siegel . . . . . . . . . . . . . . . . . — — — — —
Turner . . . . . . . . . . . . . . . . — — — — —
Deferral elections are made in December for base salary paid in pay periods beginning in the following
calendar year. Deferral elections are made in June for annual incentive awards that are earned for performance in
that calendar year but paid in March of the following year. Deferral elections are irrevocable.
Elections as to the time and form of payment are made at the same time as the corresponding deferral election.
A participant may elect to receive payment on February 1 of a calendar year while still employed or either 6 or
12 months following employment termination. Payment will be made immediately in the event a participant
terminates employment on account of death, disability or on account of certain changes in control. A participant
may elect to receive payment of his account balance in either a lump sum or in annual installments, so long as the
account balance exceeds $50,000; otherwise payment will be made in a lump sum.
If a participant elects an in-service distribution, the participant may change the scheduled distribution date or
form of payment so long as the change is made at least 12 months in advance of the scheduled distribution date. Any
such change must provide that distribution will commence at least five years later than the scheduled distribution
date. If a participant elects to receive a distribution upon employment termination, that election and the corre-
sponding form of payment election are irrevocable. Withdrawals for hardship that result from an unforeseeable
emergency are available, but no other unscheduled withdrawals are permitted.
The Plan uses the investment funds listed below as potential indices for calculating investment returns on a
participant’s Plan account balance. The deferrals the participant directs for investment into these funds are adjusted
based on a deemed investment in the applicable funds. The participant does not actually own the investments that he

40
selects. The Company may, but is not required to, make identical investments pursuant to a variable universal life
insurance product. When it does, participants have no direct interest in this life insurance.
1-Year Annualized
Rate of Return
Name of Investment Fund (as of 2/28/10)

Nationwide NVIT Money Market — Class V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ⫺0.39%


PIMCO VIT Total Return — Admin Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.72%
Fidelity VIP High Income — Service Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.43%
Nationwide NVIT Inv Dest Moderate — Class 2 . . . . . . . . . . . . . . . . . . . . . . . . . . 33.57%
T. Rowe Price Equity Income — Class II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.30%
Dreyfus Stock Index — Initial Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.79%
Dreyfus VIF Appreciation — Initial Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.25%
Fidelity VIP II Contrafund — Service Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.31%
Fidelity VIP Growth — Service Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46.24%
Nationwide NVIT Mid Cap Index — Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.70%
Oppenheimer Mid Cap VA — Non-Service Shares . . . . . . . . . . . . . . . . . . . . . . . . . 47.64%
Dreyfus IP Small Cap Stock Index — Service Shares . . . . . . . . . . . . . . . . . . . . . . . 63.41%
Fidelity VIP Overseas — Service Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.98%
AIM V.I. International Growth — Series I Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 45.84%

X. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL


The Company provides certain benefits to our Named Executive Officers in the event of employment
termination, both in connection with a change in control and otherwise. These benefits are in addition to benefits
available generally to salaried employees, such as distributions under the Company’s tax-qualified retirement
savings plan, disability insurance benefits and life insurance benefits. These benefits are described below.

A. Termination Before Change in Control: Involuntary Other than for Cause, Voluntary for Good
Reason, Death or Disability
Pursuant to Mr. van Paasschen’s employment agreement, if Mr. van Paasschen’s employment is terminated by
the Company other than for cause or by Mr. van Paasschen for good reason, the Company will pay Mr. van
Paasschen as a severance benefit (i) two times the sum of his base salary and target annual bonus, (ii) a pro rated
target bonus for the year of termination and (iii) Mr. van Paasschen’s sign on restricted stock unit award
(25,558 units) would be payable. None of the other equity awards granted to Mr. van Paasschen would be
accelerated. If Mr. van Paasschen’s employment were terminated because of his death or permanent disability,
Mr. van Paasschen (or his estate) would be entitled to receive a pro rated target bonus for the year of termination and
all of his equity awards would accelerate and vest.
Pursuant to Mr. Avril’s employment agreement, if Mr. Avril’s employment is terminated by the Company
without cause, Mr. Avril will receive severance benefits of twelve months of base salary and the Company will
continue to provide medical benefits coverage for up to twelve months after the date of termination. In addition,
Mr. Avril will also be entitled to acceleration of all of his restricted stock and options that were granted prior to
August 19, 2008, but no acceleration for equity awards granted on or after August 19, 2008.
Pursuant to his employment agreement, if Mr. Prabhu’s employment is terminated by the Company without
cause or by Mr. Prabhu voluntarily with good reason, Mr. Prabhu will receive severance benefits of twelve months
of base salary and the Company will continue to provide medical benefits coverage for up to twelve months after the
date of termination. In addition, the Company will accelerate the vesting of 50% of Mr. Prabhu’s unvested restricted
stock and options. The Company entered into a letter agreement on August 14, 2007 confirming the terms of the
agreement as it relates to the acceleration of 50% of Mr. Prabhu’s unvested restricted stock and options.
Pursuant to Mr. Siegel’s employment agreement, in the event Mr. Siegel’s employment is terminated by the
Company without cause, Mr. Siegel will receive severance benefits of twelve months of base salary plus 100% of his

41
target annual incentive and the Company will continue to provide medical benefits coverage for up to twelve
months after the date of termination.
Pursuant to Mr. Turner’s employment agreement, if Mr. Turner’s employment is terminated by the Company
other than for cause or by Mr. Turner for good reason, Mr. Turner will receive severance benefits of twelve months
base salary and the Company will continue to provide medical benefits coverage for up to twelve months after the
date of termination.

B. Termination in the Event of Change in Control


On August 2, 2006, the Company and each of Messrs. Prabhu and Siegel entered into severance agreements.
Each severance agreement provides for a term of three years, with an automatic one-year extension until either the
executive or the Company notifies the other that such party does not wish to extend the agreement. If a Change in
Control (as described below) occurs, the agreement will continue for at least 24 months following the date of such
Change in Control.
Each agreement provides that if, following a Change in Control, the executive’s employment is terminated
without Cause (as defined in the agreement) or with Good Reason (as defined in the agreement), the executive
would receive the following in addition to the items described in A. above:
• two times the sum of his base salary plus the average of the annual bonuses earned by the executive in the
three fiscal years ending immediately prior to the fiscal year in which the termination occurs;
• continued medical benefits for two years, reduced to the extent benefits of the same type are received by or
made available to the executive from another employer;
• a lump sum amount, in cash, equal to the sum of (A) any unpaid incentive compensation which had been
allocated or awarded to the executive for any measuring period preceding termination under any annual or
long-term incentive plan and which, as of the date of termination, is contingent only upon the continued
employment of the executive until a subsequent date, and (B) the aggregate value of all contingent incentive
compensation awards allocated or awarded to the executive for all then uncompleted periods under any
such plan that the executive would have earned on the last day of the performance award period, assuming
the achievement, at the target level, of the individual and corporate performance goals established with
respect to such award;
• immediate vesting of stock options and restricted stock held by the executive under any stock option or
incentive plan maintained by the Company;
• outplacement services suitable to the executive’s position for a period of two years or, if earlier, until the
first acceptance by the executive of an offer of employment, the cost of which will not exceed 20% of the
executive’s base salary;
• a lump sum payment of the executive’s deferred compensation paid in accordance with Section 409A
distribution rules; and
• immediate vesting of all unvested 401(k) contributions in the executive’s 401(k) account or payment by the
Company of an amount equal to any such unvested amounts that are forfeited by reason of the executive’s
termination of employment.
In addition, to the extent that any executive becomes subject to the “golden parachute” excise tax imposed
under Section 4999 of the Code, the executive would receive a gross-up payment in an amount sufficient to offset
the effects of such excise tax.
Under the severance agreements, a “Change in Control” is deemed to occur upon any of the following events:
• any person becomes the beneficial owner of securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly from the Company or its affiliates)
representing 25% or more of the combined voting power of the Company;

42
• a majority of the Directors cease to serve on the Company’s Board in connection with a successful hostile
proxy contest;

• a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any
other corporation, other than:

O a merger or consolidation in which securities of the Company would represent at least 70% of the voting
power of the surviving entity; or

O a merger or consolidation effected to implement a recapitalization of the Company in which no person


becomes the beneficial owner of 25% or more of the voting power of the Company; or

• approval of a plan of liquidation or dissolution by the stockholders or the consummation of a sale of all or
substantially all of the Company’s assets, other than a sale to an entity in which the Company’s stockholders
would hold at least 70% of the voting power in substantially the same proportions as their ownership of the
Company immediately prior to such sale. However, a “Change in Control” does not include a transaction in
which Company stockholders continue to hold substantially the same proportionate ownership in the entity
which would own all or substantially all of the Company’s assets following such transaction.

Each of Messrs. Avril and Turner entered into similar change in control agreements in connection with their
employment with the Company, provided that no tax gross-up is provided if such payments become subject to the
excise tax. If such payments are subject to the excise tax, the benefits under the agreement will be reduced until the
point where the executive is better off paying the excise tax rather than reducing the benefits.

Mr. van Paasschen’s employment agreement provides that he would be entitled to the following benefits if his
employment were terminated without cause or he resigned with good reason following a Change in Control:

• two times the sum of his base salary plus the average of the annual bonuses earned in the three fiscal years
ending immediately prior to the fiscal year in which the termination occurs;

• a lump sum amount, in cash, equal to the sum of (A) any unpaid incentive compensation which had been
allocated or awarded for any measuring period preceding termination under any annual or long-term
incentive plan and which, as of the date of termination, is contingent only upon his continued employment
until a subsequent date, and (B) the aggregate value of all contingent incentive compensation awards
allocated or awarded to him for all then uncompleted periods under any such plan that he would have
earned on the last day of the performance award period, assuming the achievement, at the target level, of the
individual and corporate performance goals established with respect to such award;

• immediate vesting of stock options and restricted stock held under any stock option or incentive plan
maintained by the Company;

• a lump sum payment of his deferred compensation paid in accordance with Section 409A distribution
rules; and

• immediate vesting of all unvested 401(k) contributions in his 401(k) account or payment by the Company
of an amount equal to any such unvested amounts that are forfeited by reason of his termination of
employment.

In addition, to the extent that Mr. van Paasschen becomes subject to the “golden parachute” excise tax imposed
under Section 4999 of the Code, he would receive a gross-up payment in an amount sufficient to offset the effects of
such excise tax.

In December 2008, the Company amended the employment arrangements and change in control agreements
with each of the Named Executive Officers. The amendments were technical in nature and were designed to meet
the guidelines of 409A of the Code. The amendments did not change any of the amounts payable to the Named
Executive Officers.

43
C. Estimated Payments Upon Termination
The tables below reflect the estimated amounts payable to the Named Executive Officers in the event their
employment with the Company had terminated on December 31, 2009 under various circumstances, and includes
amounts earned through that date. The actual amounts that would become payable in the event of an actual
employment termination can only be determined at the time of such termination.

1. Involuntary Termination without Cause or Voluntary Termination for Good Reason


The following table discloses the amounts that would have become payable on account of an involuntary
termination without cause or a voluntary termination for good reason outside of the change in control context.
Severance Medical Vesting of Vesting of
Pay Benefits Restricted Stock Stock Options Total
Name ($) ($) ($) ($) ($)

van Paasschen . . . . . . . . . . . . . 8,000,000 0 934,656 0 8,934,656


Avril(1) . . . . . . . . . . . . . . . . . . 725,000 10,457 1,635,337 0 2,370,794
Prabhu . . . . . . . . . . . . . . . . . . 640,658 10,023 7,001,627 0 7,652,308
Siegel(1) . . . . . . . . . . . . . . . . . 1,230,078 19,699 0 0 1,249,777
Turner . . . . . . . . . . . . . . . . . . . 625,000 9,953 0 0 634,953

(1) Messrs. Siegel and Avril’s employment agreements provide for payments in the event of involuntary termi-
nation other than for cause but do not provide for payments in the event of voluntary termination for good
reason.

2. Termination on Account of Death or Disability


The following table discloses the amounts that would have become payable on account of a termination on
account of death or disability.
Vesting of Vesting of
Severance Medical Restricted Stock
Pay Benefits Stock Options Total
Name ($) ($) ($) ($) ($)

van Paasschen . . . . . . . . . . . . . . . . . . 2,000,000 0 33,135,043 0 35,135,043


Avril . . . . . . . . . . . . . . . . . . . . . . . . . . 725,000 10,457 12,017,555 0 12,753,012
Prabhu . . . . . . . . . . . . . . . . . . . . . . . . 640,658 10,023 14,003,254 0 14,653,935
Siegel . . . . . . . . . . . . . . . . . . . . . . . . . 1,230,078 19,699 13,885,817 0 15,135,594
Turner . . . . . . . . . . . . . . . . . . . . . . . . 625,000 9,953 14,300,584 0 14,935,537

3. Change in Control
The following table discloses the amounts that would have become payable on account of an involuntary
termination without cause following a change in control or a voluntary termination with good reason following a
change in control.
Vesting of Vesting of
Severance Medical Restricted Stock 401(k) Tax
Pay Benefits Stock Options Outplacement Payment Gross-Up Total
Name ($) ($) ($) ($) ($) ($) ($) ($)

van Paasschen(1) . . . . . . . . . 8,000,000 21,939 33,135,043 0 0 0 7,033,949 48,190,931


Avril . . . . . . . . . . . . . . . . . . 3,309,868 20,914 12,017,555 0 145,000 0 n/a 15,493,337
Prabhu . . . . . . . . . . . . . . . . 3,304,994 20,046 14,003,254 0 128,132 0 0 17,456,426
Siegel . . . . . . . . . . . . . . . . . 2,964,489 39,398 13,885,817 0 123,008 0 0 17,012,712
Turner . . . . . . . . . . . . . . . . 3,125,000 19,905 14,300,584 0 125,000 0 n/a 17,570,489

(1) If the amount of severance pay and other benefits payable on change in control is greater than three times certain
base period taxable compensation for Mr. van Paasschen, a 20% excise tax is imposed on the excess amount of

44
such severance pay and other benefits. Because of Mr. van Paasschen’s recent hire, his base period taxable
compensation does not reflect the total compensation paid to him, artificially increasing the excise tax that
would apply on a change in control and, correspondingly, the tax gross-up payment due under the estimate.

XI. DIRECTOR COMPENSATION


The Company uses a combination of cash and stock-based awards to attract and retain qualified candidates to
serve on the Board. In setting Director compensation, the Company considers the significant amount of time that
members of the Board spend in fulfilling their duties to the Company as well as the skill level required by the
Company or its Directors. The current compensation structure is described below.
For 2009, under the Company’s Director share ownership guidelines, each Director was required to own Shares
(or deferred compensation stock equivalents) that have a market price equal to two times the annual Director’s fees
paid to such Director. In February 2010, the Board approved an increase in the share ownership guidelines in that
each Director is required to own Shares (or deferred compensation stock equivalents) that have a market price equal
to four times the annual Director’s fees paid to such Director. If any Director fails to satisfy this requirement, sales of
Shares by such Director shall be subject to a 35% retention requirement. Any new Director shall be given a period of
three years to satisfy this requirement.
Company employees who serve as members of the Board receive no fees for their services in this capacity.
Non-employee members of the Board (“Non-Employee Directors”) receive compensation for their services as
described below.

A. Annual Fees
Each Non-Employee Director receives an annual fee in the amount of $80,000, payable in four equal
installments of Shares issued under our LTIP. The number of Shares to be issued is based on the fair market value of
a Share using the average of the high and low price of the Company’s stock on the previous December 31.
A Non-Employee Director may elect to receive up to one-half of the annual fee in cash and to defer (at an
annual interest rate of LIBOR plus 11⁄2% for deferred cash amounts) any or all of the annual fee payable in cash.
Deferred cash amounts are payable in accordance with the Director’s advance election. A Non-Employee Director
is also permitted to elect to defer to a deferred unit account any or all of the annual fee payable in Shares. Deferred
stock amounts are payable in accordance with the Non-Employee Director’s advance election.
Non-Employee Directors serving as members of the Audit Committee received an additional annual fee in
cash of $10,000 ($25,000 for the chairman of the Audit Committee). The chairperson of each other committee of the
Board received an additional annual fee in cash of $10,000; commencing in 2010, this chairperson additional annual
fee has been increased to $12,500 in cash. The Chairman of the Board received an additional retainer of $150,000,
payable quarterly in restricted stock units which vest in three years.

B. Attendance Fees
Non-Employee Directors do not receive fees for attendance at meetings.

C. Equity grant
In 2009, each Non-Employee Director received an annual equity grant (made at the same time as the annual
grant is made to Company employees) under our LTIP with a value of $100,000. In February 2010, this annual
equity grant value was increased to $125,000. The equity grant was delivered 50% in stock units and 50% in stock
options. The number of stock units is determined by dividing the value by the average of the high and low Share
price on the date of grant. The number of options is determined by dividing the value by the average of the high and
low Share price on the date of grant (also the exercise price) and multiplying by two and one half. The options are
fully vested and exercisable upon grant and are scheduled to expire eight years after the grant date. The restricted
stock awarded pursuant to the annual grant generally vests upon the earlier of (i) the third anniversary of the grant
date and (ii) the date such person ceases to be a Director of the Company.

45
D. Starwood Preferred Guest Program Points and Rooms
In 2009, each Director received an annual grant of 750,000 Starwood Preferred Guest (“SPG”) Points to
encourage them to visit and personally evaluate our properties.

E. Other Compensation
The Company makes available to the Chairman of the Board administrative assistant services and health
insurance coverage on terms comparable to those available to Starwood executives until the Chairman turns
70 years old and thereafter on terms available to Company retirees (including required contributions). Mr. Duncan
elected to receive administrative services only in January 2009, and health coverage from the Company only in
January and February of 2009. The Company also reimburses Non-Employee Directors for travel expenses, other
out-of-pocket costs they incur when attending meetings and, for one meeting per year, expenses related to
attendance by spouses.
We have summarized the compensation paid by the Company to our Non-Employee Directors in 2009 in the
table below.
Fees earned Stock Option All Other
or Paid in Cash Awards (2) (3) Awards (4) compensation (5) Total
Name of Director(1) ($) ($) ($) ($) ($)

Adam M. Aron . . . . . . . . . . . . 20,000 129,995 50,282 11,250 211,527


Charlene Barshefsky. . . . . . . . 40,000 89,999 50,282 13,781 194,062
Thomas E. Clarke. . . . . . . . . . 50,000 89,999 50,282 11,250 201,531
Clayton C. Daley, Jr. . . . . . . . 50,000 89,999 50,282 11,751 202,032
Bruce W. Duncan . . . . . . . . . . — 279,983 50,282 32,697 362,962
Lizanne Galbreath . . . . . . . . . 10,000 129,995 50,282 13,374 203,651
Eric Hippeau . . . . . . . . . . . . . — 129,995 50,282 18,501 198,778
Stephen R. Quazzo . . . . . . . . . 10,000 129,995 50,282 11,250 201,527
Thomas O. Ryder . . . . . . . . . . 25,000 129,995 50,282 16,324 221,601
Kneeland C. Youngblood . . . . 50,000 89,999 50,282 11,250 201,531

(1) Mr. van Paasschen is not included in this table because he was an employee of the Company and thus received
no compensation for his services as a Director. Mr. van Paasschen’s 2009 compensation from the Company is
disclosed in the Summary Compensation Table on page 34.
(2) As of December 31, 2009, each Director has the following aggregate number of Shares (deferred or otherwise)
outstanding: Mr. Aron, 43,324; Ambassador Barshefsky, 19,719; Mr. Clarke, 9,050; Mr. Daley, 12,884;
Mr. Duncan, 214,591; Ms. Galbreath, 14,568; Mr. Hippeau, 28,392; Mr. Quazzo, 37,297; Mr. Ryder, 23,141;
Mr. Youngblood, 13,965.
(3) Represents the grant date fair value for restricted stock and unit awards granted during the year computed in
accordance with ASC 718. For additional information, refer to Note 21 of the Company’s financial statements
filed with the SEC as part of the Form 10-K for the year ended December 31, 2009. These amounts reflect the

46
grant date fair value for these awards and do not correspond to the actual value that will be recognized by the
Named Executive Officers. The grant date fair value of each stock award is set forth below:
Number of Shares of
Director Grant Date Stock/Units Grant Date Fair Value ($)

Adam M. Aron . . . . . . . . . . . . . . . . . . . 2/27/2009 4,392 50,003


3/31/2009 1,160 19,998
6/30/2009 1,160 19,998
9/30/2009 1,160 19,998
12/31/2009 1,160 19,998
Charlene Barshefsky . . . . . . . . . . . . . . . 2/27/2009 4,392 50,003
3/31/2009 580 9,999
6/30/2009 580 9,999
9/30/2009 580 9,999
12/31/2009 580 9,999
Thomas E. Clarke . . . . . . . . . . . . . . . . . 2/27/2009 4,392 50,003
3/31/2009 580 9,999
6/30/2009 580 9,999
9/30/2009 580 9,999
12/31/2009 580 9,999
Clayton C. Daley, Jr. . . . . . . . . . . . . . . 2/27/2009 4,392 50,003
3/31/2009 580 9,999
6/30/2009 580 9,999
9/30/2009 580 9,999
12/31/2009 580 9,999
Bruce W. Duncan . . . . . . . . . . . . . . . . . 2/27/2009 4,392 50,003
3/31/2009 2,175 37,497
3/31/2009 1,160 19,998
6/30/2009 2,175 37,497
6/30/2009 1,160 19,998
9/30/2009 2,175 37,497
9/30/2009 1,160 19,998
12/31/2009 2,175 37,497
12/31/2009 1,160 19,998
Lizanne Galbreath . . . . . . . . . . . . . . . . . 2/27/2009 4,392 50,003
3/31/2009 1,160 19,998
6/30/2009 1,160 19,998
9/30/2009 1,160 19,998
12/31/2009 1,160 19,998
Eric Hippeau . . . . . . . . . . . . . . . . . . . . . 2/27/2009 4,392 50,003
3/31/2009 1,160 19,998
6/30/2009 1,160 19,998
9/30/2009 1,160 19,998
12/31/2009 1,160 19,998
Stephen R. Quazzo . . . . . . . . . . . . . . . . 2/27/2009 4,392 50,003
3/31/2009 1,160 19,998
6/30/2009 1,160 19,998
9/30/2009 1,160 19,998
12/31/2009 1,160 19,998

47
Number of Shares of
Director Grant Date Stock/Units Grant Date Fair Value ($)

Thomas O. Ryder . . . . . . . . . . . . . . . . . 2/27/2009 4,392 50,003


3/31/2009 1,160 19,998
6/30/2009 1,160 19,998
9/30/2009 1,160 19,998
12/31/2009 1,160 19,998
Kneeland C. Youngblood . . . . . . . . . . . . 2/27/2009 4,392 50,003
3/31/2009 580 9,999
6/30/2009 580 9,999
9/30/2009 580 9,999
12/31/2009 580 9,999

(4) Represents the grant date fair value for stock option awards granted during the year computed in accordance
with ASC 718. For additional information, refer to Note 21 of the Company’s financial statements filed with the
SEC as part of the Form 10-K for the year ended December 31, 2009. These amounts reflect the grant date fair
value for these awards and do not correspond to the actual value that will be recognized by the Directors. As of
December 31, 2009, each Director has the following aggregate number of stock options outstanding: Mr. Aron,
21,941; Ambassador Barshefsky, 46,061; Mr. Clarke, 13,831; Mr. Daley, 12,523; Mr. Duncan, 95,785;
Ms. Galbreath, 29,564; Mr. Hippeau, 57,059; Mr. Quazzo, 57,059; Mr. Ryder, 51,560; Mr. Youngblood,
51,560. All Directors received a grant of 10,979 options on February 27, 2009 with a grant date fair value of
$50,282.
(5) We reimburse Non-Employee Directors for travel expenses and other out-of-pocket costs they incur when
attending meetings and, for one meeting per year, attendance by spouses. In addition, in 2009 Non-Employee
Directors received 750,000 SPG Points valued at $11,250. The Chairman of the Board also received the cost of
an administrative assistant in January 2009. Non-Employee Directors receive interest on deferred dividends.
Pursuant to SEC rules, perquisites and personal benefits are not reported for any Director for whom such
amounts were less than $10,000 in the aggregate for 2009 but must be identified by type for each Director for
whom such amounts were equal to or greater than $10,000 in the aggregate. SEC rules do not require
specification of the value of any type of perquisite or personal benefit provided to the Non-Employee Directors
because no such value exceeded $25,000.
Pursuant to SEC rules regarding All Other Compensation that is valued in excess of $10,000 and not disclosed
above, the Company provided Mr. Duncan with administrative assistant services in January 2009. The value
associated therewith was $10,226.

48
AUDIT COMMITTEE REPORT
The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or
“filed” or “incorporated by reference” in future filings with the SEC, or subject to the liabilities of Section 18 of the
Exchange Act, except to the extent that the Company specifically incorporates it by reference into a document filed
under the Securities Act of 1933, as amended, or the Exchange Act.
The Audit Committee (the “Audit Committee”) of the Board of Directors (the “Board”) of Starwood Hotels &
Resorts Worldwide, Inc. (the “Company”), which is comprised entirely of “independent” Directors, as determined by
the Board in accordance with the New York Stock Exchange (the “NYSE”) listing requirements and applicable federal
securities laws, serves as an independent and objective party to assist the Board in fulfilling its oversight respon-
sibilities including, but not limited to, (i) monitoring the quality and integrity of the Company’s financial statements,
(ii) monitoring compliance with legal and regulatory requirements, (iii) assessing the qualifications and independence
of the independent registered public accounting firm and (iv) establishing and monitoring the Company’s systems of
internal controls regarding finance, accounting and legal compliance. The Audit Committee operates under a written
charter which meets the requirements of applicable federal securities laws and the NYSE requirements.
In the first quarter of 2010, the Audit Committee reviewed and discussed the audited financial statements for
the year ended December 31, 2009 with management, the Company’s internal auditors and the independent
registered public accounting firm, Ernst & Young LLP. The Audit Committee also discussed with the independent
registered public accounting firm matters relating to its independence, including a review of audit and non-audit
fees and the written disclosures and letter from Ernst & Young LLP to the Audit Committee pursuant to Rule 3526
of the Public Company Accounting Oversight Board regarding the independent accountants’ communications with
the Audit Committee concerning independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that
the financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2009.

Audit Committee of the Board of Directors

Thomas O. Ryder (chairman)


Adam M. Aron
Thomas E. Clarke
Clayton C. Daley, Jr.
Kneeland C. Youngblood

Audit Fees
The aggregate amounts paid by the Company for the fiscal years ended December 31, 2009 and 2008 to the
Company’s principal accounting firm, Ernst & Young, are as follows (in millions):
2009 2008

Audit Fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.4 $4.9


Audit-Related Fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.6 $0.9
Tax Fees(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.4 $0.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6.4 $6.2

(1) Audit fees include the fees paid for the annual audit, the review of quarterly financial statements and assistance
with financial reports required as part of regulatory and statutory filings and the audit of the Company’s internal
controls over financial reporting with the objective of obtaining reasonable assurance about whether effective
internal controls over financial reporting were maintained in all material respects.
(2) Audit-related fees include fees for audits of employee benefit plans, audit and accounting consultation and
other attest services.
(3) Tax fees include fees for the preparation and review of certain foreign tax returns.

49
The Company has adopted a policy which requires the Audit Committee of the Board of Directors to approve
the hiring of any current or former employee (within the last 5 years) of the Company’s independent registered
public accounting firm into any position (i) as a manager or higher, (ii) in its accounting or tax departments,
(iii) where the hire would have direct involvement in providing information for use in its financial reporting
systems, or (iv) where the hire would be in a policy setting position. When undertaking its review, the Audit
Committee considers applicable laws, regulations and related commentary regarding the definition of “indepen-
dence” for independent registered public accounting firms.

Pre-Approval of Services
The Audit Committee pre-approves all services, including both audit and non-audit services, provided by the
Company’s independent registered public accounting firm. For audit services (including statutory audit engage-
ments as required under local country laws), the independent registered public accounting firm provides the Audit
Committee with an engagement letter outlining the scope of the audit services proposed to be performed during the
year. The engagement letter must be formally accepted by the Audit Committee before any audit commences. The
independent registered public accounting firm also submits an audit services fee proposal, which also must be
approved by the Audit Committee before the audit commences. The Audit Committee may delegate authority to
one of its members to pre-approve all audit/non-audit services by the independent registered public accounting firm,
as long as these approvals are presented to the full Audit Committee at its next regularly scheduled meeting.
Management submits to the Audit Committee all non-audit services that it recommends the independent
registered public accounting firm be engaged to provide and an estimate of the fees to be paid for each. Management
and the independent registered public accounting firm must each confirm to the Audit Committee that the
performance of the non-audit services on the list would not compromise the independence of the registered public
accounting firm and would be permissible under all applicable legal requirements. The Audit Committee must
approve both the list of non-audit services and the budget for each such service before commencement of the work.
Management and the independent registered public accounting firm report to the Audit Committee at each of its
regular meetings as to the non-audit services actually provided by the independent registered public accounting firm
and the approximate fees incurred by the Company for those services.
All audit and permissible non-audit services provided by Ernst & Young to the Company for the fiscal years
ended December 31, 2009 and 2008 were pre-approved by the Audit Committee or our Board of Directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION


All members of the Compensation Committee during fiscal year 2009 were independent Directors, and no
member was an employee or former employee. No Compensation Committee member had any relationship
requiring disclosure under “Certain Relationships and Related Transactions,” below. During fiscal year 2009, none
of our executive officers served on the compensation committee (or its equivalent) or board of directors of another
entity whose officer served on our Compensation Committee.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Policies of the Board of Directors of the Company


The Board has adopted a Corporate Opportunity Policy, the purpose of which is to address the reporting,
review and approval or ratification of transactions with Directors and executive officers and their affiliates. As a
general matter, we seek to avoid related person transactions because they can involve potential or actual conflicts of
interest and pose the risk that they may be, or be perceived to be, based on considerations other that the Company’s
best interests. However, we recognize that in some circumstances transaction between us and related persons may
be incidental to the normal course of business or provide an opportunity that is in the best interests of the Company,
or that is not inconsistent with the best interests of the Company and where it is not efficient to pursue an alternative
transaction. The Board has charged the Corporate Governance and Nominating Committee (the “Governance
Committee”) with establishing and reviewing (on a periodic basis) our Corporate Opportunity Policy. A copy of the

50
policy is posted on our website at www.starwoodhotels.com/corporate/investor_relations.html.
The policy applies to each Director and executive officer or their affiliates. The policy governs certain
corporate opportunities as well as certain related party transactions. For purposes of the policy, a “Corporate
Opportunity” means any opportunity (1) that a Director or executive officer reasonably believes is within the
Company’s existing line of business or is one in which the Company either has an existing interest or a reasonable
expectancy of an interest; and (2) the Company is reasonably capable of pursuing. The Corporate Opportunity
Policy also governs (1) any transaction where the Company is investing in entities in which an executive officer or
Director (or affiliates) has a material interest; or (2) any transaction between the Company and other entities
controlled by the Company, on the one hand, and any executive officer or Director (or any affiliate of such persons)
on the other hand.
Under the policy, except as otherwise provided, each Director and executive officer is required to submit any
such proposed transaction to the Governance Committee for review. In its review, the Governance Committee is to
consider all relevant facts and circumstances to determine whether it should (i) reject the proposed transaction;
(ii) conclude that the proposed transaction is appropriate and suggest that the Company pursue it on the terms
presented or on different terms, and in the case of a Corporate Opportunity suggest that the Company pursue the
Corporate Opportunity on its own, with the party who brought the proposed transaction to the Company’s attention
or with another third party; or (iii) ask the Board to consider the proposed transaction so the Board may then take
either of the actions described in (i) or (ii) above, and, at the Governance Committee’s option, in connection with
(iii), make recommendations to the Board.
Any person bringing a proposed transaction to the Governance Committee is obligated to provide any and all
information requested by the Governance Committee and, if a Director, to recuse himself from any vote or other
deliberation.
Historically the Company has employed these pre-established procedures also with respect to transactions
involving known beneficial holders of more than five percent of Shares.
The policy may be changed at any time by the Board.

OTHER MATTERS
The Board is not aware of any matters not referred to in this proxy statement that will be presented for action at
the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons
named in the enclosed proxy to vote the Shares represented thereby in accordance with their discretion.

SOLICITATION COSTS
The Company will pay the cost of soliciting proxies for the Annual Meeting, including the cost of mailing. The
solicitation is being made by mail and over the Internet and may also be made by telephone or in person using the
services of a number of regular employees of the Company at nominal cost. The Company will reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries for expenses incurred in sending proxy materials to
beneficial owners of Shares. The Company has engaged D.F. King & Co., Inc. to solicit proxies and to assist with the
distribution of proxy materials for a fee of $18,500 plus reasonable out-of-pocket expenses.

51
HOUSEHOLDING
The SEC allows us to deliver a single proxy statement and annual report to an address shared by two or more of
our stockholders. This delivery method, referred to as “householding,” can result in significant cost savings for us.
In order to take advantage of this opportunity, the Company and banks and brokerage firms that hold your Shares
have delivered only one proxy statement and annual report to multiple stockholders who share an address unless one
or more of the stockholders has provided contrary instructions. The Company will deliver promptly, upon written or
oral request, a separate copy of the proxy statement and annual report to a stockholder at a shared address to which a
single copy of the documents was delivered. A stockholder who wishes to receive a separate copy of the proxy
statement and annual report, now or in the future, may obtain one, without charge, by addressing a request to
Investor Relations, Starwood Hotels & Resorts Worldwide, Inc., 1111 Westchester Avenue, White Plains, NY
10604 or by calling (914) 640-8100. You may also obtain a copy of the proxy statement and annual report from the
investor relations page on the Company’s website (www.starwoodhotels.com/corporate/investor_relations.html).
Stockholders of record sharing an address who are receiving multiple copies of proxy materials and annual reports
and wish to receive a single copy of such materials in the future should submit their request by contacting us in the
same manner. If you are the beneficial owner, but not the record holder, of the Shares and wish to receive only one
copy of the proxy statement and annual report in the future, you will need to contact your broker, bank or other
nominee to request that only a single copy of each document be mailed to all stockholders at the shared address in
the future.

52
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
If you want to make a proposal for consideration at next year’s Annual Meeting and have it included in the
Company’s proxy materials, the Company must receive your proposal by November 13, 2010, and the proposal
must comply with the rules of the SEC.
If you want to make a proposal or nominate a Director for consideration at next year’s Annual Meeting without
having the proposal included in the Company’s proxy materials, you must comply with the then current advance
notice provisions and other requirements set forth in the Company’s Bylaws, including that the Company must
receive your proposal on or after February 2, 2011 and on or prior to February 27, 2011, with certain exceptions if
the date of next year’s Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the
anniversary date of the 2010 Annual Meeting.
If the Company does not receive your proposal or nomination by the appropriate deadline and in accordance
with the terms of the Company’s Bylaws, then it may not be brought before the 2011 Annual Meeting.
The fact that the Company may not insist upon compliance with these requirements should not be construed as
a waiver by the Company of its right to do so at any time in the future.
You should address your proposals or nominations to the Corporate Secretary, Starwood Hotels & Resorts
Worldwide, Inc., 1111 Westchester Avenue, White Plains, New York 10604.

By Order of the Board of Directors


STARWOOD HOTELS & RESORTS
WORLDWIDE, INC.

Kenneth S. Siegel
Corporate Secretary

March 29, 2010

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APPENDIX A

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


ANNUAL INCENTIVE PLAN FOR CERTAIN EXECUTIVES
AS AMENDED AND RESTATED IN DECEMBER 2008
1. Definitions. When the following terms are used herein with initial capital letters, they shall have the
following meanings:
Code — shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, and any final
Treasury Regulations promulgated thereunder. All citations to sections of the Code are to such sections as they may
from time to time be amended or renumbered.
Committee — shall mean a committee comprised solely of two or more members of the Board of Directors of
the Company, each of whom is an “outside director” within the meaning of Code section 162(m) and a “Non-
Employee Director” within the meaning of Rule 16b-3 under the Exchange Act.
Company — shall mean Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation.
Deferred Share Account — shall mean a book reserve maintained by the Company for the purpose of
measuring the amount payable to a Participant with respect to the deferred portion of the Participant’s bonus
payment for a Performance Period.
Designated Beneficiary — shall mean the person or persons entitled to receive the remaining Distributable
Balance in a Participant’s Deferred Share Account at the Participant’s death.
Disability — shall have the same meaning as in Code section 409A(a)(2)(C).
Distributable Balance — shall mean the vested portion of a Participant’s Deferred Share Account that is
distributable to the Participant on the Distribution Date (as defined in subsection 5.4), as adjusted for deemed
investment returns pursuant to subsection 5.2.
Exchange Act — shall mean the Securities Exchange Act of 1934, as amended.
Fair Market Value — shall mean the fair market value of a Share, as determined by the Committee, which,
unless otherwise specified, shall be the average of the high and low sales price for a Share as reported in the
New York Stock Exchange Composite Transactions on the date as of which such value is being determined, or, if
there is no such sale on the relevant date, then on the preceding business day on which a sale was reported.
Participant — shall mean the Executive Chairman and the Chief Executive Officer, and any other executive
officer of the Company who is designated by the Committee as a Participant in this Plan at any time ending on or
before the lesser of (i) the 90th day of the applicable Performance Period or (ii) the date on which 25% of the
Performance Period has elapsed.
Performance Measure — The Performance Measure shall be directly and specifically tied to one or more of the
following business criteria, determined with respect to the Company: earnings before interest, taxes, depreciation
and amortization (“EBITDA”), consolidated pre-tax earnings, net revenues, net earnings, operating income,
earnings before interest and taxes, cash flow measures, return on equity, return on net assets employed or earnings
per share for the applicable Performance Period, subject to such other special rules and conditions as the Committee
may establish at any time ending on or before the lesser of (i) the 90th day of the applicable Performance Period or
(ii) the date on which 25% of the applicable Performance Period has elapsed.
Performance Period — shall mean the twelve consecutive month period, which coincides with the Company’s
fiscal year, or, such other period as the Committee may determine in its discretion.
Plan — shall mean the Starwood Hotels & Resorts Worldwide, Inc. Annual Incentive Plan for Certain
Executives as set forth herein and as from time to time amended.
Separation from Service — shall mean a Participant’s separation from service with the Starwood Organization,
within the meaning of Code section 409A(a)(2)(A)(i). The term may also be used as a verb (i.e., “Separates from

A-1
Service”) with no change in meaning. Notwithstanding the preceding sentence, a Participant’s transfer to an entity
owned 50% or more by the Company will not constitute a Separation of Service to the extent permitted by Code
section 409A. The following principles shall generally apply in determining when a Separation from Service occurs:
(a) A Participant separates from service with the Company if the Employee dies, retires, or otherwise has
a termination of employment with the Company. Whether a termination of employment has occurred is
determined based on whether the facts and circumstance indicate that the Company and the Participant
reasonably anticipated that no further services would be performed after a certain date or that the level of bona
fide services the Participant would perform after such date (as an employee or independent contractor) would
permanently decrease to no more than 20 percent of the average level of bona fide services performed over the
immediately preceding 36-month period (or the full period in which the Participant provided services to the
Company if the Participant has been providing services for less than 36 months).
(b) A Participant will not be deemed to have experienced a Separation from Service if such Participant is
on military leave, sick leave, or other bona fide leave of absence, to the extent such leave does not exceed a
period of six months or, if longer, such longer period of time during which a right to re-employment is
protected by either statute or contract. If the period of leave exceeds six months and the individual does not
retain a right to re-employment under an applicable statute or by contract, the employment relationship is
deemed to terminate on the first date immediately following such six-month period.
(c) If a Participant provides services both an as employee and as a member of the Board of Directors of
the Company, the services provided as a Director are generally not taken into account in determining whether
the Participant has Separated from Service as a Participant for purposes of the Plan, in accordance with final
regulations under section 409A.
Specified Employee means an individual identified in accordance with the following principles:
(a) General. Any participant who at any time during the applicable year is:
(1) An officer of any member of the Starwood Organization having annual compensation greater
than $130,000 (as adjusted under section 416(i)(1) of the Code);
(2) A 5-percent owner of any member of the Starwood Organization; or
(3) A 1-percent owner of any member of the Starwood Organization having annual compensation of
more than $150,000.
No more than 50 employees identified in the order of their annual compensation shall be treated as officers. For
purposes of this definition, annual compensation means compensation as defined in Treas. Reg. § 1.415(c)-
2(a), without regard to Treas. Reg. §§ 1.415(c)-2(d), 1.415(c)-2(e), and 1.415(c)-2(g). The Committee or its
delegate shall determine who is a Specified Employee in accordance with section 416(i) of the Code and the
applicable regulations and other guidance of general applicability issued thereunder or in connection
therewith, and provided further that the applicable year shall be determined in accordance with section 409A
and that any modification of the foregoing definition that applies under section 409A shall be taken into
account.
(b) Applicable Year. Effective from and after December 31, 2007, the Committee or its delegate shall
determine Specified Employees effective as of the last day of each calendar year, based on compensation for
such year, and such designation shall be effective for purposes of the Plan for the twelve month period
commencing on April 1st of the next following calendar year (e.g., the Specified Employee determination by
the Committee as of December 31, 2008 shall apply to the period from April 1, 2009 to March 31, 2010).
Starwood Organization means the controlled group of organizations of which the Company is a part, as
defined by sections 414(b) and (c) of the Code and the regulations issued thereunder (but applying the 50% standard
for relatedness applicable under Treasury Regulation § 1.409A-1(h)(3) in lieu of the 80% standard that ordinarily
applies under Code section 414). An entity shall be considered a member of the Starwood Organization only during
the period it is one of the group of organizations described in the preceding sentence.
Share — shall mean one share of common stock, par value $.01 per share, of the Company.

A-2
2. Administration.

2.1 Committee. The Plan shall be administered by the Committee.

2.2 Determinations Made Prior to Each Performance Period. At any time ending on or before the lesser of
(i) the 90th day of the applicable Performance Period or (ii) the date on which 25% of the Performance Period has
elapsed, the Committee shall:

(a) Designate Participants for that Performance Period.

(b) Establish the Performance Measures for the Performance Period.

(c) Determine the formula for determining each Participant’s bonus payment for the Performance Period.

2.3 Certification. Following the close of each Performance Period and prior to payment of any bonus under
the Plan, the Committee must certify in writing that the applicable Performance Measure targets and all other
factors upon which a bonus is based have been attained.

2.4 Stockholder Approval. The material terms of the Plan shall be disclosed to and approved by stockholders
of the Company in accordance with Code section 162(m). No bonus shall be paid under this Plan unless such
stockholder approval has been obtained.

3. Determination of Bonus.

3.1 Formula. Each Participant shall be eligible to receive a bonus payment for a Performance Period in an
amount established by or determined under a bonus formula established by the Committee for the Performance
Period based on the attainment of the Performance Measure targets for the Performance Period.

3.2 Limitations.

(a) No payment if Performance Measure threshold not achieved. In no event shall any Participant
receive a bonus payment hereunder if the minimum threshold Performance Measure requirement applicable to
the bonus payment is not achieved during the Performance Period.

(b) No payment in excess of pre-established amount. No Participant shall receive a bonus payment
under this Plan for any Performance Period in excess of $9 million.

(c) Committee may reduce bonus payment. The Committee retains sole discretion to reduce the amount
of, or eliminate, any bonus otherwise payable to a Participant under this Plan. The Committee may exercise
such discretion by, among other actions, establishing conditions for the payment of bonuses in addition to the
Performance Measure targets, including the achievement of financial, strategic or individual goals, which may
be objective or subjective, as it deems appropriate.

4. Bonus Payments.

4.1 Time and Form of Payments. Not less than 75% of the bonus payment payable to a Participant under the
Plan for a Performance Period shall be paid to the Participant in one or more cash payments as soon as determined
by the Committee after it has certified that the Performance Measure targets and all other factors upon which the
bonus payment for the Participant is based have been attained; provided, however, that in all cases such payments
shall be paid during the two and one-half month period immediately following the end of such Performance Period.

4.2 Nontransferability. Participants and beneficiaries shall not have the right to assign, encumber or
otherwise anticipate the payments to be made under this Plan, and the benefits provided hereunder shall not be
subject to seizure for payment of any debts or judgments against any Participant or any other beneficiary.

4.3 Tax Withholding. In order to comply with all applicable federal or state income tax laws or regulations,
the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or
collected from such Participant.

A-3
5. Deferred Share Accounts.
5.1 Deferrals to Accounts.
(a) An amount equal to 25%, unless the Committee determines to defer a smaller portion of a Participant’s
bonus payment, determined in the sole discretion of the Committee, of the gross bonus payment payable to a
Participant under the Plan for a Performance Period may be credited to the Participant’s Deferred Share Account as
of the date on which the first cash bonus payment for the Performance Period is paid to the Participant pursuant to
subsection 4.1. The Committee shall make any determination to apply a smaller percentage for a Performance
Period no later than six months prior to the end of the Performance Period. However, for any Participant who is hired
during a Performance Period and receives a bonus opportunity under this Plan for such Performance Period, the
deferral percentage shall be 25% with no opportunity for the Committee to specify a lower percentage.
(b) An amount equal to no more than the amount of the bonus payment payable to a Participant for a
Performance Period in excess of $3 million may be credited to the Participant’s Deferred Share Account at the
election of the Participant. Any election by a Participant to defer such a portion of his bonus payment shall be made
no later than six months prior to the end of the Performance Period and in a form prescribed by the Committee. An
amount so deferred shall be credited to the Participant’s Deferred Share Account as of the date on which the first
cash bonus payment for the Performance Period is paid to the Participant pursuant to subsection 4.1.
5.2 Deemed Investment of Deferred Share Accounts. Amounts credited to a Participant’s Deferred Share
Account pursuant to subsection 5.1(a) shall be deemed to be invested in whole and fractional Shares at a price equal
to 75% of the Fair Market Value thereof on the date as of which the amount is credited to the Deferred Share
Account. Amounts credited to a Participant’s Deferred Share Account pursuant to subsection 5.1(b) shall be deemed
to be invested in whole and factional Shares at a price equal to 100% of the Fair Market Value thereof on the date as
of which the amount is credited to the Deferred Share Account. If any dividends are paid or other distributions are
made on the Company’s Shares, dividend equivalents and other distribution equivalents shall be paid in the same
proportion on the Shares concurrently to the Participant and shall be paid to the Participant within the same calendar
year that the dividend is paid or other distributions are made to the Company’s shareholders.
5.3 Vesting of Deferred Share Account.
(a) The amount credited to a Participant’s Deferred Share Account under subsection 5.1(a) (as adjusted for
deemed investment returns under subsection 5.2) shall become vested ratably over the three-year period beginning
at the end of the Performance Period, provided, however, that such credited amounts shall become fully vested on
the first to occur of the following:
(1) The date of the Participant’s death;
(2) The date of the Participant’s disability; or
(3) The date of the Participant’s retirement.
For purposes of this subsection 5.3, “disability” shall mean a total physical disability which, in the Company’s
judgment, prevents the Participant from performing substantially his/her employment duties and responsibilities for
a continuous period of at least six months, and “retirement” shall mean retirement as then defined in the Company’s
2004 Long-Term Incentive Compensation Plan (or any successor thereto) (the “Company’s LTIP”).
(b) The amount credited to a Participant’s Deferred Share Account under subsection 5.1(b) (as adjusted for
deemed investment returns under subsection 5.2) shall become vested ratably over the remaining term of any
applicable employment agreement and shall vest in full upon the Participant’s termination of employment for any
reason.
5.4 Distribution of Deferred Share Accounts.
(a) Non-409A Covered Amounts. On the earlier of (1) the third anniversary of the end of the applicable
Performance Period, or (2) the day following the date the Participant’s employment is terminated for any reason
(such earlier date being referred to as the “Distribution Date”), the Company shall compute and pay the
“Distributable Balance” in a Participant’s Deferred Share Account on such date. In the event that the Participant

A-4
becomes disabled as defined in subsection 5.3 above, his/her employment shall for these purposes be deemed to
terminate on the first day of the month in which he/she begins to receive long-term disability payments under the
Company’s long-term disability plan. All distributions under this subsection 5.4 will be made in whole Shares and
cash equal to the Fair Market Value of any fractional Share and such Shares shall be issuable under the Company’s
LTIP. If a Participant dies before his/her entire Distributable Balance has been paid, the Company shall pay the then-
undistributed remainder of the Distributable Balance to the Participant’s Designated Beneficiary.
(b) 409A Covered Amounts. Notwithstanding any contrary terms in the Plan, each portion of a Participant’s
Deferred Share Account described in subsections 5.1(a) and 5.1(b) above that is required to comply with
section 409A of the Code (together, “409A-Covered Amounts”) shall not be paid at the time specified in subsection
5.4(a) above but shall instead be paid at the following time and subject to the following conditions:
(1) On the earlier of (i) the third anniversary of the end of the applicable Performance Period, or (ii) the
day following the date of the Participant’s Separation from Service or (iii) the date on which the Participant
first incurs a Disability (such earlier date being referred to as the “Distribution Date”), the Company shall
compute and pay the vested portion of the 409A-Covered Amounts in the Participant’s Deferred Share
Account on such date. If payment is triggered by the Participant’s Separation from Service and the Participant
is determined to be a Specified Employee on the date of the Participant’s Separation from Service, the
otherwise applicable payment date related to the Separation from Service (including a retirement) shall be
delayed six months after such Separation from Service.
(2) Notwithstanding anything set out in the Plan for purposes of determining the time of payment of
409A-Covered Amounts, a Change in Control shall not be deemed to have occurred unless the transaction
constitutes a change in the ownership or effective control of a corporation or a change in the ownership of a
substantial portion of the assets of a corporation within the meaning of Treasury Regulation § 1.409A-3(i)(5)
(a “409A Change in Control”). If a Change in Control occurs for vesting purposes with respect to 409A-
Covered Amounts at a time when a 409A Change in Control has not occurred for payment purposes with
respect to such 409A-Covered Amounts, then payment of such 409A-Covered Amounts will be made at the
time otherwise provided in subsection 5.4(b)(1).
(3) Any amounts credited to a Participant’s Deferred Share Account pursuant to subsection 5.1(a) above
will be deemed to be a 409A-Covered Amount if the Participant has satisfied the definition of “retirement” at
any time during the Performance Period for which such amounts are being credited.
5.5 Designation of Beneficiaries. A Participant may designate a Designated Beneficiary by executing and
filing with the Company during his/her lifetime, a beneficiary designation. The Participant may change his
Designated Beneficiary at any time by filing a new beneficiary designation with the Company. If a Designated
Beneficiary is adjudicated bankrupt prior to the date of the Participant’s death, or if the Participant fails to designate
a beneficiary, then the following persons in the following order shall receive the entire amount which the previous
Designated Beneficiary would have been entitled to receive: (i) Participant’s spouse, if living; (ii) Participant’s then-
living descendants, per stirpes; and (iii) Participant’s estate.
5.6 Tax Withholding. The Company shall have the right to require, prior to the issuance or delivery of any
Shares, payment by the Participant of any federal, state, local or other taxes which may be required to be withheld or
paid in connection with the distribution of Shares. In the alternative, the Company may withhold whole Shares
which would otherwise be delivered to a Participant, having an aggregate Fair Market Value determined as of the
date the obligation to withhold or pay taxes arises in connection with a distribution in the amount necessary to
satisfy any such obligation. Any fraction of a Share that would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by the Participant.
5.7 Restrictions on Shares. If at any time the Company determines that the listing, registration or qual-
ification of the Shares allocated to the Deferred Share Accounts of Participants upon any securities exchange or
under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of Shares hereunder, such Shares shall not be
delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the Company. The Company may require that certificates

A-5
evidencing Shares delivered to any Participant hereunder bear a legend indicating that the sale, transfer or other
disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended,
and the rules and regulations thereunder.

5.8 Adjustment. If any change in corporate capitalization, such as a stock split, reverse stock split, or stock
dividend; or any corporate transaction such as a reorganization, reclassification, merger or consolidation or
separation, including a spin-off, of the Company or sale or other disposition by the Company of all or a portion of its
assets, any other change in the Company’s corporate structure, or any distribution to stockholders (other than a
normal cash dividend) results in the outstanding Shares being exchanged for a different number or class of shares or
other securities of the Company, or for shares of stock or other securities of any other corporation; or new, different
or additional shares or other securities of the Company or of any other corporation being received by the holders of
outstanding Shares, the number and class of securities deemed to be held in each Deferred Share Account shall be
appropriately adjusted by the Committee. The decision of the Committee regarding any such adjustment shall be
final, binding and conclusive.

5.9 Change in Control.

(a) Effect of Change in Control.

(1) Notwithstanding any provision in the Plan (other than as provided in this subsection 5.4(b) and 5.9), in the
event of a Change in Control, the Committee may, but shall not be required to, make such adjustments to
outstanding awards as it deems appropriate, including, without limitation, causing the unvested amount in a
Participant’s Deferred Share Account to vest or electing that each outstanding Deferred Share Account shall be
canceled by the Company, and that each Participant shall receive within a specified period of time from the
occurrence of the Change in Control a cash payment from the Company in an amount equal to the number of Shares
then deemed to be in the Participant’s Deferred Share Account, multiplied by the greater of (x) the highest per Share
price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or
(y) the Fair Market Value of a Share on the date of occurrence of the Change in Control.

(2) In the event of a Change in Control pursuant to subsection (b) (3) or (4) below in connection with which the
holders of Shares receive shares of common stock that are registered under section 12 of the Exchange Act, the
Committee may, but shall not be required to, substitute for each Share available under this Plan, whether or not then
subject to an outstanding award, the number and class of shares into which each outstanding Share shall be
converted pursuant to such Change in Control.

(b) Definition. For purposes of the Plan, “Change in Control” shall mean:

(1) Any person (as defined in section 3(a)(9) of the Exchange Act and used in sections 13(d) and 14(d) thereof,
including a “group” as defined in section 13(d) thereof, “Person”) is or becomes the beneficial owner within the
meaning of Rule 13d-3 promulgated under the Exchange Act (but without regard to any time period specified in
Rule 13d-3(d)(1)(i)) of 331⁄3 percent or more of either (i) then outstanding Shares (the “Outstanding Shares”) or
(ii) the combined voting power of then outstanding securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); excluding, however, (1) any acquisition by the
Company or (2) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company;

(2) Individuals who, as of January 1, 2005 (the “Effective Date”), constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of such Board; provided that any individual who
becomes a director of the Company subsequent to the Effective Date whose election, or nomination for election by
the Company’s stockholders, was approved by the vote of at least a majority of the directors then comprising the
Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who
was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member
of the Incumbent Board;

A-6
(3) Consummation by the Company of a reorganization, merger, or consolidation or sale of all or substantially
all of the assets of the Company (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant
to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the
Outstanding Shares and the Outstanding Company Voting Securities immediately prior to such Corporate Trans-
action will beneficially own, directly or indirectly, more than 662⁄3 percent of, respectively, the outstanding shares of
common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions
relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding
Shares and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than: the
Company, any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, the corporation resulting from such Corporate Transaction, and any Person which
beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly 331⁄3 percent or more of
the Outstanding Shares or the Outstanding Company Voting Securities, as the case may be) will beneficially own,
directly or indirectly, 331⁄3 percent or more of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities
of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of
the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation
resulting from such Corporate Transaction; or
(4) Approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the
Company.
6. Amendment and Termination. Subject to the provisions of Code sections 162(m) and 409A, the Com-
mittee may amend this Plan prospectively at any time and for any reason deemed sufficient by it without notice to
any person affected by this Plan and may likewise terminate or curtail the benefits of the Plan both with regard to
persons expecting to receive benefits hereunder in the future and persons already receiving benefits at the time of
such action.
7. Miscellaneous.
7.1 Effective Date. Subject to approval by the Company’s stockholders, the effective date of the Plan (as
amended and restated) shall be for Performance Periods commencing on or after January 1, 2005. The Plan as it
exists prior to being amended and restated on January 1, 2005 governs awards earned and vested prior to such date.
This current amendment and statement in December 2008 is effective as of January 1, 2005 in order to ensure
compliance with Code section 409A where applicable.
7.2 Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any ways material or relevant to the construction or
interpretation of the Plan or any provision thereof.
7.3 Applicability to Successors. This Plan shall be binding upon and inure to the benefit of the Company and
each Participant, the successors and assigns of the Company, and the beneficiaries, personal representatives and
heirs of each Participant. If the Company becomes a party to any merger, consolidation or reorganization, this Plan
shall remain in full force and effect as an obligation of the Company or its successors in interest.
7.4 Employment Rights and Other Benefits Programs. The provisions of this Plan shall not give any
Participant any right to be retained in the employment of the Company. In the absence of any specific agreement to
the contrary, this Plan shall not affect any right of the Company, or of any affiliate of the Company, to terminate,
with or without cause, the Participant’s employment at any time. This Plan shall not replace any contract of
employment, whether oral, or written, between the Company and any Participant, but shall be considered a
supplement thereto. This Plan is in addition to, and not in lieu of, any other employee benefit plan or program in
which any Participant may be or become eligible to participate by reason of employment with the Company.
Receipt of benefits hereunder shall have such effect on contributions to and benefits under such other plans or
programs as the provisions of each such other plan or program may specify.

A-7
7.5 No Trust Fund Created. This Plan shall not create or be construed to create a trust or separate fund of any
kind or fiduciary relationship between the Company or any affiliate and a Participant or any other person. To the
extent that any person acquires a right to receive payments from the Company or any affiliate pursuant to this Plan,
such right shall be no greater than the right of any unsecured general creditor of the Company or of any affiliate.
7.6 Governing Law. The place of administration of the Plan shall be in the State of New York. The corporate
law of the State of Maryland shall govern issues relating to the validity and issuance of Shares. Otherwise, the Plan
shall be construed and administered in accordance with the laws of the State of New York, without giving effect to
principles relating to conflict of laws.
7.7 Severability. If any provision of the Plan is or becomes or is deemed to be invalid, illegal or unen-
forceable in any jurisdiction such provision shall be construed or deemed amended to conform to applicable laws, or
if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering
the purpose or intent of the Plan, such provision shall be stricken as to such jurisdiction, and the remainder of the
Plan shall remain in full force and effect.
7.8 Qualified Performance-Based Compensation. All of the terms and conditions of the Plan shall be
interpreted in such a fashion as to qualify all compensation paid hereunder to the maximum extent possible as
qualified performance-based compensation within the meaning of Code section 162(m).
7.9 Compliance with Code section 409A. At all times, this Plan shall be interpreted and operated (a) in
accordance with the requirements of Code section 409A, unless an exemption from Code section 409A is available
and applicable, (b) to maintain the exemptions from Code section 409A of bonus payments under subsection 4.1
that are designed to meet the short-term deferral exception under Code section 409A and (c) to preserve the status of
deferrals of compensation that were earned and vested prior to January 1, 2005 as exempt from Code section 409A,
i.e., to preserve the grandfathered status of such deferrals. In the event that any payment hereunder or provision of
the Plan shall be deemed not to comply with Code section 409A, then neither the Company, the Board of Directors,
the Committee nor its or their designees or agents, nor any of their affiliates, assigns or successors (each a “protected
party”) shall be liable to any Participant or other person for actions, inactions, decisions, indecisions or any other
role in relation to the Plan by a protected party if made or undertaken in good faith or in reliance on the advice of
counsel (who may be counsel for the Company), or made or undertaken by someone other than a protected party.

A-8
General Directions To
Sheraton Suites Philadelphia Airport

Via I-95 North


Take I-95 North. Follow signs to Central Philadelphia, Route 291-West. Exit on Island Avenue/PA 291 Ramp.
Stay in right lane and turn right onto Island Avenue. Hotel entrance is on the right.

Via I-95 South


Take I-95 South over the Girard Point Bridge. Exit on Island Ave./Enterprise Ave. (Exit 15). At dead end, turn
right onto Island Avenue. The hotel complex is on the right side beyond the first traffic light.
Note: Should you exit at Bartram Avenue, turn left at the second light onto Island Avenue. Stay in left lane. At
the first light, make U-turn. Hotel entrance is on the right.

From New Jersey and New York (Via New Jersey Turnpike)
Take New Jersey Turnpike South to Exit 3 (Philadelphia, Walt Whitman Bridge). Cross Walt Whitman Bridge;
after toll, take I-95 South and exit at Island Avenue/Enterprise Avenue (Exit 15). At dead end, turn right onto Island
Avenue. The Hotel complex is on the right side after the first traffic light.

From 30th Street Station


Rail service to Philadelphia International Airport is provided by Southeastern Pennsylvania Transportation
Authority. Take Airport Line R1 to Philadelphia International Airport. Follow directions from airport below.

From Philadelphia International Airport (PHL)


By Sheraton Suites Shuttle: Proceed to courtesy phones located outside baggage claim area. Say “The
Sheraton Suites” to reach shuttle operator.
By Car: Follow I-95 North to Island Avenue/291 Exit or take 291 East and turn left at traffic light (see Exxon
on left side). Hotel is located on the right.
(This page intentionally left blank)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K
¥ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2009
OR
n TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number: 1-7959
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction
of incorporation or organization)
52-1193298
(I.R.S. employer identification no.)
1111 Westchester Avenue
White Plains, NY 10604
(Address of principal executive
offices, including zip code)
(914) 640-8100
(Registrant’s telephone number,
including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¥ No n
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes n No ¥
Note: Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from
their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ¥ No n
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for
such shorter period than the registrant was required to submit and post such files). Yes ¥ No n
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. ¥
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer ¥ Accelerated filer n Non-accelerated filer n Smaller reporting company n
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes n No ¥
As of June 30, 2009, the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates (for purposes of
this Annual Report only, includes all Shares other than those held by the registrant’s Directors and executive officers) computed by reference to the
closing sales price as quoted on the New York Stock Exchange was $4,131,127,271.
As of February 19, 2010, the Corporation had outstanding 186,812,007 shares of common stock.
For information concerning ownership of Shares, see the Proxy Statement for the Company’s Annual Meeting of Stockholders to be held on
May 13, 2010, which is incorporated by reference under various Items of this Annual Report.
Document Incorporated by Reference:
Document Where Incorporated

Proxy Statement Part III (Items 10, 11, 12, 13 and 14)
TABLE OF CONTENTS

Page

PART I
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

PART II
Item 5. Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . 23
Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . 38
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure . . . 40
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

PART III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Item 13. Certain Relationships and Related Transactions and Director Independence . . . . . . . . . . . . . . 42
Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

PART IV
Item 15. Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
This Annual Report is filed by Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (the
“Corporation”). Unless the context otherwise requires, all references to the Corporation include those entities
owned or controlled by the Corporation, including SLC Operating Limited Partnership, a Delaware limited
partnership (the “Operating Partnership”), which prior to April 10, 2006 included Starwood Hotels & Resorts, a
Maryland real estate investment trust (the “Trust”), which was sold in the Host Transaction (defined below); all
references to the Trust include the Trust and those entities owned or controlled by the Trust, including SLT Realty
Limited Partnership, a Delaware limited partnership (the “Realty Partnership”); and all references to “we”, “us”,
“our”, “Starwood”, or the “Company” refer to the Corporation, the Trust and its respective subsidiaries, collectively
through April 7, 2006. Until April 7, 2006, the shares of common stock, par value $0.01 per share, of the
Corporation (“Corporation Shares”) and the Class B shares of beneficial interest, par value $0.01 per share, of the
Trust (“Class B Shares”) were attached and traded together and were held or transferred only in units consisting of
one Corporation Share and one Class B Share (a “Share”). On April 7, 2006, in connection with a transaction (the
“Host Transaction”) with Host Hotels & Resorts, Inc., its subsidiary Host Marriot L.P. and certain other subsidiaries
of Host Hotels & Resorts, Inc. (collectively, “Host”), the Shares were depaired and the Corporation Shares became
transferable separately from the Class B Shares. As a result of the depairing, the Corporation Shares trade alone
under the symbol “HOT” on the New York Stock Exchange (“NYSE”). As of April 10, 2006, neither Shares nor
Class B Shares are listed or traded on the NYSE.

PART I

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

Item 1. Business.
General
We are one of the world’s largest hotel and leisure companies. We conduct our hotel and leisure business both
directly and through our subsidiaries. Our brand names include the following:
St. Regis» (luxury full-service hotels, resorts and residences) are for connoisseurs who desire the finest
expressions of luxury. They provide flawless and bespoke service to high-end leisure and business travelers.
St. Regis hotels are located in the ultimate locations within the world’s most desired destinations, important
emerging markets and yet to be discovered paradises, and they typically have individual design characteristics to
capture the distinctive personality of each location.
The Luxury Collection» (luxury full-service hotels and resorts) is a group of unique hotels and resorts
offering exceptional service to an elite clientele. From legendary palaces and remote retreats to timeless modern
classics, these remarkable hotels and resorts enable the most discerning traveler to collect a world of unique,
authentic and enriching experiences indigenous to each destination that capture the sense of both luxury and place.
They are distinguished by magnificent decor, spectacular settings and impeccable service.
W» (luxury and upscale full service hotels, retreats and residences) feature world class design, world class
restaurants and “on trend” bars and lounges and its signature Whatever\Whenever» service standard. It’s a sensory
multiplex that not only indulges the senses, it delivers an emotional experience. Whether it’s “behind the scenes”

1
access at Whappenings, or our cutting edge music, lighting and scent programs, W hotels delivers an experience
unmatched in the hotel segment.

Westin» (luxury and upscale full-service hotels, resorts and residences) is a lifestyle brand competing in the
upper upscale sector around the globe. Each hotel offers renewing experiences that inspire guests to be at their best.
First impressions at any Westin hotel are fueled by signature sensory experiences of light, music, white tea scent and
botanicals. Westin revolutionized the industry with its famous Heavenly Bed» and Heavenly Bath» and launched a
multi-million dollar retail program featuring these products. Westin is the first global brand to offer in-room spa
treatments at every hotel and the first to go smoke-free in North America. The Westin Superfoods» menu is an
unique way we bring renewal to guests, with foods considered best for providing disease-fighting and health-
enhancing benefits due to their high nutrient and antioxidant content.

Le Méridien» (luxury and upscale full-service hotels, resorts and residences) is a European-inspired brand
with a French accent. Each of its hotels, whether city, airport or resort has a distinctive character driven by its
individuality and the Le Méridien brand values. With its underlying passion for food, art and style and its classic yet
stylish design, Le Méridien offers a unique experience at some of the world’s top travel destinations.

Sheraton» (luxury and upscale full-service hotels, resorts and residences) is our largest brand serving the
needs of luxury and upscale business and leisure travelers worldwide. We offer the entire spectrum of comfort. From
full-service hotels in major cities to luxurious resorts by the water, Sheraton can be found in the most sought-after
cities and resort destinations around the world. Every guest at Sheraton hotels and resorts feels a warm and
welcoming connection, the feeling you have when you walk into a place and your favorite song is playing — a sense
of comfort and belonging. Our innovation, the Link@Sheraton(SM) with Microsoft, encourages hotel guests to come
out of their rooms to enjoy the energy and social opportunities of traveling. At Sheraton, we help our guests connect
to what matters most to them, the office, home and the best spots in town.

Four Points» (select-service hotels) delights the self-sufficient traveler with a new kind of comfort,
approachable style and spirited, can-do service — all at the honest value our guests deserve. Our guests start
their day feeling energized and finish up relaxed and free to enjoy little indulgences that make their time away from
home special.

Aloft(SM) (select-service hotels), a brand introduced in 2005 with the first hotel opened in 2008, provides new
heights, an oasis where you least expect it, a spirited neighborhood outpost, a haven at the side of the road. Bringing
a cozy harmony of modern elements to the classic American on-the-road tradition, Aloft offers a sassy, refreshing,
ultra effortless alternative for both the business and leisure traveler. Fresh, fun, and fulfilling, Aloft is an experience
to be discovered and rediscovered, destination after destination, as you ease on down the road.

Element(SM) (extended stay hotels), a brand introduced in 2006 with the first hotel opened in 2008, provides
a modern, upscale and intuitively designed hotel experience that allows guests to live well and feel in control.
Inspired by Westin, Element hotels promote balance through a thoughtful, upscale environment. Decidedly modern
with an emphasis on nature, Element is intuitively constructed with an efficient use of space that encourages guests
to stay connected, feel alive, and thrive while they are away. Primarily all Element hotels are LEED certified,
depicting the importance of the environment in today’s world.

Through our brands, we are well represented in most major markets around the world. Our operations are
reported in two business segments, hotels and vacation ownership and residential operations.

Our revenue and earnings are derived primarily from hotel operations, which include management and other
fees earned from hotels we manage pursuant to management contracts, the receipt of franchise and other fees and
the operation of our owned hotels.

Our hotel business emphasizes the global operation of hotels and resorts primarily in the luxury and upscale
segment of the lodging industry. We seek to acquire interests in, or management or franchise rights with respect to
properties in this segment. At December 31, 2009, our hotel portfolio included owned, leased, managed and
franchised hotels totaling 979 hotels with approximately 292,000 rooms in approximately 100 countries, and is
comprised of 63 hotels that we own or lease or in which we have a majority equity interest, 440 hotels managed by

2
us on behalf of third-party owners (including entities in which we have a minority equity interest) and 476 hotels for
which we receive franchise fees.

Our revenues and earnings are also derived from the development, ownership and operation of vacation
ownership resorts, marketing and selling vacation ownership interests (“VOIs”) in the resorts and providing
financing to customers who purchase such interests. Generally these resorts are marketed under the brand names
described above. Additionally, our revenues and earnings are derived from the development, marketing and selling
of residential units at mixed use hotel projects owned by us as well as fees earned from the marketing and selling of
residential units at mixed use hotel projects developed by third-party owners of hotels operated under our brands. At
December 31, 2009, we had 22 owned vacation ownership resorts and residential properties (including 13 stand-
alone, eight mixed-use and one unconsolidated joint venture) in the United States, Mexico, and the Bahamas.

Due to the global economic crisis and its impact on the long-term growth outlook for the timeshare industry,
during the fourth quarter of 2009 we evaluated all of our existing vacation ownership projects, as well as land held
for future vacation ownership projects. We have thereby decided that no new vacation ownership projects are being
initiated and we have decided not to develop certain vacation ownership sites and future phases of certain existing
projects.

Our operations are in geographically diverse locations around the world. The following tables reflect our hotel
and vacation ownership and residential properties by type of revenue source and geographical presence by major
geographic area as of December 31, 2009:
Number of
Properties Rooms

Managed and unconsolidated joint venture hotels . . . . . . . . . . . . . . . . . . . . . . 440 153,800


Franchised hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 116,300
Owned hotels(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 21,500
Vacation ownership resorts and stand-alone properties . . . . . . . . . . . . . . . . . . 13 6,900
Total properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 992 298,500

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


Number of
Properties Rooms

North America (and Caribbean) . . . . . . . . . . . . ....................... 533 175,000


Europe, Africa and the Middle East . . . . . . . . . ....................... 244 60,000
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . ....................... 155 51,200
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . ....................... 60 12,300
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 992 298,500

We have implemented a strategy of reducing our investment in owned real estate and increasing our focus on
the management and franchise business. In furtherance of this strategy, since 2006, we have sold 60 hotels for
approximately $5.2 billion. As a result, our primary business objective is to maximize earnings and cash flow by
increasing the number of our hotel management contracts and franchise agreements; developing vacation own-
ership resorts and selling VOIs; and investing in real estate assets where there is a strategic rationale for doing so,
which may include selectively acquiring interests in additional assets and disposing of non-core hotels (including
hotels where the return on invested capital is not adequate) and “trophy” assets that may be sold at significant
premiums. We plan to meet these objectives by leveraging our global assets, broad customer base and other
resources and by taking advantage of our scale to reduce costs. The implementation of our strategy and financial
planning are impacted by the uncertainty relating to geopolitical and economic environments around the world and
their consequent impact on travel in their respective regions and the rest of the world.

3
The Corporation was incorporated in 1980 under the laws of Maryland. Sheraton Hotels & Resorts and Westin
Hotels & Resorts, Starwood’s largest brands, have been serving guests for more than 60 years. Starwood Vacation
Ownership (and its predecessor, Vistana, Inc.) has been selling VOIs for more than 20 years.

Our principal executive offices are located at 1111 Westchester Avenue, White Plains, New York 10604, and
our telephone number is (914) 640-8100.

For discussion of our revenues, profits, assets and geographical segments, see the notes to financial statements
of this Annual Report. For additional information concerning our business, see Item 2 Properties, of this Annual
Report.

Competition

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

We encounter strong competition as a hotel, residential, resort and vacation ownership operator and developer.
While some of our competitors are private management firms, several are large national and international chains
that own and operate their own hotels, as well as manage hotels for third-party owners and develop and sell VOIs,
under a variety of brands that compete directly with our brands. Changes in the general availability of suitable land
or the cost of acquiring or developing such land could adversely impact the profitability of our vacation ownership
and residential business.

Environmental Matters

We are subject to certain requirements and potential liabilities under various foreign and U.S. federal, state and
local environmental laws, ordinances and regulations (“Environmental Laws”). Under such laws, we could be held
liable for the costs of removing or cleaning up hazardous or toxic substances at, on, under, or in our currently or
formerly owned or operated properties. Such laws often impose liability without regard to whether the owner or
operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of
hazardous or toxic substances may adversely affect the owner’s ability to sell or rent such real property or to borrow
using such real property as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic wastes
may be liable for the costs of removal or remediation of such wastes at the treatment, storage or disposal facility,
regardless of whether such facility is owned or operated by such person. We use certain substances and generate
certain wastes that may be deemed hazardous or toxic under applicable Environmental Laws, and we from time to
time have incurred, and in the future may incur, costs related to cleaning up contamination resulting from historic
uses of certain of our current or former properties or our treatment, storage or disposal of wastes at facilities owned
by others. Other Environmental Laws govern occupational exposure to asbestos-containing materials (“ACMs”)
and require abatement or removal of certain ACMs (limited quantities of which are present in various building
materials such as spray-on insulation, floor coverings, ceiling coverings, tiles, decorative treatments and piping
located at certain of our hotels) in the event of damage or demolition, or certain renovations or remodeling.
Environmental Laws also regulate polychlorinated biphenyls (“PCBs”), which may be present in electrical
equipment. A number of our hotels have underground storage tanks (“USTs”) and equipment containing chlo-
rofluorocarbons (“CFCs”); the operation and subsequent removal or upgrading of certain USTs and the use of
equipment containing CFCs also are regulated by Environmental Laws. In connection with our ownership,
operation and management of our properties, we could be held liable for costs of remedial or other action with
respect to PCBs, USTs or CFCs.

4
Congress and some states are considering or have undertaken actions to regulate and reduce greenhouse gas
emissions. New or revised laws and regulations or new interpretations of existing laws and regulations, such as those
related to climate change, could affect the operation of our hotels and/or result in significant additional expense and
operating restrictions on us. The cost impact of such legislation, regulation, or new interpretations would depend
upon the specific requirements enacted and cannot be determined at this time.

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

Although we have incurred and expect to incur remediation and various environmental-related costs during the
ordinary course of operations, management does not anticipate that such costs will have a material adverse effect on
our operations or financial condition.

Seasonality and Diversification

The hotel industry is seasonal in nature; however, the periods during which our properties experience higher
revenue activities vary from property to property and depend principally upon location. Generally, our revenues and
operating income have been lower in the first quarter than in the second, third or fourth quarters.

Comparability of Owned Hotel Results

We continually update and renovate our owned, leased and consolidated joint venture hotels. While under-
going renovation, these hotels are generally not operating at full capacity and, as such, these renovations can
negatively impact our owned hotel revenues and operating income. Other events, such as the occurrence of natural
disasters may cause a full or partial closure or sale of a hotel, and such events can negatively impact our revenues
and operating income. Finally as we pursue our strategy of reducing our investment in owned real estate assets, the
sale of such assets can significantly reduce our revenues and operating income.

Employees

At December 31, 2009, approximately 145,000 people were employed at our corporate offices, owned and
managed hotels and vacation ownership resorts, of whom approximately 34% were employed in the United States.
At December 31, 2009, approximately 39% of the U.S.-based employees were covered by various collective
bargaining agreements providing, generally, for basic pay rates, working hours, other conditions of employment
and orderly settlement of labor disputes. Generally, labor relations have been maintained in a normal and
satisfactory manner, and management believes that our employee relations are satisfactory.

Where You Can Find More Information

We file annual, quarterly and special reports, proxy statements and other information with the Securities &
Exchange Commission (“SEC”). Our SEC filings are available to the public over the Internet at the SEC’s web site
at http://www.sec.gov. Our SEC filings are also available on our website at http://www.starwoodhotels.com/
corporate/investor relations.html as soon as reasonably practicable after they are filed with or furnished to the SEC.
You may also read and copy any document we file with the SEC at its public reference room located at 100 F Street,
NE, in Washington, D.C. 20549 on official business days during the hours of 10 a.m. to 3 p.m. Please call the SEC at
(800) SEC-0330 for further information. Our filings with the SEC are also available at the New York Stock
Exchange. For more information on obtaining copies of our public filings at the New York Stock Exchange, you
should call (212) 656-5060. You may also obtain a copy of our filings free of charge by calling Investor Relations
at (914) 640-8165.

5
Item 1A. Risk Factors.
Risks Relating to Hotel, Resort, Vacation Ownership and Residential Operations
We Are Subject to All the Operating Risks Common to the Hotel and Vacation Ownership and Residential
Industries. Operating risks common to the hotel and vacation ownership and residential industries include:
• changes in general economic conditions, including the severity and duration of the current downturn in the
US and global economies;
• impact of war and terrorist activity (including threatened terrorist activity) and heightened travel security
measures instituted in response thereto;
• domestic and international political and geopolitical conditions;
• travelers’ fears of exposures to contagious diseases;
• decreases in the demand for transient rooms and related lodging services, including a reduction in business
travel as a result of general economic conditions;
• decreases in demand or increases in supply for vacation ownership interests;
• the impact of internet intermediaries on pricing and our increasing reliance on technology;
• cyclical over-building in the hotel and vacation ownership industries;
• restrictive changes in zoning and similar land use laws and regulations or in health, safety and environmental
laws, rules and regulations and other governmental and regulatory action;
• changes in travel patterns;
• changes in operating costs including, but not limited to, energy, labor costs (including the impact of
unionization), food costs, workers’ compensation and health-care related costs, insurance and unanticipated
costs such as acts of nature and their consequences;
• the costs and administrative burdens associated with compliance with applicable laws and regulations,
including, among others, franchising, timeshare, privacy, licensing labor and employment, and regulations
under the Office of Foreign Assets Control and the Foreign Corrupt Practices Act.
• disputes with owners of properties, including condominium hotels, franchisees and homeowner associations
which may result in litigation;
• the availability and cost of capital to allow us and potential hotel owners and franchisees to fund
construction, renovations and investments;
• foreign exchange fluctuations;
• the financial condition of third-party property owners, project developers and franchisees, which may impact
our ability to recover indemnity payments that may be owed to us and their ability to fund amounts required
under development, management and franchise agreements and in most cases our recourse is limited to the
equity value said party has in the property;
• the financial condition of the airline industry and the impact on air travel; and
• regulation or taxation of carbon dioxide emissions by airlines and other forms of transportation.
We are also impacted by our relationships with owners and franchisees. Our hotel management contracts are
typically long-term arrangements, but most allow the hotel owner to replace us in certain circumstances, such as the
bankruptcy of the hotel owner or franchisee, the failure to meet certain financial or performance criteria and in
certain cases, upon a sale of the property. Our ability to meet these financial and performance criteria is subject to,
among other things, the risks described in this section. Additionally, our operating results would be adversely
affected if we could not maintain existing management, franchise or representation agreements or obtain new
agreements on as favorable terms as the existing agreements.

6
We utilize our brands in connection with the residential portions of certain properties that we develop and
license our brands to third parties to use in a similar manner for a fee. Residential properties using our brands could
become less attractive due to changes in mortgage rates and the availability of mortgage financing generally, market
absorption or oversupply in a particular market. As a result, we and our third party licensees may not be able to sell
these residences for a profit or at the prices that we or they have anticipated.
The Current Recession in the Lodging Industry and the Global Economy Generally Will Continue to Impact
Our Financial Results and Growth. The continuing economic recession and the uncertainty over its breadth,
depth and duration have had a negative impact on the hotel and vacation ownership and residential industries.
Substantial increases in air and ground travel costs and decreases in airline capacity have reduced demand for our
hotel rooms and interval and fractional timeshare products. Accordingly, our financial results have been impacted
by the economic recession and both our future financial results and growth could be further harmed if the economic
recession continues for a significant period or becomes worse. In addition, as a result of the impact on the lodging
industry, we may be required to pay out on certain performance and other guarantees that are contained in our third
party contracts and may have future impairments.
Moreover, many businesses, particularly financial institutions, face restrictions on the ability to travel and hold
conferences or events at resorts and luxury hotels. The negative publicity associated with such companies holding
large events has also resulted in cancellations and reduced bookings. New or revised regulations on businesses
participating in government financial assistance programs, as well as the negative publicity associated with
conferences and events could continue to impact our financial results.
We Must Compete for Customers. The hotel, vacation ownership and residential industries are highly
competitive. Our properties compete for customers with other hotel and resort properties, and, with respect to our
vacation ownership resorts and residential projects, with owners reselling their VOIs, including fractional own-
ership, or apartments. Some of our competitors may have substantially greater marketing and financial resources
than we do, and they may improve their facilities, reduce their prices or expand or improve their marketing
programs in ways that adversely affect our operating results.
We Must Compete for Management and Franchise Agreements. Our present growth strategy for devel-
opment of additional lodging facilities entails entering into and maintaining various arrangements with property
owners. We compete with other hotel companies for management and franchise agreements. The terms of our
management agreements, franchise agreements, and leases for each of our lodging facilities are influenced by
contract terms offered by our competitors, among other things. We cannot assure you that any of our current
arrangements will continue or that we will be able to enter into future collaborations, renew agreements, or enter
into new agreements in the future on terms that are as favorable to us as those that exist today. In connection with
entering into management or franchise agreements, we may be required to make investments in or guarantee the
obligations of third parties or guarantee minimum income to third parties.
Any Failure to Protect Our Trademarks Could Have a Negative Impact on the Value of Our Brand Names
and Adversely Affect Our Business. We believe our trademarks are an important component of our business. We
rely on trademark laws to protect our proprietary rights. The success of our business depends in part upon our
continued ability to use our trademarks to increase brand awareness and further develop our brand in both domestic
and international markets. Monitoring the unauthorized use of our intellectual property is difficult. Litigation has
been and may continue to be necessary to enforce our intellectual property rights or to determine the validity and
scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of
resources, may result in counterclaims or other claims against us and could significantly harm our results of
operations. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as
do the laws of the United States. From time to time, we apply to have certain trademarks registered. There is no
guarantee that such trademark registrations will be granted. We cannot assure you that all of the steps we have taken
to protect our trademarks in the United States and foreign countries will be adequate to prevent imitation of our
trademarks by others. The unauthorized reproduction of our trademarks could diminish the value of our brand and
its market acceptance, competitive advantages or goodwill, which could adversely affect our business.
Significant Owners of Our Properties May Concentrate Risks. Generally there has not been a concentration
of ownership of hotels operated under our brands by any single owner. Following the acquisition of the Le Méridien

7
brand business and a large disposition transaction to one ownership group in 2006, single ownership groups own
significant numbers of hotels operated by us. While the risks associated with such ownership are no different than
exist generally (i.e., the financial position of the owner, the overall state of the relationship with the owner and their
participation in optional programs and the impact on cost efficiencies if they choose not to participate), they are
more concentrated.

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

Third Party Internet Reservation Channels May Negatively Impact Our Bookings. Some of our hotel
rooms are booked through third party internet travel intermediaries such as Travelocity.com», Expedia.com»
Orbitz.com» and Priceline.com». As the percentage of internet bookings increases, these intermediaries may be
able to obtain higher commissions, reduced room rates or other significant contract concessions from us. Moreover,
some of these internet travel intermediaries are attempting to commoditize hotel rooms by increasing the
importance of price and general indicators of quality (such as “three-star downtown hotel”) at the expense of
brand identification. These agencies hope that consumers will eventually develop brand loyalties to their reser-
vations system rather than to our lodging brands. Although we expect to derive most of our business from traditional
channels and our websites, if the amount of sales made through internet intermediaries increases significantly, our
business and profitability may be significantly harmed.

A Failure to Keep Pace with Developments in Technology Could Impair Our Operations Or Competitive
Position. The hospitality industry continues to demand the use of sophisticated technology and systems including
technology utilized for property management, brand assurance and compliance, procurement, reservation systems,
operation of our customer loyalty program, distribution and guest amenities. These technologies can be expected to
require refinements, including to comply with legal requirements such as privacy regulations and requirements
established by third parties such as the payment card industry, and there is the risk that advanced new technologies
will be introduced. Further, the development and maintenance of these technologies may require significant capital.
There can be no assurance that as various systems and technologies become outdated or new technology is required
we will be able to replace or introduce them as quickly as our competition or within budgeted costs and timeframes
for such technology. Further, there can be no assurance that we will achieve the benefits that may have been
anticipated from any new technology or system.

Our Businesses Are Capital Intensive. For our owned, managed and franchised properties to remain
attractive and competitive, the property owners and we have to spend money periodically to keep the properties well
maintained, modernized and refurbished. This creates an ongoing need for cash and, to the extent the property
owners and we cannot fund expenditures from cash generated by operations, funds must be borrowed or otherwise
obtained. In addition, to maintain our vacation ownership business and residential projects, we need to spend money
to develop new units. Events over the past two years including the failures and near failures of financial services
companies and the decrease in liquidity and available capital have negatively impacted the capital markets for hotel
and real estate investments.

Our Real Estate Investments Subject Us to Numerous Risks. We are subject to the risks that generally relate
to investments in real property because we own and lease hotels and resorts. The investment returns available from
equity investments in real estate depend in large part on the amount of income earned and capital appreciation
generated by the related properties, and the expenses incurred. In addition, a variety of other factors affect income
from properties and real estate values, including governmental regulations, insurance, zoning, tax and eminent
domain laws, interest rate levels and the availability of financing. For example, new or existing real estate zoning or
tax laws can make it more expensive and/or time-consuming to develop real property or expand, modify or renovate
hotels. When interest rates increase, the cost of acquiring, developing, expanding or renovating real property
increases and real property values may decrease as the number of potential buyers decreases. Similarly, as financing
becomes less available, it becomes more difficult both to acquire and to sell real property. Finally, under eminent
domain laws, governments can take real property. Sometimes this taking is for less compensation than the owner
believes the property is worth. Any of these factors could have a material adverse impact on our results of operations

8
or financial condition. In addition, equity real estate investments are difficult to sell quickly and we may not be able
to adjust our portfolio of owned properties quickly in response to economic or other conditions. If our properties do
not generate revenue sufficient to meet operating expenses, including debt service and capital expenditures, our
income will be adversely affected.
Our Dependence on Hotel and Resort Development Exposes Us to Timing, Budgeting and Other Risks.
We intend to develop hotel and resort properties and residential components of hotel properties, as suitable
opportunities arise, taking into consideration the general economic climate. In addition, the owners and developers
of new-build properties that we have entered into management or franchise agreements with are subject to these
same risks which may impact the amount and timing of fees we had expected to collect from those properties. New
project development has a number of risks, including risks associated with:
• construction delays or cost overruns that may increase project costs;
• receipt of zoning, occupancy and other required governmental permits and authorizations;
• development costs incurred for projects that are not pursued to completion;
• so-called acts of God such as earthquakes, hurricanes, floods or fires that could adversely impact a project;
• defects in design or construction that may result in additional costs to remedy or require all or a portion of a
property to be closed during the period required to rectify the situation;
• ability to raise capital; and
• governmental restrictions on the nature or size of a project or timing of completion.
We cannot assure you that any development project, including sites held for development of vacation
ownership resorts, will in fact be developed, and if developed, the time period or the budget of such development
may be greater than initially contemplated and the actual number of units or rooms constructed may be less than
initially contemplated.
We May Be Subject To Environmental Liabilities. Our properties and operations are subject to a number of
Environmental Laws. Under such laws, we could be held liable for the costs of removing or cleaning up hazardous
or toxic substances at, on, under, or in our currently or formerly owned or operated properties. Such laws often
impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of
such hazardous or toxic substances. The presence of hazardous or toxic substances may adversely affect the owner’s
ability to sell or rent such real property or to borrow using such real property as collateral. Persons who arrange for
the disposal or treatment of hazardous or toxic wastes may be liable for the costs of removal or remediation of such
wastes at the treatment, storage or disposal facility, regardless of whether such facility is owned or operated by such
person. We use certain substances and generate certain wastes that may be deemed hazardous or toxic under
applicable Environmental Laws, and we from time to time have incurred, and in the future may incur, costs related
to cleaning up contamination resulting from historic uses of certain of our current or former properties or our
treatment, storage or disposal of wastes at facilities owned by others. Other Environmental Laws govern occu-
pational exposure to ACMs and require abatement or removal of certain ACMs (limited quantities of which are
present in various building materials such as spray-on insulation, floor coverings, ceiling coverings, tiles, decorative
treatments and piping located at certain of our hotels) in the event of damage or demolition, or certain renovations or
remodeling. Environmental Laws also regulate PCBs, which may be present in electrical equipment. A number of
our hotels have USTs and equipment containing CFCs; the operation and subsequent removal or upgrading of
certain USTs and the use of equipment containing CFCs also are regulated by Environmental Laws. In connection
with our ownership, operation and management of our properties, we could be held liable for costs of remedial or
other action with respect to PCBs, USTs or CFCs.
Congress and some states are considering or have undertaken actions to regulate and reduce greenhouse gas
emissions. New or revised laws and regulations or new interpretations of existing laws and regulations, such as those
related to climate change, could affect the operation of our hotels and/or result in significant additional expense and
operating restrictions on us. The cost impact of such legislation, regulation, or new interpretations would depend
upon the specific requirements enacted and cannot be determined at this time.

9
International Operations Are Subject to Unique Political and Monetary Risks. We have significant
international operations which as of December 31, 2009 included 244 owned, managed or franchised properties
in Europe, Africa and the Middle East (including 16 properties with majority ownership); 60 owned, managed or
franchised properties in Latin America (including 9 properties with majority ownership); and 155 owned, managed
or franchised properties in the Asia Pacific region (including 3 properties with majority ownership). International
operations generally are subject to various political, geopolitical, and other risks that are not present in U.S. oper-
ations. These risks include the risk of war, terrorism, civil unrest, expropriation and nationalization as well as the
impact in cases in which there are inconsistencies between U.S. law and the laws of an international jurisdiction. In
addition, some international jurisdictions restrict the repatriation of non-U.S. earnings. Various other international
jurisdictions have laws limiting the ability of non-U.S. entities to pay dividends and remit earnings to affiliated
companies unless specified conditions have been met. In addition, sales in international jurisdictions typically are
made in local currencies, which subject us to risks associated with currency fluctuations. Currency devaluations and
unfavorable changes in international monetary and tax policies could have a material adverse effect on our
profitability and financing plans, as could other changes in the international regulatory climate and international
economic conditions. Other than Italy, where our risks are heightened due to the 6 properties we owned as of
December 31, 2009, our international properties are geographically diversified and are not concentrated in any
particular region.

Risks Relating to Operations in Syria


During fiscal 2009, Starwood subsidiaries generated approximately $2 million of revenue from management
and other fees from hotels located in Syria, a country that the United States has identified as a state sponsor of
terrorism. This amount constitutes significantly less than 1% of our worldwide annual revenues. The United States
does not prohibit U.S. investments in, or the exportation of services to, Syria, and our activities in that country are in
full compliance with U.S. and local law. However, the United States has imposed limited sanctions as a result of
Syria’s support for terrorist groups and its interference with Lebanon’s sovereignty, including a prohibition on the
exportation of U.S.-origin goods to Syria and the operation of government-owned Syrian air carriers in the
United States except in limited circumstances. The United States may impose further sanctions against Syria at any
time for foreign policy reasons. If so, our activities in Syria may be adversely affected, depending on the nature of
any further sanctions that might be imposed. In addition, our activities in Syria may reduce demand for our stock
among certain investors.

Risks Relating to Debt Financing


Our Debt Service Obligations May Adversely Affect Our Cash Flow. As a result of our debt obligations, we
are subject to: (i) the risk that cash flow from operations will be insufficient to meet required payments of principal
and interest, (ii) restrictive covenants, including covenants relating to certain financial ratios and ability to pay
dividends, and (iii) interest rate risk. Although we anticipate that we will be able to repay or refinance our existing
indebtedness and any other indebtedness when it matures, there can be no assurance that we will be able to do so or
that the terms of such refinancings will be favorable. Our leverage may have important consequences including the
following: (i) our ability to obtain additional financing for acquisitions, working capital, capital expenditures or
other purposes, if necessary, may be impaired or such financing may not be available on terms favorable to us and
(ii) a substantial decrease in operating cash flow, EBITDA (as defined in our credit agreements) or a substantial
increase in our expenses could make it difficult for us to meet our debt service requirements and restrictive
covenants and force us to sell assets and/or modify our operations.
We Have Little Control Over the Availability of Funds Needed to Fund New Investments and Maintain
Existing Hotels. In order to fund new hotel investments, as well as refurbish and improve existing hotels, both we
and current and potential hotel owners must have access to capital. The availability of funds for new investments and
maintenance of existing hotels depends in large measure on capital markets and liquidity factors over which we
have little control. Recent events have made the capital markets increasingly volatile. As a result, many current and
prospective hotel owners are finding hotel financing to be increasingly expensive and difficult to obtain. Delays,
increased costs and other impediments to restructuring such projects may affect our ability to realize fees, recover
loans and guarantee advances, or realize equity investments from such projects. Our ability to recover loans and

10
guarantee advances from hotel operations or from owners through the proceeds of hotel sales, refinancing of debt or
otherwise may also affect our ability to raise new capital. In addition, downgrades of our public debt ratings by
rating agencies could increase our cost of capital. A breach of a covenant could result in an event of default, that, if
not cured or waived, could result in an acceleration of all or a substantial portion of our debt. For a more detailed
description of the covenants imposed by our debt obligations, see Item 7, Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Liquidity and Capital Resources — Cash Used for Financing
Activities in this Annual Report.
Volatility in the Credit Markets Will Continue to Adversely Impact Our Ability to Sell the Loans That Our
Vacation Ownership Business Generates. Our vacation ownership business provides financing to purchasers of
our vacation ownership and fractional units, and we attempt to sell interests in those loans in the securities markets.
Increased volatility in the credit markets will likely continue to impact the timing and volume of the timeshare loans
that we are able to sell. Although we expect to realize the economic value of our vacation ownership note portfolio
even if future note sales are temporarily or indefinitely delayed, such delays could reduce or postpone future gains
and could result in either increased borrowings to provide capital to replace anticipated proceeds from such sales or
reduced spending in order to maintain our leverage and return targets.

Risks Relating to So-Called Acts of God, Terrorist Activity and War


Our financial and operating performance may be adversely affected by so-called acts of God, such as natural
disasters, in locations where we own and/or operate significant properties and areas of the world from which we
draw a large number of customers. Similarly, wars (including the potential for war), terrorist activity (including
threats of terrorist activity), political unrest and other forms of civil strife and geopolitical uncertainty have caused
in the past, and may cause in the future, our results to differ materially from anticipated results.

Risks Related to Pandemic Diseases


Our business could be materially and adversely affected by the effect of a pandemic disease on the travel
industry. For example, the past outbreaks of SARS and avian flu had a severe impact on the travel industry, and the
recent outbreak of swine flu in Mexico had a similar impact. A prolonged recurrence of SARS, avian flu, swine flu
or another pandemic disease also may result in health or other government authorities imposing restrictions on
travel. Any of these events could result in a significant drop in demand for our hotel and vacation ownership
businesses and adversely affect our financial condition and results of operations.

Our Insurance Policies May Not Cover All Potential Losses


We carry insurance coverage for general liability, property, business interruption and other risks with respect to
our owned and leased properties and we make available insurance programs for owners of properties we manage.
These policies offer coverage terms and conditions that we believe are usual and customary for our industry.
Generally, our “all-risk” property policies provide that coverage is available on a per occurrence basis and that, for
each occurrence, there is a limit as well as various sub-limits on the amount of insurance proceeds we will receive in
excess of applicable deductibles. In addition, there may be overall limits under the policies. Sub-limits exist for
certain types of claims such as service interruption, debris removal, expediting costs or landscaping replacement,
and the dollar amounts of these sub-limits are significantly lower than the dollar amounts of the overall coverage
limit. Our property policies also provide that for the coverage of critical earthquake (California and Mexico),
hurricane and flood, all of the claims from each of our properties resulting from a particular insurable event must be
combined together for purposes of evaluating whether the annual aggregate limits and sub-limits contained in our
policies have been exceeded and any such claims will also be combined with the claims of owners of managed
hotels that participate in our insurance program for the same purpose. Therefore, if insurable events occur that affect
more than one of our owned hotels and/or managed hotels owned by third parties that participate in our insurance
program, the claims from each affected hotel will be added together to determine whether the per occurrence limit,
annual aggregate limit or sub-limits, depending on the type of claim, have been reached and if the limits or
sub-limits are exceeded each affected hotel will only receive a proportional share of the amount of insurance
proceeds provided for under the policy. In addition, under those circumstances, claims by third party owners will
reduce the coverage available for our owned and leased properties.

11
In addition, there are also other risks including but not limited to war, certain forms of terrorism such as
nuclear, biological or chemical terrorism, political risks, some environmental hazards and/or acts of God that may
be deemed to fall completely outside the general coverage limits of our policies or may be uninsurable or may be too
expensive to justify insuring against.
We may also encounter challenges with an insurance provider regarding whether it will pay a particular claim
that we believe to be covered under our policy. Should an uninsured loss or a loss in excess of insured limits occur,
we could lose all or a portion of the capital we have invested in a hotel or resort, as well as the anticipated future
revenue from the hotel or resort. In that event, we might nevertheless remain obligated for any mortgage debt or
other financial obligations related to the property.

Our Acquisitions/Dispositions and Investments In New Brands May Ultimately Not Prove Successful
And We May Not Realize Anticipated Benefits
We will consider corporate as well as property acquisitions and investments that complement our business. In
many cases, we will be competing for these opportunities with third parties who may have substantially greater
financial resources or different or lower acceptable financial metrics than we do. There can be no assurance that we
will be able to identify acquisition or investment candidates or complete transactions on commercially reasonable
terms or at all. If transactions are consummated, there can be no assurance that any anticipated benefits will actually
be realized. Similarly, there can be no assurance that we will be able to obtain additional financing for acquisitions
or investments, or that the ability to obtain such financing will not be restricted by the terms of our debt agreements.
We periodically review our business to identify properties or other assets that we believe either are non-core,
no longer complement our business, are in markets which may not benefit us as much as other markets during an
economic recovery or could be sold at significant premiums. We are focused on restructuring and enhancing real
estate returns and monetizing investments and from time to time, may attempt to sell these identified properties and
assets. There can be no assurance, however, that we will be able to complete dispositions on commercially
reasonable terms or at all or that any anticipated benefits will actually be received.
We may develop and launch additional brands in the future. There can be no assurance regarding the level of
acceptance of these brands in the development and consumer marketplaces, that the cost incurred in developing the
brands will be recovered or that the anticipated benefits from these new brands will be realized.

Investing Through Partnerships or Joint Ventures Decreases Our Ability to Manage Risk
In addition to acquiring or developing hotels and resorts or acquiring companies that complement our business
directly, we have from time to time invested, and expect to continue to invest, as a co-venturer. Joint venturers often
have shared control over the operation of the joint venture assets. Therefore, joint venture investments may involve
risks such as the possibility that the co-venturer in an investment might become bankrupt or not have the financial
resources to meet its obligations, or have economic or business interests or goals that are inconsistent with our
business interests or goals, or be in a position to take action contrary to our instructions or requests or contrary to our
policies or objectives. Consequently, actions by a co-venturer might subject hotels and resorts owned by the joint
venture to additional risk. Further, we may be unable to take action without the approval of our joint venture
partners. Alternatively, our joint venture partners could take actions binding on the joint venture without our
consent. Additionally, should a joint venture partner become bankrupt, we could become liable for our partner’s
share of joint venture liabilities.

Our Vacation Ownership Business is Subject to Extensive Regulation and Risk of Default
We market and sell VOIs, which typically entitle the buyer to ownership of a fully-furnished resort unit for a
one-week period (or in the case of fractional ownership interests, generally for three or more weeks) on either an
annual or an alternate-year basis. We also acquire, develop and operate vacation ownership resorts, and provide
financing to purchasers of VOIs. These activities are all subject to extensive regulation by the federal government
and the states in which vacation ownership resorts are located and in which VOIs are marketed and sold including
regulation of our telemarketing activities under state and federal “Do Not Call” laws. In addition, the laws of most
states in which we sell VOIs grant the purchaser the right to rescind the purchase contract at any time within a

12
statutory rescission period. Although we believe that we are in material compliance with all applicable federal,
state, local and foreign laws and regulations to which vacation ownership marketing, sales and operations are
currently subject, changes in these requirements or a determination by a regulatory authority that we were not in
compliance, could adversely affect us. In particular, increased regulations of telemarketing activities could
adversely impact the marketing of our VOIs.
We bear the risk of defaults under purchaser mortgages on VOIs. If a VOI purchaser defaults on the mortgage
during the early part of the loan amortization period, we will not have recovered the marketing, selling (other than
commissions in certain events), and general and administrative costs associated with such VOI, and such costs will
be incurred again in connection with the resale of the repossessed VOI. Accordingly, there is no assurance that the
sales price will be fully or partially recovered from a defaulting purchaser or, in the event of such defaults, that our
allowance for losses will be adequate.

Risks Related to Privacy Initiatives


We collect information relating to our guests for various business purposes, including marketing and
promotional purposes. The collection and use of personal data are governed by privacy laws and regulations
enacted in the United States and other jurisdictions around the world. Privacy regulations continue to evolve and on
occasion may be inconsistent from one jurisdiction to another. Compliance with applicable privacy regulations may
increase our operating costs and/or adversely impact our ability to market our products, properties and services to
our guests. In addition, non-compliance with applicable privacy regulations by us (or in some circumstances non-
compliance by third parties engaged by us) or a breach of security on systems storing our data may result in fines,
payment of damages or restrictions on our use or transfer of data.

Risks Related to Our Ability to Manage Growth


Our future success and our ability to manage future growth depend in large part upon the efforts of our senior
management and our ability to attract and retain key officers and other highly qualified personnel. Competition for
such personnel is intense. In the past several years, we have experienced significant changes in our senior
management, including executive officers (See Item 10. “Directors, Executive Officers and Corporate Governance”
of this Annual Report). There can be no assurance that we will continue to be successful in attracting and retaining
qualified personnel. Accordingly, there can be no assurance that our senior management will be able to successfully
execute and implement our growth and operating strategies.
Over the last few years we have been pursuing a strategy of reducing our investment in owned real estate and
increasing our focus on the management and franchise business. As a result, we are planning on substantially
increasing the number of hotels we open every year and increasing the overall number of hotels in our system. This
increase will require us to recruit and train a substantial number of new associates to work at these hotels as well as
increasing our capabilities to enable hotels to open on time and successfully. There can be no assurance that our
strategy will be successful.

Tax Risks
Failure of the Trust to Qualify as a REIT Would Increase Our Tax Liability. Qualifying as a real estate
investment trust (a “REIT”) requires compliance with highly technical and complex tax provisions that courts and
administrative agencies have interpreted only to a limited degree. Due to the complexities of our ownership,
structure and operations, the Trust is more likely than are other REITs to face interpretative issues for which there
are no clear answers. We believe that for the taxable years ended December 31, 1995 through April 10, 2006, the
date which Host acquired the Trust, the Trust qualified as a REIT under the Internal Revenue Code of 1986, as
amended. If the Trust failed to qualify as a REIT for any prior tax year, we would be liable to pay a significant
amount of taxes for those years. Subsequent to the Host Transaction, the Trust is no longer owned by us and we are
not subject to this risk for actions following the transaction.
Evolving Government Regulation Could Impose Taxes or Other Burdens on Our Business. We rely upon
generally available interpretations of tax laws and other types of laws and regulations in the countries and locales in
which we operate. We cannot be sure that these interpretations are accurate or that the responsible taxing or other

13
governmental authority is in agreement with our views. The imposition of additional taxes or causing us to change
the way we conduct our business could cause us to have to pay taxes that we currently do not collect or pay or
increase the costs of our services or increase our costs of operations.
Our current business practice with our internet reservation channels is that the intermediary collects hotel
occupancy tax from its customer based on the price that the intermediary paid us for the hotel room. We then remit
these taxes to the various tax authorities. Several jurisdictions have stated that they may take the position that the tax
is also applicable to the intermediaries’ gross profit on these hotel transactions. If jurisdictions take this position,
they should seek the additional tax payments from the intermediary; however, it is possible that they may seek to
collect the additional tax payment from us and we would not be able to collect these taxes from the customers. To the
extent that any tax authority succeeds in asserting that the hotel occupancy tax applies to the gross revenue on these
transactions, we believe that any additional tax would be the responsibility of the intermediary. However, it is
possible that we might have additional tax exposure. In such event, such actions could have a material adverse effect
on our business, results of operations and financial condition.
Risks Relating to Ownership of Our Shares
Our Board of Directors May Issue Preferred Stock and Establish the Preferences and Rights of Such
Preferred Stock. Our charter provides that the total number of shares of stock of all classes which the Corporation
has authority to issue is 1,200,000,000, consisting of one billion shares of common stock and 200 million shares of
preferred stock. Our Board of Directors has the authority, without a vote of shareholders, to establish the preferences
and rights of any preferred or other class or series of shares to be issued and to issue such shares. The issuance of
preferred shares or other shares having special preferences or rights could delay or prevent a change in control even
if a change in control would be in the interests of our shareholders. Since our Board of Directors has the power to
establish the preferences and rights of additional classes or series of shares without a shareholder vote, our Board of
Directors may give the holders of any class or series preferences, powers and rights, including voting rights, senior
to the rights of holders of our shares.
Our Board of Directors May Implement Anti-Takeover Devices and our Charter and Bylaws Contain
Provisions which May Prevent Takeovers. Certain provisions of Maryland law permit our Board of Directors,
without stockholder approval, to implement possible takeover defenses that are not currently in place, such as a
classified board. In addition, our charter contains provisions relating to restrictions on transferability of the
Corporation Shares, which provisions may be amended only by the affirmative vote of our shareholders holding
two-thirds of the votes entitled to be cast on the matter. As permitted under the Maryland General Corporation Law,
our Bylaws provide that directors have the exclusive right to amend our Bylaws.
Item 1B. Unresolved Staff Comments.
Not applicable.

Item 2. Properties.
We are one of the largest hotel and leisure companies in the world, with operations in approximately
100 countries. We consider our hotels and resorts, including vacation ownership resorts (together “Resorts”),
generally to be premier establishments with respect to desirability of location, size, facilities, physical condition,
quality and variety of services offered in the markets in which they are located. Although obsolescence arising from
age, condition of facilities, and style can adversely affect our Resorts, Starwood and third-party owners of managed
and franchised Resorts expend substantial funds to renovate and maintain their facilities in order to remain
competitive. For further information see Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations — Liquidity and Capital Resources in this Annual Report.
Our hotel business included 979 owned, managed or franchised hotels with approximately 292,000 rooms and
our owned vacation ownership and residential business included 13 stand-alone vacation ownership resorts and
residential properties at December 31, 2009, predominantly under seven brands. All brands (other than the Four
Points by Sheraton and the Aloft and Element brands) represent full-service properties that range in amenities from
luxury hotels and resorts to more moderately priced hotels. Our Four Points by Sheraton, Aloft and Element brands
are select service properties that cater to more value oriented consumers.

14
The following table reflects our hotel and vacation ownership properties, by brand as of December 31, 2009:
Hotels, VOI and
Residential(a)
Properties Rooms

St. Regis and Luxury Collection . . . . . . . . . . . . . . . . . . . ................ 82 15,300


W......................................... ................ 34 10,600
Westin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 169 68,100
Le Méridien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 105 27,400
Sheraton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 398 143,100
Four Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 148 24,900
Aloft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 39 5,900
Independent / Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 17 3,200
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 992 298,500

(a) Includes vacation ownership properties of which 13 are stand-alone, eight are mixed-use and one is an
unconsolidated joint venture totaling rooms of 6,900.

Hotel Business
Managed and Franchised Hotels. Hotel and resort properties in the United States are often owned by
entities that do not manage hotels or own a brand name. Hotel owners typically enter into management contracts
with hotel management companies to operate their hotels. When a management company does not offer a brand
affiliation, the hotel owner often chooses to pay separate franchise fees to secure the benefits of brand marketing,
centralized reservations and other centralized administrative functions, particularly in the sales and marketing area.
Management believes that companies, such as Starwood, that offer both hotel management services and well-
established worldwide brand names appeal to hotel owners by providing the full range of management, marketing
and reservation services. In 2009, we opened 82 managed and franchised hotels with approximately 16,000 rooms
and 42 managed and franchised hotels with approximately 11,000 rooms left the system.
Managed Hotels. We manage hotels worldwide, usually under a long-term agreement with the hotel owner
(including entities in which we have a minority equity interest). Our responsibilities under hotel management
contracts typically include hiring, training and supervising the managers and employees that operate these facilities.
For additional fees, we provide centralized reservation services and coordinate national advertising and certain
marketing and promotional services. We prepare and implement annual budgets for the hotels we manage and are
responsible for allocating property-owner funds for periodic maintenance and repair of buildings and furnishings. In
addition to our owned and leased hotels, at December 31, 2009, we managed 440 hotels with approximately 153,800
rooms worldwide. During the year ended December 31, 2009, we generated management fees by geographic area as
follows:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.1%
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.6%
Middle East and Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5%
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7%
Americas (Latin America, Caribbean & Canada). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0%

Management contracts typically provide for base fees tied to gross revenue and incentive fees tied to profits as
well as fees for other services, including centralized reservations, sales and marketing, public relations and national
and international media advertising. In our experience, owners seek hotel managers that can provide attractively
priced base, incentive and marketing fees combined with demonstrated sales and marketing expertise and
operations-focused management designed to enhance profitability. Some of our management contracts permit
the hotel owner to terminate the agreement when the hotel is sold or otherwise transferred to a third party, as well as

15
if we fail to meet established performance criteria. In addition, many hotel owners seek equity, debt or other
investments from us to help finance hotel renovations or conversions to a Starwood brand so as to align the interests
of the owner and Starwood. Our ability or willingness to make such investments may determine, in part, whether we
will be offered, will accept, or will retain a particular management contract. During the year ended December 31,
2009, we opened 27 managed hotels with approximately 7,000 rooms, and 25 managed hotels with approximately
6,000 rooms left our system. In addition, during 2009, we signed management agreements for 44 hotels with
approximately 12,000 rooms, a small portion of which opened in 2009 and the majority of which will open in the
future.
Brand Franchising and Licensing. We franchise our Sheraton, Westin, Four Points by Sheraton, Luxury
Collection, Le Méridien, Aloft and Element brand names and generally derive licensing and other fees from
franchisees based on a fixed percentage of the franchised hotel’s room revenue, as well as fees for other services,
including centralized reservations, sales and marketing, public relations and national and international media
advertising. In addition, a franchisee may also purchase hotel supplies, including brand-specific products, from
certain Starwood-approved vendors. We approve certain plans for, and the location of, franchised hotels and review
their design. At December 31, 2009, there were 476 franchised properties with approximately 116,300 rooms.
During the year ended December 31, 2009, we generated franchise fees by geographic area as follows:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.0%
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0%
Americas (Latin America, Caribbean & Canada). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0%
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2%
Middle East and Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0%

In addition to the franchise contracts we retained in connection with the sale of hotels during the year ended
December 31, 2009, we opened 55 franchised hotels with approximately 9,000 rooms, and 17 franchised hotels with
approximately 5,000 rooms left our system. In addition, during 2009, we signed franchise agreements for 33 hotels
with approximately 5,000 rooms, a portion of which opened in 2009 and a portion of which will open in the future.
Owned, Leased and Consolidated Joint Venture Hotels. Historically, we have derived the majority of our
revenues and operating income from our owned, leased and consolidated joint venture hotels and a significant
portion of these results are driven by these hotels in North America. However, beginning in 2006, we embarked
upon a strategy of selling a significant number of hotels. Since the beginning of 2006, we have sold 60 wholly
owned hotels which has substantially reduced our revenues and operating income from owned, leased and
consolidated joint venture hotels. The majority of these hotels were sold subject to long-term management or
franchise contracts. Total revenues generated from our owned, leased and consolidated joint venture hotels
worldwide for the years ending December 31, 2009, 2008 and 2007 were $1.584 billion, $2.212 billion and
$2.384 billion, respectively (total revenues from our owned, leased and consolidated joint venture hotels in
North America were $1.024 billion, $1.380 billion and $1.542 billion for 2009, 2008 and 2007, respectively). The
following represents our top five markets in the United States by metropolitan area as a percentage of our total
owned, leased and consolidated joint venture revenues for the year ended December 31, 2009 (with comparable data
for 2008):
Top Five Domestic Markets in the United States as a % of Total Owned
Revenues for the Year Ended December 31, 2009 with Comparable Data for 2008(1)
2009 2008
Metropolitan Area Revenues Revenues

New York, NY . . . . . . . . . . . . . . . . . . .............................. 14.3% 13.5%


Hawaii . . . . . . . . . . . . . . . . . . . . . . . . .............................. 6.3% 6.1%
San Francisco, CA . . . . . . . . . . . . . . . .............................. 5.1% 5.7%
Phoenix, AZ . . . . . . . . . . . . . . . . . . . . .............................. 5.1% 5.6%
Boston, MA . . . . . . . . . . . . . . . . . . . . .............................. 4.5% 3.8%

16
The following represents our top five international markets by country as a percentage of our total owned,
leased and consolidated joint venture revenues for the year ended December 31, 2009 (with comparable data for
2008):

Top Five International Markets as a % of Total Owned


Revenues for the Year Ended December 31, 2009 with Comparable Data for 2008(1)
2009 2008
Country Revenues Revenues

Canada . . . . . . . . . . . . . . . . . . . . . . . . .............................. 9.3% 9.0%


Italy . . . . . . . . . . . . . . . . . . . . . . . . . . .............................. 7.6% 8.5%
Australia . . . . . . . . . . . . . . . . . . . . . . . .............................. 5.3% 4.8%
Mexico . . . . . . . . . . . . . . . . . . . . . . . . .............................. 4.7% 5.4%
Austria . . . . . . . . . . . . . . . . . . . . . . . . .............................. 2.8% 2.8%

(1) Includes the revenues of hotels sold for the period prior to their sale.
Following the sale of a significant number of our hotels in the past three years, we currently own or lease 63
hotels as follows:
Hotel Location Rooms

U.S. Hotels:
The St. Regis Hotel, New York New York, NY 229
St. Regis Resort, Aspen Aspen, CO 179
St. Regis Hotel, San Francisco San Francisco, CA 260
The Phoenician Scottsdale, AZ 643
W New York — Times Square New York, NY 509
W Chicago Lakeshore Chicago, IL 520
W Los Angeles Westwood Los Angeles, CA 258
W Chicago City Center Chicago, IL 369
W New York — The Court and Tuscany New York, NY 318
W New Orleans New Orleans, LA 423
W New Orleans, French Quarter New Orleans, LA 98
W Atlanta Atlanta, GA 275
The Westin Maui Resort & Spa Maui, HI 759
The Westin Peachtree Plaza, Atlanta Atlanta, GA 1068
The Westin Gaslamp San Diego San Diego, CA 450
The Westin San Francisco Airport San Francisco, CA 397
The Westin St. John Resort & Villas St. John, Virgin Islands 175
Sheraton Manhattan Hotel New York, NY 665
Sheraton Kauai Resort Kauai, HI 394
Sheraton Steamboat Springs Resort Steamboat Springs, CO 205
Sheraton Suites Philadelphia Airport Philadelphia, PA 251
Aloft Lexington Lexington, MA 136
Aloft Philadelphia Airport Philadelphia, PA 136
Element Lexington Lexington, MA 123
Four Points by Sheraton Philadelphia Airport Philadelphia, PA 177
Four Points by Sheraton Tucson University Plaza Tucson, AZ 150
The Boston Park Plaza Hotel & Towers Boston, MA 941

17
Hotel Location Rooms

Tremont Hotel Chicago, IL 135


Clarion Hotel San Francisco, CA 251
Cove Haven Resort Scranton, PA 276
Pocono Palace Resort Scranton, PA 189
Paradise Stream Resort Scranton, PA 143
International Hotels:
St. Regis Grand Hotel, Rome Rome, Italy 161
Grand Hotel Florence, Italy 107
Hotel Gritti Palace Venice, Italy 91
Park Tower Buenos Aires, Argentina 180
Hotel Alfonso XIII Seville, Spain 147
Hotel Imperial Vienna, Austria 138
Hotel Bristol, Vienna Vienna, Austria 140
Hotel Goldener Hirsch Salzburg, Austria 69
Hotel Maria Cristina San Sebastian, Spain 136
W Barcelona Barcelona, Spain 473
The Westin Excelsior, Rome Rome, Italy 316
The Westin Resort & Spa, Los Cabos Los Cabos, Mexico 243
The Westin Resort & Spa, Puerto Vallarta Puerto Vallarta, Mexico 280
The Westin Excelsior, Florence Florence, Italy 171
The Westin Resort & Spa Cancun Cancun, Mexico 379
The Westin Denarau Island Resort Nadi, Fiji 273
The Westin Dublin Hotel Dublin, Ireland 163
Sheraton Centre Toronto Hotel Toronto, Canada 1377
Sheraton On The Park Sydney, Australia 557
Sheraton Rio Hotel & Resort Rio de Janeiro, Brazil 559
Sheraton Diana Majestic Hotel Milan, Italy 106
Sheraton Ambassador Hotel Monterrey, Mexico 229
Sheraton Lima Hotel & Convention Center Lima, Peru 431
Sheraton Santa Maria de El Paular Rascafria, Spain 44
Sheraton Fiji Resort Nadi, Fiji 264
Sheraton Buenos Aires Hotel & Convention Center Buenos Aires, Argentina 739
Sheraton Maria Isabel Hotel & Towers Mexico City, Mexico 755
Sheraton Gateway Hotel in Toronto International Airport Toronto, Canada 474
Le Centre Sheraton Montreal Hotel Montreal, Canada 825
Sheraton Paris Airport Hotel & Conference Centre Paris, France 252
The Park Lane Hotel, London London, England 305
An indicator of the performance of our owned, leased and consolidated joint venture hotels is revenue per
available room (“REVPAR”)(1), as it measures the period-over-period growth in rooms revenue for comparable
properties. This is particularly the case in the United States where there is no impact on this measure from foreign
exchange rates.

18
The following table summarizes REVPAR, average daily rates (“ADR”) and average occupancy rates on a
year-to-year basis for our 53 owned, leased and consolidated joint venture hotels (excluding 15 hotels sold or closed
and 10 hotels undergoing significant repositionings or without comparable results in 2009 and 2008) (“Same-Store
Owned Hotels”) for the years ended December 31, 2009 and 2008:
Year Ended
December 31,
2009 2008 Variance

Worldwide (53 hotels with approximately 18,000 rooms)


REVPAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $128.95 $171.09 ⫺24.6%
ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $199.22 $240.23 ⫺17.1%
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 64.7% 71.2% ⫺6.5
North America (28 hotels with approximately 11,000 rooms)
REVPAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $134.96 $178.61 ⫺24.4%
ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $194.33 $241.32 ⫺19.5%
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 69.4% 74.0% ⫺4.6
International (25 hotels with approximately 7,000 rooms)
REVPAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $118.80 $158.40 ⫺25.0%
ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $209.31 $238.17 ⫺12.1%
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 56.8% 66.5% ⫺9.7

(1) REVPAR is calculated by dividing room revenue, which is derived from rooms and suites rented or leased, by
total room nights available for a given period. REVPAR may not be comparable to similarly titled measures
such as revenues.
During the years ended December 31, 2009 and 2008, we invested approximately $132 million and
$282 million, respectively, for capital improvements at owned hotels. These capital expenditures include con-
struction costs at W City Center in Chicago, IL, Westin Peachtree Plaza in Atlanta, GA, Le Centre Sheraton in
Montreal, Canada, The Phoenician in Scottsdale, AZ, and the W Times Square in New York, NY.

Vacation Ownership and Residential Business


We develop, own and operate vacation ownership resorts, market and sell the VOIs in the resorts and, in many
cases, provide financing to customers who purchase such ownership interests. Owners of VOIs can trade their
interval for intervals at other Starwood vacation ownership resorts, for intervals at certain vacation ownership
resorts not otherwise sponsored by Starwood through an exchange company, or for hotel stays at Starwood
properties. From time to time, we securitize or sell the receivables generated from our sale of VOIs.
We have also entered into arrangements with several owners for mixed use hotel projects that will include a
residential component. We have entered into licensing agreements for the use of certain of our brands to allow the
owners to offer branded condominiums to prospective purchasers. In consideration, we typically receive a licensing
fee equal to a percentage of the gross sales revenue of the units sold. The licensing arrangement generally terminates
upon the earlier of sell-out of the units or a specified length of time.
At December 31, 2009, we had 22 residential and vacation ownership resorts and sites in our portfolio with 16
actively selling VOIs and residences, and two that have sold all existing inventory. During 2009 and 2008, we
invested approximately $121 million and $363 million, respectively, for vacation ownership capital expenditures,
including VOI construction at the Sheraton Vistana Villages in Orlando, FL, the Westin Desert Willow Villas in
Palm Desert, CA, and the Westin Lagunamar Ocean Resort in Cancun, as well as construction costs at the St. Regis
Bal Harbour Resort in Miami Beach, FL.
Due to the global economic crisis and its impact on the long-term outlook for the timeshare industry, during the
fourth quarter of 2009, we completed a comprehensive review of our vacation ownership projects. No new projects
are being initiated and we have decided not to develop three vacation ownership sites and future phases of certain
existing projects. As a result, inventories, fixed assets and land values at certain projects were determined to be

19
impaired and were written down to their fair value, resulting in a primarily non-cash pre-tax impairment charge of
$255 million. Additionally, in connection with this review of the business, we made a decision to reduce the pricing
of certain inventory at existing projects, resulting in a pre-tax charge of $17 million. As a result of these decisions
and future plans for the vacation ownership business, we recorded a $90 million non-cash charge for the impairment
of goodwill associated with the vacation ownership reporting unit.

Item 3. Legal Proceedings.


Incorporated by reference to the description of legal proceedings in Note 24. Commitments and Contingencies,
in the consolidated financial statements set forth in Part II, Item 8. Financial Statements and Supplementary Data.

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


Not applicable.

20
PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
Market Information
The Corporation Shares are traded on the New York Stock Exchange (the “NYSE”) under the symbol “HOT.”
The following table sets forth the quarterly range of the high and low sale prices of the Corporation Shares for
the fiscal periods indicated as reported on the NYSE Composite Tape.
High Low

2009
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... $37.55 $27.66
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... $34.78 $18.49
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... $26.68 $12.12
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... $23.78 $ 8.99
2008
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... $28.55 $10.97
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... $43.29 $25.95
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... $55.06 $38.89
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... $56.00 $37.07

Approximate Number of Equity Security Holders


As of February 19, 2010, there were approximately 15,000 holders of record of Corporation Shares.

Dividends
The following table sets forth the frequency and amount of dividends made by the Corporation to holders of
Corporation Shares for the years ended December 31, 2009 and 2008:
Dividends
Declared

2009
Annual dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.20(a)
2008
Annual dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.90(b)

(a) The Corporation declared a dividend in the fourth quarter of 2009 to shareholders of record on December 31,
2009, which was paid in January 2010.
(b) The Corporation declared a dividend in the fourth quarter of 2008 to shareholders of record on December 31,
2008, which was paid in January 2009.

Conversion of Securities; Sale of Unregistered Securities


In 2006, we completed the redemption of the remaining 25,000 outstanding shares of Class B Exchangeable
Preferred Shares of the Trust (“Class B EPS”) for approximately $1 million in cash. Also in 2006, in connection with the
Host Transaction, we redeemed all of the Class A Exchangeable Preferred Shares of the Trust (“Class A EPS”)
(approximately 562,000 shares) and Realty Partnership units (approximately 40,000 units) for approximately $34 million
in cash. SLC Operating Limited Partnership units are convertible into Corporation Shares at the unit holder’s option,
provided that we have the option to settle conversion requests in cash or Corporation Shares. In 2006, we redeemed
approximately 926,000 SLC Operating Limited Partnership units for approximately $56 million in cash, and there were
approximately 169,000 and 178,000 of these units outstanding at December 31, 2009 and 2008, respectively.

Issuer Purchases of Equity Securities


We did not repurchase any Corporation Shares during 2009.

21
STOCK RETURN PERFORMANCE AND CUMULATIVE TOTAL RETURN
Set forth below is a line graph comparing the cumulative total stockholder return on the Corporation Shares
(and Shares until April 7, 2006) against the cumulative total return on the S&P 500 and the S&P 500 Hotel Index
(the “S&P 500 Hotel”) for the five fiscal years beginning December 31, 2004 and ending December 31, 2009. The
graph assumes that the value of the investments was 100 on December 31, 2004 and that all dividends and other
distributions were reinvested. In addition, the Share prices for the periods prior to the Host Transaction on April 10,
2006 have been adjusted based on the value shareholders received for their Class B shares. The comparisons are
provided in response to SEC disclosure requirements and are not intended to forecast or be indicative of future
performance.

200
Starwood
S&P 500
150 S&P 500 Hotel
DOLLARS

100

50

0
2004 2005 2006 2007 2008 2009
2004 2005 2006 2007 2008 2009
Starwood 100.00 110.79 135.96 97.74 41.73 85.73
S&P 500 100.00 104.91 121.46 128.13 80.73 102.10
S&P 500 Hotel 100.00 101.52 116.35 101.88 52.68 82.10

22
Item 6. Selected Financial Data.
The following financial and operating data should be read in conjunction with the information set forth under
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated
financial statements and related notes thereto appearing elsewhere in this Annual Report and incorporated herein by
reference. As a result of asset sales in the fourth quarter, gains on dispositions and operations associated with the
sale of hotels have been reclassified to discontinued operations for all periods presented.
Year Ended December 31,
2009 2008 2007 2006 2005
(In millions, except per share data)
Income Statement Data
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,756 $5,754 $5,999 $ 5,840 $5,860
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26 $ 610 $ 841 $ 824 $ 812
Income (loss) from continuing operations(b) . . . . . . . . . . $ (1) $ 249 $ 532 $ 1,105 $ 416
Diluted earnings per share from continuing operations . . $ 0.00 $ 1.34 $ 2.52 $ 4.96 $ 1.85
Operating Data
Cash from operating activities . . . . . . . . . . . . . . . . . . . . $ 571 $ 646 $ 884 $ 500 $ 764
Cash from (used for) investing activities . . . . . . . . . . . . . $ 116 $ (172) $ (215) $ 1,402 $ 85
Cash used for financing activities . . . . . . . . . . . . . . . . . . $ (993) $ (243) $ (712) $(2,635) $ (253)
Aggregate cash distributions paid . . . . . . . . . . . . . . . . . . $ 165 $ 172 $ 90 $ 276 $ 176
Cash distributions and dividends declared per Share . . . . $ 0.20 $ 0.90 $ 0.90 $ 0.84(a) $ 0.84

(a) In connection with the Host Transaction, in February and March 2006, the Trust declared distributions totaling
$0.42 per Corporation Share. In December 2006, the Corporation declared a dividend of $0.42 per Corporation
Share.
(b) Amounts represent income from continuing operations attributable to Starwood Shares (i.e. excluding non-
controlling interests).
At December 31,
2009 2008 2007 2006 2005
(In millions)
Balance Sheet Data
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,761 $9,703 $9,622 $9,280 $12,494
Long-term debt, net of current maturities and
including exchangeable units and Class B
preferred shares . . . . . . . . . . . . . . . . . . . . . . . $2,955 $3,502 $3,590 $1,827 $ 2,926

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)
discusses our consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these consolidated financial statements
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and costs and expenses during the reporting periods. On an ongoing basis, management
evaluates its estimates and judgments, including those relating to revenue recognition, bad debts, inventories,
investments, plant, property and equipment, goodwill and intangible assets, income taxes, financing operations,
frequent guest program liability, self-insurance claims payable, restructuring costs, retirement benefits and
contingencies and litigation.
Management bases its estimates and judgments on historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily available from other sources. Actual results may differ
from these estimates under different assumptions and conditions.

23
CRITICAL ACCOUNTING POLICIES

We believe the following to be our critical accounting policies:

Revenue Recognition. Our revenues are primarily derived from the following sources: (1) hotel and resort
revenues at our owned, leased and consolidated joint venture properties; (2) vacation ownership and residential
revenues; (3) management and franchise revenues; (4) revenues from managed and franchised properties; and
(5) other revenues which are ancillary to our operations. Generally, revenues are recognized when the services have
been rendered. The following is a description of the composition of our revenues:

• Owned, Leased and Consolidated Joint Ventures — Represents revenue primarily derived from hotel oper-
ations, including the rental of rooms and food and beverage sales from owned, leased or consolidated joint
venture hotels and resorts. Revenue is recognized when rooms are occupied and services have been rendered.
These revenues are impacted by global economic conditions affecting the travel and hospitality industry as
well as relative market share of the local competitive set of hotels. REVPAR is a leading indicator of revenue
trends at owned, leased and consolidated joint venture hotels as it measures the period-over-period growth in
rooms revenue for comparable properties.

• Vacation Ownership and Residential — We recognize revenue from VOI sales and financings and the sales
of residential units which are typically a component of mixed use projects that include a hotel. Such revenues
are impacted by the state of the global economies and, in particular, the U.S. economy, as well as interest rate
and other economic conditions affecting the lending market. Revenue is generally recognized upon the buyer
demonstrating a sufficient level of initial and continuing investment, the period of cancellation with refund
has expired and receivables are deemed collectible. We determine the portion of revenues to recognize for
sales accounted for under the percentage of completion method based on judgments and estimates including
total project costs to complete. Additionally, we record reserves against these revenues based on expected
default levels. Changes in costs could lead to adjustments to the percentage of completion status of a project,
which may result in differences in the timing and amount of revenues recognized from the projects. We have
also entered into licensing agreements with third-party developers to offer consumers branded condomin-
iums or residences. Our fees from these agreements are generally based on the gross sales revenue of units
sold. Residential fee revenue is recorded in the period that a purchase and sales agreement exists, delivery of
services and obligations has occurred, the fee to the owner is deemed fixed and determinable and
collectibility of the fees is reasonably assured.

• Management and Franchise Revenues — Represents fees earned on hotels managed worldwide, usually
under long-term contracts, franchise fees received in connection with the franchise of our Sheraton, Westin,
Four Points by Sheraton, Le Méridien and Luxury Collection brand names, termination fees and the
amortization of deferred gains related to sold properties for which we have significant continuing
involvement, offset by payments by us under performance and other guarantees. Management fees are
comprised of a base fee, which is generally based on a percentage of gross revenues, and an incentive fee,
which is generally based on the property’s profitability. For any time during the year, when the provisions of
our management contracts allow receipt of incentive fees upon termination, incentive fees are recognized for
the fees due and earned as if the contract was terminated at that date, exclusive of any termination fees due or
payable. Therefore, during periods prior to year-end, the incentive fees recorded may not be indicative of the
eventual incentive fees that will be recognized at year-end as conditions and incentive hurdle calculations
may not be final. Franchise fees are generally based on a percentage of hotel room revenues. As with hotel
revenues discussed above, these revenue sources are affected by conditions impacting the travel and
hospitality industry as well as competition from other hotel management and franchise companies.

• Revenues from Managed and Franchised Properties — These revenues represent reimbursements of costs
incurred on behalf of managed hotel properties and franchisees. These costs relate primarily to payroll costs
at managed properties where we are the employer. Since the reimbursements are made based upon the costs
incurred with no added margin, these revenues and corresponding expenses have no effect on our operating
income and our net income.

24
Goodwill and Intangible Assets. Goodwill and intangible assets arise in connection with acquisitions,
including the acquisition of management contracts. We do not amortize goodwill and intangible assets with
indefinite lives. Intangible assets with finite lives are amortized on a straight-line basis over their respective useful
lives. We review all goodwill and intangible assets for impairment by comparing their fair values to book values
annually, or upon the occurrence of a trigger event. Impairment charges, if any, are recognized in operating results.

In 2009 we recorded a goodwill impairment charge of $90 million to our vacation ownership reporting unit. It
is reasonably possible that the remaining carrying value of vacation ownership goodwill may become further
impaired if future operating results are below our estimates.

Frequent Guest Program. SPG is our frequent guest incentive marketing program. SPG members earn
points based on spending at our properties, as incentives to first time buyers of VOIs and residences and through
participation in affiliated programs. Points can be redeemed at substantially all of our owned, leased, managed and
franchised properties as well as through other redemption opportunities with third parties, such as conversion to
airline miles. Properties are charged based on hotel guests’ qualifying expenditures. Revenue is recognized by
participating hotels and resorts when points are redeemed for hotel stays.

We, through the services of third-party actuarial analysts, determine the fair value of the future redemption
obligation based on statistical formulas which project the timing of future point redemption based on historical
experience, including an estimate of the “breakage” for points that will never be redeemed, and an estimate of the
points that will eventually be redeemed as well as the cost of reimbursing hotels and other third parties in respect of
other redemption opportunities for point redemptions. Actual expenditures for SPG may differ from the actuarially
determined liability. The total actuarially determined liability as of December 31, 2009 and 2008 is $689 million
and $662 million, respectively. A 10% reduction in the “breakage” of points would result in an estimated increase of
$87 million to the liability at December 31, 2009.

Long-Lived Assets. We evaluate the carrying value of our long-lived assets for impairment by comparing the
expected undiscounted future cash flows of the assets to the net book value of the assets if certain trigger events
occur. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the
net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash
flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, sales of similar
assets, appraisals and, if appropriate, current estimated net sales proceeds from pending offers. We evaluate the
carrying value of our long-lived assets based on our plans, at the time, for such assets and such qualitative factors as
future development in the surrounding area, status of expected local competition and projected incremental income
from renovations. Changes to our plans, including a decision to dispose of or change the intended use of an asset,
can have a material impact on the carrying value of the asset.

Loan Loss Reserves. For the vacation ownership and residential segment, we record an estimate of expected
uncollectibility on our VOI notes receivable as a reduction of revenue at the time we recognize profit on a sale of a
vacation ownership interest. We hold large amounts of homogeneous VOI notes receivable and therefore assess
uncollectibility based on pools of receivables. In estimating our loss reserves, we use a technique referred to as static
pool analysis, which tracks uncollectible notes for each year’s sales over the life of the respective notes and projects
an estimated default rate that is used in the determination of our loan loss reserve requirements. As of December 31,
2009, the average estimated default rate for our pools of receivables was 9.8%. Given the significance of our
respective pools of VOI notes receivable, a change in the projected default rate can have a significant impact to our
loan loss reserve requirements, with a 0.1% change estimated to have an impact of approximately $3 million.

For the hotel segment, we measure the impairment of a loan based on the present value of expected future cash
flows discounted at the loan’s original effective interest rate or the estimated fair value of the collateral. For
impaired loans, we establish a specific impairment reserve for the difference between the recorded investment in the
loan and the present value of the expected future cash flows or the estimated fair value of the collateral. We apply the
loan impairment policy individually to all loans in the portfolio and do not aggregate loans for the purpose of
applying such policy. For loans that we have determined to be impaired, we recognize interest income on a cash
basis.

25
Assets Held for Sale. We consider properties to be assets held for sale when management approves and
commits to a formal plan to actively market a property or group of properties for sale and a signed sales contract and
significant non-refundable deposit or contract break-up fee exist. Upon designation as an asset held for sale, we
record the carrying value of each property or group of properties at the lower of its carrying value which includes
allocable segment goodwill or its estimated fair value, less estimated costs to sell, and we stop recording
depreciation expense. Any gain realized in connection with the sale of a property for which we have significant
continuing involvement (such as through a long-term management agreement) is deferred and recognized over the
initial term of the related agreement. The operations of the properties held for sale prior to the sale date are recorded
in discontinued operations unless we will have continuing involvement (such as through a management or franchise
agreement) after the sale.
Legal Contingencies. We are subject to various legal proceedings and claims, the outcomes of which are
subject to significant uncertainty. An estimated loss from a loss contingency should be accrued by a charge to
income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can
be reasonably estimated. We evaluate, among other factors, the degree of probability of an unfavorable outcome and
the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact our
financial position or our results of operations.
Income Taxes. We provide for income taxes in accordance with principles contained in ASC 740, Income
Taxes. Under these principles, we recognize the amount of income tax payable or refundable for the current year and
deferred tax assets and liabilities for the future tax consequences of events that have been recognized in our financial
statements or tax returns. We also measure and recognize the amount of tax benefit that should be recorded for
financial statement purposes for uncertain tax positions taken or expected to be taken in a tax return. With respect to
uncertain tax positions, we evaluate the recognized tax benefits for derecognition, classification, interest and
penalties, interim period accounting and disclosure requirements. Judgment is required in assessing the future tax
consequences of events that have been recognized in our financial statements or tax returns.

26
RESULTS OF OPERATIONS

The following discussion presents an analysis of results of our operations for the years ended December 31,
2009, 2008 and 2007.

The last fifteen months have imposed significant pressures on the lodging industry. The present economic
slowdown and the uncertainty over its breadth, depth and duration have had a negative impact on the hotel and
vacation ownership and residential industries resulting in steep declines in demand and lower rates for our hotel
rooms and interval and fractional timeshare products. Many businesses around the world, including businesses
participating in the Troubled Asset Relief Program (TARP), face restrictions on the ability to travel and hold
conferences or events at resorts and luxury hotels. The negative publicity associated with such companies holding
large events has resulted in cancellations and reduced bookings. In addition, the H1N1 (Swine Flu) virus has
negatively impacted our business around the world and particularly our owned hotels in Latin America.

Year Ended December 31, 2009 Compared with Year Ended December 31, 2008

Continuing Operations
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2009 2008 Year Year

Owned, Leased and Consolidated Joint Venture


Hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,584 $2,212 $ (628) (28.4)%
Management Fees, Franchise Fees and Other
Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 658 751 (93) (12.4)%
Vacation Ownership and Residential . . . . . . . . . . . 523 749 (226) (30.2)%
Other Revenues from Managed and Franchise
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,947 2,042 (95) (4.7)%
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,712 $5,754 $(1,042) (18.1)%

The decrease in revenues from owned, leased and consolidated joint venture hotels was primarily due to the
continued economic crisis in the United States and internationally. The decrease was also due to lost revenues from
15 wholly owned hotels sold or closed in 2009 and 2008. These sold or closed hotels had revenues of $68 million in
the year ended December 31, 2009 compared to $248 million in the corresponding period of 2008. Revenues at our
Same-Store Owned Hotels (53 hotels for the year ended December 31, 2009 and 2008, excluding the 15 hotels sold
or closed and 10 additional hotels undergoing significant repositionings or without comparable results in 2009 and
2008) decreased 24.0%, or $437 million, to $1.386 billion for the year ended December 31, 2009 when compared to
$1.823 billion in the same period of 2008 due primarily to a decrease in REVPAR.

REVPAR at our Same-Store Owned Hotels decreased 24.6% to $128.95 for the year ended December 31, 2009
when compared to the corresponding 2008 period. The decrease in REVPAR at these Same-Store Owned Hotels
resulted from a 17.1% decrease in ADR to $199.22 for the year ended December 31, 2009 compared to $240.23 for
the corresponding 2008 period and a decrease in occupancy rates to 64.7% in the year ended December 31, 2009
when compared to 71.2% in the same period in 2008. REVPAR at Same-Store Owned Hotels in North America
decreased 24.4% for the year ended December 31, 2009 when compared to the same period of 2008. REVPAR
declined in substantially all of our major domestic markets. REVPAR at our international Same-Store Owned
Hotels decreased by 25.0% for the year ended December 31, 2009 when compared to the same period of 2008.
REVPAR declined in most of our major international markets. REVPAR for Same-Store Owned Hotels interna-
tionally decreased 20.3% excluding the unfavorable effects of foreign currency translation.

The decrease in management fees, franchise fees and other income was primarily a result of an $87 million
decrease in management and franchise revenue to $630 million for the year ended December 31, 2009 compared to
$717 million in the corresponding period in 2008. The decrease was due to the significant decline in base and
incentive management fees as a result of the global economic crisis, partially offset by fees from the net addition of

27
40 managed and franchised hotels to our system and approximately $15 million in termination fees recognized in
2009 when compared to $4 million in 2008.
The decrease in vacation ownership and residential sales and services was primarily due to lower originated
contract sales of VOI inventory, which represents vacation ownership revenues before adjustments for percentage of
completion accounting and other deferrals, partially offset by gains of $23 million relating to securitizations.
Originated contract sales of VOI inventory decreased 39% for the year ended December 31, 2009 when compared to
the same period in 2008. This decline was primarily driven by lower tour flow which was down 19.2% for the year
ended December 31, 2009 when compared to the same period in 2008. The decline in tour flow was a result of the
economic climate and resulting closure of underperforming sales centers. Additionally, the average contract amount
per vacation ownership unit sold decreased 21.4% to approximately $16,000, driven by a higher sales mix of lower-
priced inventory, including a higher percentage of lower-priced biennial inventory. The decrease is also due to a
$43 million decrease in residential revenue, as the 2008 period included license fees in connection with two
St. Regis projects.
Other revenues from managed and franchised properties decreased primarily due to a decrease in costs,
commensurate with the decline in revenues, at our managed and franchised hotels. These revenues represent
reimbursements of costs incurred on behalf of managed hotel and vacation ownership properties and franchisees
and relate primarily to payroll costs at managed properties where we are the employer. Since the reimbursements
are made based upon the costs incurred with no added margin, these revenues and corresponding expenses have no
effect on our operating income and our net income.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2009 2008 Year Year

Selling, General, Administrative and Other . . $314 $377 $(63) (16.7)%


The decrease in selling, general, administrative and other expenses was primarily a result of our focus on
reducing our cost structure in the current economic climate. Beginning in the middle of 2008, we began an activity
value analysis project to review our cost structure across a majority of our corporate departments and divisional
headquarters. (See Note 13 for a summary of charges associated with this initiative.) A majority of the cost
containment initiatives were completed and implemented in late 2008 and early 2009 and are now being realized.
Costs and expenses related to our former Bliss spa business (“Bliss”) have been reclassified to discontinued
operations for both periods presented as a result of the sale of Bliss at the end of 2009.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2009 2008 Year Year

Restructuring, Goodwill Impairment and


Other Special Charges, Net . . . . . . . . . . . . $379 $141 $238 n/a
During the fourth quarter of 2009, we completed a comprehensive review of our vacation ownership business.
We decided not to develop certain vacation ownership sites and future phases of certain existing projects. As a result
of these decisions, we recorded a primarily non-cash impairment charge of $255 million in the restructuring,
goodwill impairment and other special charges line item. Additionally, we recorded a $90 million non-cash charge
for the impairment of goodwill in the vacation ownership reporting unit.
Additionally, throughout 2009, we recorded restructuring and other special charges of $34 million related to
our ongoing initiative of rationalizing our cost structure. These charges related to severance charges and costs to
close vacation ownership sales galleries.
During the year ended December 31, 2008, we recorded restructuring and other special charges of $141 million,
including $62 million of severance and related charges associated with our ongoing initiative of rationalizing our cost
structure in light of the current economic climate. We also recorded impairment charges of approximately $79 million
primarily related to the decision not to develop two vacation ownership projects as a result of the economic climate and
its impact on business conditions.

28
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2009 2008 Year Year

Depreciation and Amortization . . . . . . . . . . . $309 $313 $(4) (1.3)%

The decrease in depreciation expense was due to reduced depreciation expense from sold hotels offset by
additional capital expenditures made in the last twelve months.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2009 2008 Year Year

Operating Income . . . . . . . . . . . . . . . . . . . . . $26 $610 $(584) n/a

The decrease in operating income was primarily due to the decline in our core business units, hotels and
vacation ownership, due to the severe impact from the global economic crisis as discussed above and the related
impairments and restructuring charges previously discussed. Additionally, operating income was impacted by a
$17 million charge, recorded in the vacation ownership costs and expenses line, related to a price reduction in
vacation ownership intervals, following an in-depth review of the business. These decreases were partially offset by
the reduction in selling, general, administrative and other costs as a result of our activity value analysis costs savings
project and other cost savings initiatives and a favorable $14 million income item related to the expiration of the
statute of limitations on an indirect tax exposure and a Brazilian water claim.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2009 2008 Year Year

Equity (Losses) Earnings and Gains and Losses


from Unconsolidated Ventures, Net . . . . . . . . . $(4) $16 $(20) n/a

The decrease in equity earnings and gains and losses from unconsolidated joint ventures was primarily due to
decreased operating results at several properties owned by joint ventures in which we hold non-controlling interests.
The decrease also relates to a charge of approximately $4 million, in 2009, related to an unfavorable mark-to-market
adjustment on a US dollar denominated loan in an unconsolidated venture in Mexico.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2009 2008 Year Year

Net Interest Expense . . . . . . . . . . . . . . . . . . . $227 $207 $20 9.7%

The increase in net interest expense was primarily due to higher interest rates in the year ended December 31,
2009 when compared to the same period of 2008 and early debt extinguishment costs of $21 million that were
incurred in 2009. This was partially offset by a lower average debt balance in 2009 as compared to 2008. Our
weighted average interest rate was 6.73% at December 31, 2009 as compared to 5.24% at December 31, 2008.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2009 2008 Year Year

Loss on Asset Dispositions and Impairments, Net . . $(91) $(98) $(7) (7.1)%

During 2009, we recorded a net loss on dispositions of approximately $91 million, primarily related to
$41 million of impairment charges on six hotels whose carrying values exceeded their fair values, a $22 million
impairment of our retained interests in vacation ownership mortgage receivables, a $13 million impairment of an
investment in a hotel management contract that has been cancelled, a $5 million impairment of certain technology-
related fixed assets and a $4 million loss on the sale of a wholly-owned hotel.

29
During 2008, we recorded a net loss of $98 million primarily related to $64 million of impairment charges on
five hotels, a $22 million impairment of our investment in vacation ownership notes receivable that we have
previously securitized, and an $11 million write-off of our investment in a joint venture in which we hold minority
interest (see Note 5 of the consolidated financial statements).
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2009 2008 Year Year

Income Tax (Benefit) Expense . . . . . . . . . . . $(293) $72 $(365) n/a


The $365 million decrease in income tax expense primarily relates to a deferred tax benefit of $120 million
(net) in 2009 for an Italian tax incentive program in which the tax basis of land and buildings for the hotels we own
in Italy was stepped-up to fair value in exchange for paying a current tax of $9 million. The remaining decrease
primarily relates to tax benefits of $67 million associated with impairments, restructuring and asset sales and
$37 million related to a foreign tax credit election change. Additionally, a benefit of $10 million was recognized to
reverse the deferred interest accrual associated with the deferral of taxable income. The remaining decrease is
primarily due to lower pretax income.

Discontinued Operations, Net of Tax


During 2009, we sold our Bliss spa business and other non-core assets for cash proceeds of $227 million.
Revenues and expenses from the Bliss spa business, together with revenues and expenses from two hotels which are
in the process of being sold, have been reclassified to discontinued operations resulting in a loss of $2 million, net of
tax. In addition, the net gain on the assets sold in 2009 has been recorded in discontinued operations resulting in
income of $76 million, net of tax.
For the year ended December 31, 2008, the gain on dispositions includes a $124 million gain ($129 million pre
tax) on the sale of three properties which were sold unencumbered by management or franchise contracts. The tax
impact on this transaction was minimized due to the utilization of capital loss carryforwards. Additionally, in 2009,
$5 million was reclassified to discontinued operations (in the 2008 results) relating to two hotels that were in the
process of being sold at the end of 2009. Discontinued operations for the year ended December 31, 2008 also
includes a $49 million tax charge as a result of a 2008 administrative tax ruling for an unrelated taxpayer, that
impacts the tax liability associated with the disposition of one of our businesses several years ago.

Year Ended December 31, 2008 Compared with Year Ended December 31, 2007
Continuing Operations
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2008 2007 Year Year

Owned, Leased and Consolidated Joint Venture


Hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,212 $2,384 $(172) (7.2)%
Management Fees, Franchise Fees and Other
Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751 730 21 2.9%
Vacation Ownership and Residential . . . . . . . . . . 749 1,025 (276) (26.9)%
Other Revenues from Managed and Franchise
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,042 1,860 182 9.8%
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $5,754 $5,999 $(245) (4.1)%

The decrease in revenues from owned, leased and consolidated joint venture hotels was partially due to lost
revenues from 19 wholly owned hotels sold or closed in 2008 and 2007. These sold or closed hotels had revenues of
$77 million in the year ended December 31, 2008 compared to $121 million in the corresponding period of 2007.
Revenues at our Same-Store Owned Hotels (59 hotels for the year ended December 31, 2008 and 2007, excluding
the 19 hotels sold or closed and 10 additional hotels undergoing significant repositionings or without comparable

30
results in 2008 and 2007) decreased 1.5%, or $31 million, to $2.015 billion for the year ended December 31, 2008
when compared to $2.046 billion in the same period of 2007 due primarily to a decrease in REVPAR.
REVPAR at our Same-Store Owned Hotels decreased 1.2% to $168.93 for the year ended December 31, 2008
when compared to the corresponding 2007 period. The decrease in REVPAR at these Same-Store Owned Hotels
resulted from a 1.0% increase in ADR to $237.45 for the year ended December 31, 2008 compared to $235.18 for
the corresponding 2007 period and a decrease in occupancy rates to 71.1% in the year ended December 31, 2008
when compared to 72.7% in the same period in 2007. REVPAR at Same-Store Owned Hotels in North America
decreased 1.9% for the year ended December 31, 2008 when compared to the same period of 2007. REVPAR
declined in most of our major domestic markets, including Atlanta, Georgia, Kauai, Hawaii and New York,
New York, due to the severe economic crisis in the United States, and globally. REVPAR at our international Same-
Store Owned Hotels increased by 0.1% for the year ended December 31, 2008 when compared to the same period of
2007. Once again, due to the global economic crisis, REVPAR declined in most of our major international markets,
including the United Kingdom and Italy. REVPAR for Same-Store Owned Hotels internationally increased 0.6%
excluding the unfavorable effects of foreign currency translation.
The increase in management fees, franchise fees and other income was primarily a result of a $35 million
increase in management and franchise revenue to $717 million for the year ended December 31, 2008. The increase
was due to the net addition of 48 managed and franchised hotels to our system. Other income decreased $13 million
primarily due to $18 million of income recognized in 2007 from the sale of a managed hotel that resulted in a
payment of an $18 million fee to us.
The decrease in vacation ownership and residential sales and services was primarily due to an overall decline in
demand as a result of the economic climate, and the timing of revenue recognition from ongoing projects under
construction which are being accounted for under percentage of completion accounting. Originated contract sales of
VOI inventory, which represents vacation ownership revenues before adjustments for percentage of completion
accounting and rescission, decreased 26% in the year ended December 31, 2008 when compared to the same period in
2007. Additionally, sales in Hawaii were negatively impacted by the sell out of our largest project on Maui in early
2008. The decline in the vacation ownership business was partially offset by strong results in the residential branding
business. The increase in residential fees for the year ended December 31, 2008 to $49 million when compared to
$18 million in 2007 was primarily related to fees earned from the St. Regis Singapore Residences, which opened
during the year and a nonrefundable license fee received in connection with another residential project.
Other revenues and expenses from managed and franchised properties increased primarily due to an increase in
the number of our managed and franchised hotels. These revenues represent reimbursements of costs incurred on
behalf of managed hotel and vacation ownership properties and franchisees and relate primarily to payroll costs at
managed properties where we are the employer. Since the reimbursements are made based upon the costs incurred
with no added margin, these revenues and corresponding expenses have no effect on our operating income and our
net income.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2008 2007 Year Year

Selling, General, Administrative and Other . . $377 $416 $(39) (9.4)%


The decrease in selling, general, administrative and other expenses was primarily a result of our focus on
reducing our cost structure in light of the declining business conditions in this current economic climate. Beginning
in the middle of 2008, we began an activity value analysis project to review our cost structure across a majority of
our corporate departments and divisional headquarters. We completed the first two phases of that project in 2008
which resulted in the majority of the cost savings, and additional phases were completed in the first half of 2009.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2008 2007 Year Year

Restructuring, Goodwill Impairment and


Other Special Charges, Net . . . . . . . . . . . . $141 $53 $88 n/a

31
During the year ended December 31, 2008, we recorded restructuring and other special charges of $141 mil-
lion, including $62 million of severance and related charges associated with our ongoing initiative of rationalizing
our cost structure in light of the current economic climate. We also recorded impairment charges of approximately
$79 million primarily related to the decision not to develop two vacation ownership projects as a result of the current
economic climate and its impact on business conditions in the timeshare industry (see Note 13 of the consolidated
financial statements).
During the year ended December 31, 2007, we recorded $53 million in net restructuring and other special
charges primarily related to accelerated depreciation of property, plant and equipment at the Sheraton Bal Harbour
in Florida (“Bal Harbour”) and demolition costs associated with our redevelopment of that hotel. Bal Harbour was
closed for business on July 1, 2007, and the majority of its employees were terminated. The hotel was demolished
and we are in the process of building a St. Regis hotel along with branded residences.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2008 2007 Year Year

Depreciation and Amortization . . . . . . . . . . . $313 $297 $16 5.4%


The increase in depreciation expense was due to an increase in capital spending on our owned hotels partially
offset by the impact of hotels sold or held for sale. The increase in amortization expense was primarily due to the
write-off, through amortization expense, of an investment in a management contract during 2008.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2008 2007 Year Year

Operating Income . . . . . . . . . . . . . . . . . . . . . $610 $841 $(231) (27.5)%


The decrease in operating income was primarily due to the decrease in vacation ownership sales and services as
well as the decrease in revenues from owned, leased and consolidated joint venture hotels discussed above.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2008 2007 Year Year

Equity Earnings and Gains and Losses from


Unconsolidated Ventures, Net . . . . . . . . . . $16 $66 $(50) (75.8)%
The decrease in equity earnings and gains and losses from unconsolidated joint ventures was primarily due to
our share of non-recurring gains, in 2007, on the sale of several hotels in an unconsolidated joint venture as well as
decreased operating results, in 2008, at several properties owned by joint ventures in which we hold minority
interests.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2008 2007 Year Year

Net Interest Expense . . . . . . . . . . . . . . . . . . . $207 $147 $60 40.8%


The increase in net interest expense was primarily due to increased borrowings to fund our share repurchase
program. Our weighted average interest rate was 5.24% at December 31, 2008 versus 6.52% at December 31, 2007.
The average debt balance during 2008 and 2007 was $3.802 billion and $3.114 billion respectively.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2008 2007 Year Year

Loss on Asset Dispositions and Impairments, Net . . $(98) $(44) $(54) n/a
During 2008, we recorded a net loss of $98 million primarily related to $64 million of impairment charges on
five hotels, a $22 million impairment of our investment in vacation ownership notes receivable that we have

32
previously securitized, and an $11 million write-off of our investment in a joint venture in which we hold minority
interest (see Note 5 of the consolidated financial statements).
During 2007, we recorded a net loss of $44 million primarily related to a net loss of $58 million on the sale of
eight wholly-owned hotels and a loss of approximately $7 million primarily related to charges at three other
properties. These losses were offset in part by $20 million of net gains primarily on the sale of assets in which we
held a minority interest and a gain of $6 million as a result of insurance proceeds received for property damage
caused by storms at two owned hotels in prior years.
Increase/ Percentage
Year Ended Year Ended (Decrease) Change
December 31, December 31, from Prior from Prior
2008 2007 Year Year

Income Tax Expense . . . . . . . . . . . . . . . . . . . $72 $183 $(111) (60.7)%


The decrease in income tax expense is primarily related to a decrease in pretax income and certain other one
time tax benefits. The effective tax rate decreased to 23.0% in the year ended December 31, 2008 as compared to
25.8% in 2007. The 2008 tax rate was favorably impacted by a $31 million benefit related to the reversal of capital
and net operating loss valuation allowances, a $20 million benefit related to lower foreign taxes, and a $14 million
benefit associated with tax on the repatriation of foreign earnings. These benefits were partially offset by a
$16 million charge for the basis difference on certain asset sales and a $7 million charge related to amortization of
prepaid taxes in connection with certain related party transactions during 2008. The 2007 expense was favorably
impacted by a $158 million benefit related to the reversal of capital and net operating loss valuation allowances and
a $28 million benefit associated with our election to claim foreign tax credits generated in 1999 and 2000. Offsetting
these benefits in 2007 were a $97 million charge associated with adjustments to the tax benefit from the Host
Transaction and a $13 million charge associated with changes in uncertain tax positions.

Discontinued Operations, Net of Tax


For the year ended December 31, 2008, the gain on dispositions includes a $124 million gain ($129 million pre
tax) on the sale of three properties which were sold unencumbered by management or franchise contracts.
Additionally, in 2009, $5 million was reclassified to discontinued operations (in the 2008 results) relating to two
hotels that were in the process of being sold at the end of 2009. Discontinued operations for the year ended
December 31, 2008 also includes a $49 million tax charge as a result of a 2008 administrative tax ruling for an
unrelated taxpayer, that impacts the tax liability associated with the disposition of one of our businesses several
years ago.
For the year ended December 31, 2007, the income from discontinued operations represents $11 million (net of
tax) of 2007 results from operations relating to Bliss and the two hotels that were in the process of being sold at
December 31, 2009 and that were reclassified to discontinued operations. The loss on disposition includes a
$1 million tax assessment associated with the disposition of the Company’s former gaming business in 1999.

LIQUIDITY AND CAPITAL RESOURCES

Cash From Operating Activities


Cash flow from operating activities is generated primarily from management and franchise revenues,
operating income from our owned hotels and sales of VOIs and residential units. Other sources of cash are
distributions from joint-ventures, servicing financial assets and interest income. These are the principal sources of
cash used to fund our operating expenses, interest payments on debt, capital expenditures, dividend payments,
property and income taxes and share repurchases. We believe that our existing borrowing availability together with
capacity for additional borrowings and cash from operations will be adequate to meet all funding requirements for
our operating expenses, principal and interest payments on debt, capital expenditures, dividend payments and share
repurchases in the foreseeable future.
The majority of our cash flow is derived from corporate and leisure travelers and is dependent on the supply
and demand in the lodging industry. In a recessionary economy, we experience significant declines in business and

33
leisure travel. The impact of declining demand in the industry and higher hotel supply in key markets could have a
material impact on our sources of cash.

Our day-to-day operations are financed through a net working capital deficit, a practice that is common in our
industry. The ratio of our current assets to current liabilities was 0.74 and 0.81 as of December 31, 2009 and 2008,
respectively. Consistent with industry practice, we sweep the majority of the cash at our owned hotels on a daily
basis and fund payables as needed by drawing down on our existing revolving credit facility.

State and local regulations governing sales of VOIs and residential properties allow the purchaser of such a
VOI or property to rescind the sale subsequent to its completion for a pre-specified number of days. In addition, cash
payments received from buyers of units under construction are held in escrow during the period prior to obtaining a
certificate of occupancy. These payments and the deposits collected from sales during the rescission period are the
primary components of our restricted cash balances in our consolidated balance sheets. At December 31, 2009 and
2008, we had short-term restricted cash balances of $47 million and $96 million, respectively.

The 2009 securitization transactions resulted in cash from operating activities of approximately $300 million
and is discussed in our general liquidity discussion under cash from financing activities.

Cash From Investing Activities

Gross capital spending during the full year ended December 31, 2009 was as follows (in millions):
Capital Expenditures:
Owned, Leased and Consolidated Joint Venture Hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . $102
Corporate and information technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Subtotal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
(1)
Vacation Ownership and Residential Capital Expenditures :
Net capital expenditures for inventory (excluding St. Regis Bal Harbour) . . . . . . . . . . . . . . (2)
Capital expenditures for inventory — St. Regis Bal Harbour . . . . . . . . . . . . . . . . . . . . . . . . 109
Subtotal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Development Capital(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Total Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $343

(1) Represents gross inventory capital expenditures of $193 less cost of sales of $86.
(2) Includes $30 million of expenditures that are classified as Plant, property and equipment, net on the
consolidated balance sheet.

Gross capital spending during the year ended December 31, 2009 included approximately $132 million in
renovations of our wholly owned assets including construction costs at the W City Center in Chicago, IL, the Le
Centre Sheraton in Montreal, Canada, the Westin Peachtree Plaza in Atlanta, GA, and The Phoenician in Scottsdale,
AZ. Investment spending on gross VOI inventory was $193 million, which was offset by cost of sales of $86 million
associated with VOI sales. The inventory spend included VOI construction at the Westin Desert Willow Villas in
Palm Desert, CA, the Sheraton Vistana Villages in Orlando, FL, and the Westin Lagunamar Ocean Resort in
Cancun, as well as construction costs at the St. Regis Bal Harbour Resort in Miami Beach, FL.

As a result of the global economic climate, we scaled back our capital expenditures in 2009. Our capital
expenditure program includes both offensive and defensive capital. Defensive spend is related to repairs, main-
tenance, and renovations that we believe is necessary to stay competitive in the markets we are in. Other than capital
to address fire, life and safety issues, we consider defensive capital to be discretionary and reductions to this capital
program could result in decreases to our cash flow from operations, as hotels in certain markets could become less
desirable. The offensive capital expenditures, which are primarily related to new projects that we expect will
generate a return, are also considered discretionary. We currently anticipate that our defensive capital expenditures

34
for 2010 (excluding vacation ownership and residential inventory) will be approximately $150 million for
maintenance, renovations, and technology capital. In addition, we currently expect to spend approximately
$240 million for investment projects, including construction of the St. Regis Bal Harbour and various joint
ventures and other investments.

In order to secure management or franchise agreements, we have made loans to third-party owners, made
minority investments in joint ventures and provided certain guarantees and indemnifications. See Note 24 of the
consolidated financial statements for discussion regarding the amount of loans we have outstanding with owners,
unfunded loan commitments, equity and other potential contributions, surety bonds outstanding, performance
guarantees and indemnifications we are obligated under, and investments in hotels and joint ventures.

We intend to finance the acquisition of additional hotel properties (including equity investments), construction
of the St. Regis Bal Harbour, hotel renovations, VOI and residential construction, capital improvements, technology
spend and other core and ancillary business acquisitions and investments and provide for general corporate purposes
(including dividend payments and share repurchases) through our credit facilities described below, through the net
proceeds from dispositions, through the assumption of debt, and from cash generated from operations.

We periodically review our business to identify properties or other assets that we believe either are non-core
(including hotels where the return on invested capital is not adequate), no longer complement our business, are in
markets which may not benefit us as much as other markets during an economic recovery or could be sold at
significant premiums. We are focused on enhancing real estate returns and monetizing investments.

Since 2006, we have sold 60 hotels realizing proceeds of approximately $5.2 billion in numerous transactions
(see Note 5 of the consolidated financial statements). There can be no assurance, however, that we will be able to
complete future dispositions on commercially reasonable terms or at all.

The 2009 asset sales resulted in gross cash proceeds from investing activities of approximately $328 million
and is discussed in greater detail in our general liquidity discussion under cash from financing activities.

Cash Used for Financing Activities

The following is a summary of our debt portfolio (including capital leases) as of December 31, 2009:
Amount
Outstanding at Interest Rate at
December 31, December 31, Average
2009(a) 2009 Maturity
(Dollars in millions) (In years)
Floating Rate Debt
Revolving Credit Facilities . . . . . . . . . . . . . . . . . . . . $ 114 3.74% 1.1
Mortgages and Other . . . . . . . . . . . . . . . . . . . . . . . . 40 5.80% 3.0
Interest Rate Swaps . . . . . . . . . . . . . . . . . . . . . . . . . 500 4.81%
Total/Average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 654 4.68% 1.6
Fixed Rate Debt
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,684 7.26% 5.1
Mortgages and Other . . . . . . . . . . . . . . . . . . . . . . . . 122 7.49% 8.2
Interest Rate Swaps . . . . . . . . . . . . . . . . . . . . . . . . . (500) 7.06%
Total/Average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,306 7.31% 5.2
Total Debt
Total Debt and Average Terms . . . . . . . . . . . . . . . . . $2,960 6.73% 5.1

(a) Excludes approximately $581 million of our share of unconsolidated joint venture debt, all of which is non-
recourse.

35
Due to the current credit liquidity crisis, we evaluated the commitments of each of the lenders in our Revolving
Credit Facilities (the “Facilities”). In addition, we have reviewed our debt covenants and restrictions and do not
anticipate any issues regarding the availability of funds under the Facilities.
See Note 15 of the consolidated financial statements for specifics related to our financing transactions,
issuances, and terms entered into for the years ended December 31, 2009 and 2008.
During 2009, we completed a series of dispositions and financing transactions that resulted in proceeds of
approximately $1.6 billion as outlined below:
On May 7, 2009, we completed a public offering of $500 million of 7.875% Senior Notes due 2014.
On June 5, 2009, we sold approximately $181 million of vacation ownership notes receivable realizing cash
proceeds of $125 million. We amended this transaction in the fourth quarter of 2009, which resulted in additional
proceeds of $9 million.
In June 2009, we entered into a multi-year extension and amendment to our existing co-branded credit card
agreement (“Amendment”) with American Express. In connection with the Amendment, we received $250 million
in cash in July 2009 and, in return, sold SPG points to American Express to be used by American Express in the
future. In accordance with the terms of the Amendment, if we fail to comply with certain financial covenants, we are
required to repay the remaining liability and, if we do not repay such liability, we are required to pledge certain
receivables as collateral for the remaining balance of the liability.
During 2009, we sold four non-core assets for cash proceeds of approximately $227 million and four wholly-
owned hotels for approximately $100 million.
In November 2009, we completed a public offering of $250 million of 7.150% Senior Notes due 2019.
On December 7, 2009, we sold approximately $200 million of vacation ownership notes receivables, realizing
cash proceeds of $166 million. We recorded a gain on the sale of these receivables of approximately $19 million.
The cash proceeds from the multiple transactions noted above were used to reduce indebtedness, resulting in
gross debt reduction of approximately $1.0 billion, from approximately $4.0 billion at December 31, 2008 to
approximately $3.0 billion at December 31, 2009. We repaid a $500 million term loan that was due in 2009, prepaid
$875 million of term loans due in 2010 and 2011 and completed a tender offer in which we purchased $195 million
of our 7.875% Senior Notes due 2012 and $105 million of our 6.25% Senior Notes due 2013. Excluding revolver
draws and scheduled mortgage amortization, we prepaid all 2010 and 2011 maturities and reduced maturities in
2012 and 2013 by $300 million.
Our Facilities are used to fund general corporate cash needs. As of December 31, 2009, we have availability of
over $1.6 billion under the Facilities. We have reviewed the financial covenants associated with our Facilities, the
most restrictive being the leverage ratio. As of December 31, 2009, we were in compliance with this covenant and
expect to remain in compliance through the end of 2010. We have the ability to manage the business in order to
reduce our leverage ratio by reducing operating costs, selling, general and administrative costs and postponing
discretionary capital expenditures. However, there can be no assurance that we will stay below the required leverage
ratio if the current economic climate deteriorates.
Our current credit ratings and outlook are as follows: S&P BB (stable outlook); Moody’s Ba1 (stable outlook);
and; Fitch BB+ (negative outlook). The impact of the ratings could impact our current and future borrowing costs,
which cannot be currently estimated.
Based upon the current level of operations, management believes that our cash flow from operations and asset
sales, together with our significant cash balances (approximately $141 million at December 31, 2009, including
$54 million of short-term and long-term restricted cash), available borrowings under the Facilities and other bank
credit facilities (approximately $1.6 billion at December 31, 2009, our expected income tax refund of over
$200 million in 2010 (see Note 14 of the consolidated financial statements), and capacity for additional borrowings
will be adequate to meet anticipated requirements for scheduled maturities, dividends, working capital, capital
expenditures, marketing and advertising program expenditures, other discretionary investments, interest and
scheduled principal payments and share repurchases for the foreseeable future. However, there can be no assurance

36
that we will be able to refinance our indebtedness as it becomes due and, if refinanced, on favorable terms. In
addition, there can be no assurance that in our continuing business we will generate cash flow at or above historical
levels, that currently anticipated results will be achieved or that we will be able to complete dispositions on
commercially reasonable terms or at all.

If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be
required to sell additional assets at lower than preferred amounts, reduce capital expenditures, refinance all or a
portion of our existing debt or obtain additional financing at unfavorable rates. Our ability to make scheduled
principal payments, to pay interest on or to refinance our indebtedness depends on our future performance and
financial results, which, to a certain extent, are subject to general conditions in or affecting the hotel and vacation
ownership industries and to general economic, political, financial, competitive, legislative and regulatory factors
beyond our control.

We had the following contractual obligations(1) outstanding as of December 31, 2009 (in millions):
Due in Less Due in Due in Due After
Total Than 1 Year 1-3 Years 3-5 Years 5 Years

Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,957 $ 5 $ 774 $1,038 $1,140


Interest payable . . . . . . . . . . . . . . . . . . . . 1,094 207 390 261 236
Capital lease obligations(2) . . . . . . . . . . . . 3 — 1 — 2
Operating lease obligations . . . . . . . . . . . . 1,049 87 155 131 676
Unconditional purchase obligations(3) . . . . 308 86 136 80 6
Other long-term obligations . . . . . . . . . . . 4 1 3 — —
Total contractual obligations . . . . . . . . . . . $5,415 $386 $1,459 $1,510 $2,060

(1) The table below excludes unrecognized tax benefits that would require cash outlays for $499 million, the
timing of which is uncertain. Refer to Note 14 of the consolidated financial statements for additional discussion
on this matter. In addition, the table excludes amounts related to the construction of our St. Regis Bal Harbour
project that has a total project cost of $735 million, of which $353 million has been paid through December 31,
2009.
(2) Excludes sublease income of $3 million.
(3) Included in these balances are commitments that may be reimbursed or satisfied by our managed and franchised
properties.

We had the following commercial commitments outstanding as of December 31, 2009 (in millions):
Amount of Commitment Expiration Per Period
Less Than After
Total 1 Year 1-3 Years 3-5 Years 5 Years

Standby letters of credit . . . . . . . . . . . . . . . . . . $168 $165 $— $— $3

A dividend of $0.20 per share was paid in January 2010 to shareholders of record as of December 31, 2009.

A dividend of $0.90 per share was paid in January 2009 to shareholders of record as of December 31, 2008.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements include residual interests of $81 million, which are comprised of
$25 million of retained interests and $56 million of loans effectively retained in connection with the securitization
of vacation ownership receivables, letters of credit of $168 million, unconditional purchase obligations of
$308 million and surety bonds of $21 million. These items are more fully discussed earlier in this section and
in the Notes to Financial Statements and Item 8 of Part II of this report.

37
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
In limited instances, we seek to reduce earnings and cash flow volatility associated with changes in interest
rates and foreign currency exchange rates by entering into financial arrangements intended to provide a hedge
against a portion of the risks associated with such volatility. We continue to have exposure to such risks to the extent
they are not hedged.
We enter into a derivative financial arrangement to the extent it meets the objectives described above, and we
do not engage in such transactions for trading or speculative purposes.
At year-end 2009, we were party to the following derivative instruments:
• Forward contracts to hedge forecasted transactions for management and franchise fee revenues earned in
foreign currencies. The aggregate dollar equivalent of the notional amounts was approximately $28 million,
and they expire in 2010.
• Forward foreign exchange contracts to manage the foreign currency exposure related to certain intercom-
pany loans not deemed to be permanently invested. The aggregate dollar equivalent of the notional amounts
of the forward contracts was approximately $669 million and they expire in 2010.

38
The following table sets forth the scheduled maturities and the total fair value of our debt portfolio and other
financial instruments as of year-end 2009 (in millions, excluding interest rates):
Total Fair
Expected Maturity or Transaction Date Total at Value at
At December 31, December 31, December 31,
2010 2011 2012 2013 2014 Thereafter 2009 2009

Liabilities
Fixed rate . . . . . . . . . . . . . . . $ 5 $ 8 $413 $300 $438 $1,142 $2,306 $2,422
Average interest rate . . . . . . . 7.31%
Floating rate . . . . . . . . . . . . . $ — $114 $240 $250 $ 50 $ — $ 654 $ 654
Average interest rate . . . . . . . 4.68%
Forward Foreign Exchange
Hedge Contracts:
Fixed (EUR) to Fixed
(USD) . . . . . . . . . . . . . . . . $ 24 $ — $ — $ — $ — $ — $ — $ —
Average Exchange rate . . . . . . 1.43
Fixed (JPY) to Fixed (USD) . . $ 4 $ — $ — $ — $ — $ — $ — $ —
Average Exchange rate . . . . . . .01
Forward Foreign Exchange
Contracts:
Fixed (EUR) to Fixed
(USD) . . . . . . . . . . . . . . . . $395 $ — $ — $ — $ — $ — $ (8) $ (8)
Average Exchange rate . . . . . . 1.54
Fixed (ARS) to Fixed
(USD) . . . . . . . . . . . . . . . . $ 1 $ — $ — $ — $ — $ — $ — $ —
Average Exchange rate . . . . . . .26
Fixed (CLP) to Fixed (USD). . $ 21 $ — $ — $ — $ — $ — $ — $ —
Average Exchange rate . . . . . . .00
Fixed (THB) to Fixed
(USD) . . . . . . . . . . . . . . . . $ 6 $ — $ — $ — $ — $ — $ — $ —
Average Exchange rate . . . . . . .03
Fixed (JPY) to Fixed (USD) . . $ 33 $ — $ — $ — $ — $ — $ 1 $ 1
Average Exchange rate . . . . . . .01
Fixed (CAD) to Fixed
(USD) . . . . . . . . . . . . . . . . $ 1 $ — $ — $ — $ — $ — $ — $ —
Average Exchange rate . . . . . . .94
Fixed (AUD) to Fixed
(USD) . . . . . . . . . . . . . . . . $ 24 $ — $ — $ — $ — $ — $ — $ —
Average Exchange rate . . . . . . .90
Fixed (JPY) to Fixed (SGD) . . $ 5 $ — $ — $ — $ — $ — $ — $ —
Fixed (SGD) to Fixed
(THB) . . . . . . . . . . . . . . . . $ 6 $ — $ — $ — $ — $ — $ — $ —
Fixed (AUD) to Fixed
(EUR) . . . . . . . . . . . . . . . . $100 $ — $ — $ — $ — $ — $ (1) $ (1)
Fixed (GBP) to Fixed
(EUR) . . . . . . . . . . . . . . . . $ 62 $ — $ — $ — $ — $ — $ 1 $ 1
Fixed (JPY) to Fixed (THB) . . $ 15 $ — $ — $ — $ — $ — $ — $ —

39
Item 8. Financial Statements and Supplementary Data.
The financial statements and supplementary data required by this Item are included in Item 15 of this Annual
Report and are incorporated herein by reference.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.

Item 9A. Controls and Procedures.


Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with
the participation of our management, including our principal executive and principal financial officers, of the
effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon the
foregoing evaluation, our principal executive and principal financial officers concluded that our disclosure controls
and procedures were effective and operating to provide reasonable assurance that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and to
provide reasonable assurance that such information is accumulated and communicated to our management,
including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding
required disclosure.
There has been no change in our internal control over financial reporting (as defined in Rules 13(a)-15(e) and
15(d)-15(e) under the Exchange Act) that occurred during the period covered by this report that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting


Management of Starwood Hotels & Resorts Worldwide, Inc. and its subsidiaries is responsible for establishing
and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act
Rule 13a-15(f) or 15(d)-15(f). Those rules define internal control over financial reporting as a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles (“GAAP”) and
includes those policies and procedures that:
• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company;
• Provide reasonable assurance that the transactions are recorded as necessary to permit the preparation of
financial statements in accordance with GAAP, and the receipts and expenditures of the Company are being
made only in accordance with authorizations of management and directors of the Company; and
• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with policies or
procedures may deteriorate.
The Company’s management assessed the effectiveness of the Company’s internal controls over financial
reporting as of December 31, 2009. In making this assessment, the Company’s management used the criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on our assessment and those criteria, management believes that, as of
December 31, 2009, the Company’s internal control over financial reporting is effective.
Management has engaged Ernst & Young LLP, the independent registered public accounting firm that audited
the financial statements included in this Annual Report on Form 10-K, to attest to the Company’s internal control
over financial reporting. Its report is included herein.

40
Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Starwood Hotels & Resorts Worldwide, Inc.
We have audited Starwood Hotels & Resorts Worldwide, Inc.’s (the “Company”) internal control over financial
reporting as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The
Company’s management is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2009, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of the Company as of December 31, 2009 and 2008; and the related
consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the
period ended December 31, 2009 of the Company and our report dated February 25, 2010, expressed an unqualified
opinion thereon.

/s/ Ernst & Young LLP

New York, New York


February 25, 2010

41
Changes in Internal Controls
There has not been any change in our internal control over financial reporting identified in connection with the
evaluation that occurred during the year ended December 31, 2009 that has materially affected, or is reasonably
likely to materially affect, those controls.

Item 9B. Other Information


Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.


Certain information regarding directors, executive officers and corporate governance is incorporated by
reference to our Proxy Statement for the Annual Meeting of Stockholders to be held May 13, 2010 (the “Proxy
Statement”), which will be filed with the Securities and Exchange Commission no more than 120 days after the
close of our fiscal year.

Item 11. Executive Compensation.


Information regarding executive compensation is incorporated by reference to the Proxy Statement, which will
be filed with the Securities and Exchange Commission no more than 120 days after the close of our fiscal year.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
Information regarding security ownership of certain beneficial owners and management and related stock-
holder matters is incorporated by reference to the Proxy Statement, which will be filed with the Securities and
Exchange Commission no more than 120 days after the close of our fiscal year.

Item 13. Certain Relationships and Related Transactions and Director Independence.
Information regarding certain relationships and related transactions and director independence is incorporated
by reference to the Proxy Statement, which will be filed with the Securities and Exchange Commission no more
than 120 days after the close of our fiscal year.

Item 14. Principal Accounting Fees and Services.


Information regarding principal accounting fees and services is incorporated by reference to the Proxy
Statement, which will be filed with the Securities and Exchange Commission no more than 120 days after the close
of our fiscal year.

42
PART IV

Item 15. Exhibits, Financial Statement Schedules.


(a) The following documents are filed as a part of this Annual Report:
1-2. The financial statements and financial statement schedule listed in the Index to Financial Statements
and Schedule following the signature pages hereof.
3. Exhibits:
Exhibit
Number Description of Exhibit

2.1 Formation Agreement, dated as of November 11, 1994, among the Company, Starwood Capital and the
Starwood Partners (incorporated by reference to Exhibit 2 to the Company’s Current Report on Form 8-K
dated November 16, 1994). (The SEC file number of all filings made by the Company pursuant to the
Securities Exchange Act of 1934, as amended, and referenced herein is 1-7959).
2.2 Form of Amendment No. 1 to Formation Agreement, dated as of July 1995, among the Company and the
Starwood Partners (incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement
on Form S-2 filed with the SEC on June 29, 1995 (Registration Nos. 33-59155 and 33-59155-01)).
2.3 Master Agreement and Plan of Merger, dated as of November 14, 2005, among Host Marriott
Corporation, Host Marriott, L.P., Horizon Supernova Merger Sub, L.L.C., Horizon SLT Merger Sub,
L.P., Starwood Hotels & Resorts Worldwide, Inc., Starwood Hotels & Resorts, Sheraton Holding
Corporation and SLT Realty Limited Partnership (the “Merger Agreement”) (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on From 8-K filed with the SEC on
November 14, 2005).
2.4 Amendment Agreement, dated as of March 24, 2006, to the Merger Agreement (incorporated by reference
to Exhibit 2.1 of the Joint Current Report on Form 8-K filed with the SEC on March 29, 2006).
3.1 Articles of Amendment and Restatement of the Company, as of May 30, 2007 (incorporated by reference
to Appendix A to the Company’s 2007 Notice of Annual Meeting and Proxy Statement).
3.2 Amended and Restated Bylaws of the Company, as amended and restated through April 10, 2006
(incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the
SEC on April 13, 2006 (the “April 13 Form 8-K”).
3.3 Amendment to Amended and Restated Bylaws of the Company, dated as of March 13, 2008 (incorporated
by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 18,
2008).
4.1 Termination Agreement dated as of April 7, 2006 between the Company and the Trust (incorporated by
reference to Exhibit 4.1 of the April 13 Form 8-K).
4.2 Amended and Restated Rights Agreement, dated as of April 7, 2006, between the Company and American
Stock Transfer and Trust Company, as Rights Agent (which includes the form of Amended and Restated
Articles Supplementary of the Series A Junior Participating Preferred Stock as Exhibit A, the form of
Rights Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Stock as Exhibit C)
(incorporated by reference to Exhibit 4.2 of the April 13 Form 8-K).
4.3 Amended and Restated Indenture, dated as of November 15, 1995, as Amended and Restated as of
December 15, 1995 between ITT Corporation (formerly known as ITT Destinations, Inc.) and the First
National Bank of Chicago, as trustee (incorporated by reference to Exhibit 4.A.IV to the First Amendment
to ITT Corporation’s Registration Statement on Form S-3 filed November 13, 1996).
4.4 First Indenture Supplement, dated as of December 31, 1998, among ITT Corporation, the Company and
The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on
Form 8-K filed with the SEC on January 8, 1999).
4.5 Second Indenture Supplement, dated as of April 9, 2006, among the Company, Sheraton Holding
Corporation and Bank of New York Trust Company, N.A., as trustee (incorporated by reference to
Exhibit 4.3 to the April 13 Form 8-K).

43
Exhibit
Number Description of Exhibit

4.6 Indenture, dated as of April 19, 2002, among the Company, the guarantor parties named therein and U.S.
Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s and
Sheraton Holding Corporation’s Joint Registration Statement on Form S-4 filed with the SEC on
November 19, 2002 (the “2002 Forms S-4”)).
4.7 Indenture, dated as of September 13, 2007, between the Company and the U.S. Bank National
Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on
Form 8-K filed with the SEC on September 17, 2007 (the “September 17 Form 8-K”)).
4.8 Supplemental Indenture, dated as of September 13, 2007, between the Company and the U.S. Bank
National Association, as trustee (incorporated by reference to Exhibit 4.2 to the September 17 Form 8-K).
4.9 Supplemental Indenture No. 2, dated as of May 23, 2008, between the Company and U.S. Bank National
Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on
Form 8-K filed with the SEC on May 28, 2008).
4.10 Supplemental Indenture No. 3, dated as of May 7, 2009, between the Company and the U.S. Bank
National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current
Report on Form 8-K files with the SEC on May 12, 2009).
4.11 Supplemental Indenture No. 4, dated as of November 20, 2009, between the Company and the U.S. Bank
National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current
Report on Form 8-K filed with the SEC on November 23, 2009).
The registrant hereby agrees to file with the Commission a copy of any instrument, including indentures,
defining the rights of long-term debt holders of the registrant and its consolidated subsidiaries upon the
request of the Commission.
10.1 Third Amended and Restated Limited Partnership Agreement for Operating Partnership, dated January 6,
1999, among the Company and the limited partners of Operating Partnership (incorporated by reference to
Exhibit 10.2 to the 1998 Form 10-K).
10.2 Form of Trademark License Agreement, dated as of December 10, 1997, between Starwood Capital and
the Company (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 (the “1997 Form 10-K”)).
10.3 Credit Agreement, dated as of February 10, 2006, among the Company, certain additional Dollar
Revolving Loan Borrowers, certain additional Alternate Currency Revolving Loan Borrowers, various
Lenders, Deutsche Bank AG New York Branch, as Administrative Agent, JPMorgan Chase Bank, N.A.
and Societe Generale, as Syndication Agents, Bank of America, N.A. and Calyon New York Branch, as
Co-Documentation Agents, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Banc of
America Securities LLC, as Lead Arrangers and Book Running Managers, The Bank of Nova Scotia,
Citicorp North America, Inc., and the Royal Bank of Scotland PLC, as Senior Managing Agents and
Nizvho Corporate Bank, Ltd. as Managing Agent (the “Credit Agreement”) (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 15, 2006).
10.4 First Amendment, dated as of March 31, 2006, to the Credit Agreement (incorporated by reference to
Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2006).
10.5 Second Amendment, dated as of June 29, 2006, to the Credit Agreement (incorporated by reference to
Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 6, 2006).
10.6 Third Amendment dated as of April 27, 2007, to the Credit Agreement (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 30, 2007).
10.7 Fourth Amendment, dated as of December 20, 2007, to the Credit Agreement (incorporated by reference
to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2007).
10.8 Fifth Amendment, dated as of April 11, 2008, to the Credit Agreement, dated as of February 10, 2006,
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the
SEC on April 15, 2008).
10.9 Credit Agreement, dated as of June 29, 2007, among the Company, Bank of America, N.A., as
administrative agent and various lenders party thereto (incorporated by reference to Exhibit 10.01 to
the Company’s Current Report on Form 8-K, filed with the SEC on July 5, 2007).

44
Exhibit
Number Description of Exhibit

10.10 Starwood Hotels & Resorts Worldwide, Inc. 1999 Long-Term Incentive Compensation Plan (the “1999
LTIP”) (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1999 (the “1999 Form 10-Q2”)).*
10.11 First Amendment to the 1999 LTIP, dated as of August 1, 2001 (incorporated by reference to Exhibit 10.1
to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001). *
10.12 Second Amendment to the 1999 LTIP (incorporated by reference to Exhibit 10.2 to the 2003 10-Q1).*
10.13 Form of Non-Qualified Stock Option Agreement pursuant to the 1999 LTIP (incorporated by reference to
Exhibit 10.30 to the 2004 Form 10-K).*
10.14 Form of Restricted Stock Agreement pursuant to the 1999 LTIP (incorporated by reference to
Exhibit 10.31 to the 2004 Form 10-K).*
10.15 Starwood Hotels & Resorts Worldwide, Inc. 2002 Long-Term Incentive Compensation Plan (the “2002
LTIP”) (incorporated by reference to Annex B of the Company’s 2002 Proxy Statement).*
10.16 First Amendment to the 2002 LTIP (incorporated by reference to Exhibit 10.1 to the 2003 10-Q1).*
10.17 Form of Non-Qualified Stock Option Agreement pursuant to the 2002 LTIP (incorporated by reference to
Exhibit 10.49 to the 2002 Form 10-K filed on February 28, 2003 (the “2002 10-K”)).*
10.18 Form of Restricted Stock Agreement pursuant to the 2002 LTIP (incorporated by reference to
Exhibit 10.35 to the 2004 Form 10-K).*
10.19 2004 Long-Term Incentive Compensation Plan, amended and restated as of December 31, 2008 (“2004
LTIP”) (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed
with the SEC on January 6, 2009 (the “January 2009 8-K”)).*
10.20 Form of Non-Qualified Stock Option Agreement pursuant to the 2004 LTIP (incorporated by reference to
Exhibit 10.4 to the 2004 Form 10-Q2).*
10.21 Form of Restricted Stock Agreement pursuant to the 2004 LTIP (incorporated by reference to
Exhibit 10.38 to the 2004 Form 10-K).*
10.22 Form of Non-Qualified Stock Option Agreement pursuant to the 2004 LTIP (incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K filed February 13, 2006 (the February 2006
Form 8-K”)).*
10.23 Form of Restricted Stock Agreement pursuant to the 2004 LTIP (incorporated by reference to Exhibit 10.1
to the February 2006 Form 8-K).*
10.24 Form of Amended and Restated Non-Qualified Stock Option Agreement pursuant to the 2004 LTIP
(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the
period ended June 30, 2006 (the 2006 Form 10-Q2”)).*
10.25 Form of Amended and Restated Restricted Stock Agreement pursuant to the 2004 LTIP (incorporated by
reference to Exhibit 10.2 to the 2006 Form 10-Q2).*
10.26 Annual Incentive Plan for Certain Executives, amended and restated as of December 2008 (incorporated
by reference to Exhibit 10.2 to the January 2009 8-K).*
10.27 Starwood Hotels & Resorts Worldwide, Inc. Amended and Restated Deferred Compensation Plan,
effective as of January 22, 2008 (incorporate by reference to Exhibit 10.35 to the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2007).*
10.28 Form of Indemnification Agreement between the Company and each of its Directors and executive
officers (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed
with the SEC on November 25, 2009).*
10.29 Employment Agreement, dated as of November 13, 2003, between the Company and Vasant Prabhu
(incorporated by reference to Exhibit 10.68 to the 2003 10-K).*
10.30 Letter Agreement, dated August 14, 2007, between the Company and Vasant Prabhu (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 17, 2007 (the
“August 17 Form 8-K”)).*
10.31 Amendment, dated as of December 30, 2008, to employment agreement between the Company and
Vasant Prabhu.*

45
Exhibit
Number Description of Exhibit

10.32 Employment Agreement, dated as of November 13, 2003, between the Company and Kenneth Siegel
(incorporated by reference to Exhibit 10.57 to the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2000 (the “2000 Form 10-K”)).*
10.33 Letter Agreement, dated July 22, 2004 between the Company and Kenneth Siegel (incorporated by
reference to Exhibit 10.73 to the 2004 Form 10-K).*
10.34 Letter Agreement, dated August 14, 2007, between the Company and Kenneth S. Siegel (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 17, 2007 (the
“August 17 Form 8-K”)).*
10.35 Amendment, dated as of December 30, 2008, to employment agreement between the Company and
Kenneth S. Siegel.*
10.36 Separation Agreement and Mutual General Release of Claims, effective as of August 31, 2008, between
the Company and Matthew Ouimet (incorporated by reference to Exhibit 10.1 to the Company’s quarterly
report on Form 10-Q for the quarterly period ended September 30, 2008).*
10.37 Employment Agreement, dated as of August 2, 2007, between the Company and Bruce W. Duncan
(incorporated by reference to Exhibit 10.5 to the Company’s quarterly report on Form 10-Q for the
quarterly period ended June 30, 2007).*
10.38 Form of Restricted Stock Unit Agreement between the Company and Bruce W. Duncan pursuant to the
2004 LTIP (incorporated by reference to Exhibit 10.2 to the 2007 Form 10-Q1).*
10.39 Amended and Restated Employment Agreement, dated as of December 30, 2008, between the Company
and Frits van Paasschen.*
10.40 Form of Non-Qualified Stock Option Agreement between the Company and Frits van Paasschen pursuant
to the 2004 LTIP (incorporated by reference to Exhibit 10.5 to the 2007 Form 10-Q3).*
10.41 Form of Restricted Stock Unit Agreement between the Company and Frits van Paasschen pursuant to the
2004 LTIP (incorporated by reference to Exhibit 10.6 to the 2007 Form 10-Q3).*
10.42 Form of Restricted Stock Grant between the Company and Frits van Paasschen pursuant to the 2004 LTIP
(incorporated by reference to Exhibit 10.7 to the 2007 Form 10-Q3).*
10.57 Form of Severance Agreement between the Company and each of Messrs. Siegel and Prabhu.*
10.58 Sixth Amendment, dated as of April 27, 2009, to the Credit Agreement, dated as of February 10, 2006,
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the
SEC on April 28, 2009).
10.59 First Amendment, dated as of April 27, 2009, to the Credit Agreement, dated as of June 29, 2007,
(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K files with the SEC
on April 28, 2009).
12.1 Calculation of Ratio of Earnings to Total Fixed Charges.+
21.1 List of our Subsidiaries.+
23.1 Consent of Ernst & Young LLP.+
31.1 Certification Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 — Chief Executive
Officer.+
31.2 Certification Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 — Chief Financial
Officer.+
32.1 Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code — Chief
Executive Officer.+
32.2 Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code — Chief
Financial Officer.+

+ Filed herewith.
* Indicates management contract or compensatory plan or arrangement

46
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

STARWOOD HOTELS & RESORTS WORLD-


WIDE, INC.

By: /s/ FRITS VAN PAASSCHEN


Frits van Paasschen
Chief Executive Officer and Director

Date: February 25, 2010


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant in the capacities and on the dates indicated.
Signature Title Date

/s/ FRITS VAN PAASSCHEN Chief Executive Officer and Director February 25, 2010
Frits van Paasschen

/s/ BRUCE W. DUNCAN Chairman and Director February 25, 2010


Bruce W. Duncan

/s/ VASANT M. PRABHU Executive Vice President and Chief February 25, 2010
Vasant M. Prabhu Financial Officer (Principal Financial
Officer)

/s/ ALAN M. SCHNAID Senior Vice President, Corporate February 25, 2010
Alan M. Schnaid Controller and Principal Accounting
Officer

/s/ ADAM M. ARON Director February 25, 2010


Adam M. Aron

/s/ CHARLENE BARSHEFSKY Director February 25, 2010


Charlene Barshefsky

/s/ THOMAS E. CLARKE Director February 25, 2010


Thomas E. Clarke

/s/ CLAYTON C. DALEY, JR. Director February 25, 2010


Clayton C. Daley, Jr.

/s/ LIZANNE GALBREATH Director February 25, 2010


Lizanne Galbreath

/s/ ERIC HIPPEAU Director February 25, 2010


Eric Hippeau

47
Signature Title Date

/s/ STEPHEN R. QUAZZO Director February 25, 2010


Stephen R. Quazzo

/s/ THOMAS O. RYDER Director February 25, 2010


Thomas O. Ryder

/s/ KNEELAND C. YOUNGBLOOD Director February 25, 2010


Kneeland C. Youngblood

48
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

Page

Report of Independent Registered Public Accounting Firm. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2


Consolidated Balance Sheets as of December 31, 2009 and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Income for the Years Ended December 31, 2009, 2008 and 2007 . . . . . . . . . F-4
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2009, 2008 and
2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Equity for the Years Ended December 31, 2009, 2008 and 2007 . . . . . . . . . . F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007 . . . . . . F-7
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8
Schedule:
Schedule II — Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1

F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Starwood Hotels & Resorts Worldwide, Inc.
We have audited the accompanying consolidated balance sheets of Starwood Hotels & Resorts Worldwide,
Inc. (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of income,
comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2009.
Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial
statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of the Company at December 31, 2009 and 2008, and the consolidated results
of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity
with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, the Company adopted Financial Accounting
Standards Board (“FASB”) Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements–an
amendment of ARB No. 51 (codified in FASB Accounting Standards Codification (“ASC”) Topic 810, Consol-
idations) on January 1, 2009. The Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes an Interpretation of FASB Statement No. 109 (codified in FASB ASC Topic 740, Income Taxes) on
January 1, 2007.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Company’s internal control over financial reporting as of December 31, 2009, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 25, 2010 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

New York, New York


February 25, 2010

F-2
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
CONSOLIDATED BALANCE SHEETS

December 31,
2009 2008
(In millions, except
share data)
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 87 $ 389
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 96
Accounts receivable, net of allowance for doubtful accounts of $54 and $49 . . . . . . . . . . 447 552
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783 986
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 143
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,491 2,166
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344 372
Plant, property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,350 3,347
Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 336
Goodwill and intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,063 2,161
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 982 639
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460 682
$8,761 $9,703

LIABILITIES AND STOCKHOLDERS’ EQUITY


Current liabilities:
Short-term borrowings and current maturities of long-term debt . . . . . . . . . . . . . . . . . . . $ 5 $ 506
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 171
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,212 1,274
Accrued salaries, wages and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303 346
Accrued taxes and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368 391
Total current liabilities . . . ............................................. 2,027 2,688
Long-term debt . . . . . . . . . . . . ............................................. 2,955 3,502
Deferred income taxes. . . . . . . ............................................. 31 26
Other liabilities . . . . . . . . . . . . ............................................. 1,903 1,843
6,916 8,059
Commitments and contingencies
Stockholders’ equity:
Common stock; $0.01 par value; authorized 1,000,000,000 shares; outstanding
186,785,068 and 182,827,483 shares at December 31, 2009 and 2008, respectively . . . 2 2
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 493
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (283) (391)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,553 1,517
Total Starwood stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,824 1,621
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 23
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,845 1,644
$8,761 $9,703

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

F-3
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Year Ended December 31,
2009 2008 2007
(In millions, except per share
data)
Revenues
Owned, leased and consolidated joint venture hotels. . . . . .. . .. .. .. . .. .. . .. . $1,584 $2,212 $2,384
Vacation ownership and residential sales and services . . . . .. . .. .. .. . .. .. . .. . 523 749 1,025
Management fees, franchise fees and other income. . . . . . .. . .. .. .. . .. .. . .. . 658 751 730
Other revenues from managed and franchised properties . . .. . .. .. .. . .. .. . .. . 1,947 2,042 1,860
4,712 5,754 5,999
Costs and Expenses
Owned, leased and consolidated joint venture hotels. . . . . . . . . . . . .. . .. .. . .. . 1,315 1,688 1,774
Vacation ownership and residential . . . . . . . . . . . . . . . . . . . . . . . . .. . .. .. . .. . 422 583 758
Selling, general, administrative and other . . . . . . . . . . . . . . . . . . . . .. . .. .. . .. . 314 377 416
Restructuring, goodwill impairment and other special charges, net . .. . .. .. . .. . 379 141 53
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. .. . .. . 274 281 271
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. .. . .. . 35 32 26
Other expenses from managed and franchised properties . . . . . . . . .. . .. .. . .. . 1,947 2,042 1,860
4,686 5,144 5,158
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 610 841
Equity (losses) earnings and gains and losses from unconsolidated ventures, net . . (4) 16 66
Interest expense, net of interest income of $3, $3 and $21 . . . . . . . . . . . . . . . . . . (227) (207) (147)
Loss on asset dispositions and impairments, net . . . . . . . . . . . . . . . . . . . . . . . . . . (91) (98) (44)
Income (loss) from continuing operations before taxes and noncontrolling
interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (296) 321 716
Income tax (expense) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293 (72) (183)
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) 249 533
Discontinued operations:
Income (loss) from operations, net of tax (benefit) expense of $(2), $4 and $6. . (2) 5 11
Gain (loss) on dispositions, net of tax (benefit) expense of $(35), $54 and $1 . . 76 75 (1)
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 329 543
Net loss (income) attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . 2 — (1)
Net income attributable to Starwood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 73 $ 329 $ 542
Earnings (Losses) Per Share — Basic
Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.00 $ 1.37 $ 2.62
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.41 0.44 0.05
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.41 $ 1.81 $ 2.67
Earnings (Losses) Per Share — Diluted
Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.00 $ 1.34 $ 2.52
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.41 0.43 0.05
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.41 $ 1.77 $ 2.57
Amounts attributable to Starwood’s Common Shareholders
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1) $ 249 $ 532
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 80 10
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 73 $ 329 $ 542
Weighted average number of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 181 203
Weighted average number of shares assuming dilution . . . . . . . . . . . . . . . . . . . . . 180 185 211
Dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.20 $ 0.90 $ 0.90

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

F-4
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31,


2009 2008 2007
(In millions)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 71 $ 329 $543
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 (190) 84
Less: Recognition of accumulated foreign currency translation adjustments on
sold hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13) — —
Defined benefit pension plans net gains (losses) arising during the year . . . . . . . . . 10 (61) 1
Net curtailment and settlement gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 1 —
Amortization of acturial gains and losses included in net periodic pension cost . . 5 2 2
Change in fair value of derivatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4 —
Reclassification adjustments for gains (losses) included in net income . . . . . . . . . (6) 2 —
Change in fair value of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 (1) (3)
Reclassification for gains and amortization included in net income . . . . . . . . . . . — (1) (3)
108 (244) 81
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 85 624
Comprehensive (income) loss attributable to noncontrolling interests . . . . . . . . . . . 2 — (1)
Foreign currency translation adjustments attributable to noncontrolling interests . . . 1 — —
Comprehensive income (loss) attributable to Starwood . . . . . . . . . . . . . . . . . . . . . . . . $182 $ 85 $623

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

F-5
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
CONSOLIDATED STATEMENTS OF EQUITY

Equity Attributable to Starwood Stockholders


Accumulated Equity
Additional Other Attributable to
Shares Paid-in Comprehensive Retained Noncontrolling
Shares Amount Capital(1) (Loss) Income(2) Earnings Interests Total
(In millions)
Balance at December 31, 2006 . . 213 $ 2 $ 2,286 $(228) $ 948 $25 $ 3,033
Net income (loss) . . . . . . . . . . . . — — — — 542 1 543
Stock option and restricted stock
award transactions, net . . . . . . 7 — 358 — — — 358
ESPP stock issuances . . . . . . . . . — — 7 — — — 7
Share repurchases. . . . . . . . . . . . (29) — (1,787) — — — (1,787)
Other . . . . . . . . . . . . . . . . . . . . — — 4 — — — 4
Impact of adoption of ASC
740-10(3) . . . . . . . . . . . . . . . . — — — — 35 — 35
Other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . — — — 81 — — 81
Dividends declared . . . . . . . . . . . — — — — (172) — (172)
Balance at December 31, 2007 . . 191 2 868 (147) 1,353 26 2,102
Net income (loss) . . . . . . . . . . . . — — — — 329 — 329
Stock option and restricted stock
award transactions, net . . . . . . 6 — 212 — — — 212
ESPP stock issuances . . . . . . . . . — — 6 — — — 6
Share repurchases. . . . . . . . . . . . (14) — (593) — — — (593)
Other . . . . . . . . . . . . . . . . . . . . — — — — — (2) (2)
Other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . — — — (244) — — (244)
Dividends declared . . . . . . . . . . . — — — — (165) (1) (166)
Balance at December 31, 2008 . . 183 2 493 (391) 1,517 23 1,644
Net income (loss) . . . . . . . . . . . . — — — — 73 (2) 71
Stock option and restricted stock
award transactions, net . . . . . . 4 — 54 — — — 54
ESPP stock issuances . . . . . . . . . — — 5 — — — 5
Other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . — — — 108 — 1 109
Dividends declared . . . . . . . . . . . — — — — (37) (1) (38)
Balance at December 31, 2009 . . 187 $ 2 $ 552 $(283) $1,553 $21 $ 1,845

(1) Stock option and restricted stock award transactions are net of a tax (expense) benefit of ($18) million, $33 million and $65 million in 2009,
2008, and 2007 respectively.
(2) As of December 31, 2009, this balance is comprised of $231 million of cumulative translation adjustments, $1 million unrealized net gain
on investments and $53 million of cumulative pension adjustments.
(3) This was previously FASB Interpretation No. (“FIN”) 48 and was updated in the ASC, which is the source of authoritative accounting
principles recognized by the FASB.

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

F-6
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,


2009 2008 2007
(In millions)
Operating Activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ $ 71 $ 329 $ 543
Adjustments to net income:
Discontinued operations:
(Gain) loss on dispositions, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (76) (75) 1
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 10 9
Other adjustments relating to discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 68 99
Excess stock-based compensation tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (16) (46)
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 313 297
Amortization of deferred loan costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5 4
Non-cash portion of restructuring, goodwill impairment and other special charges (credits), net . . . . . . . . . . . . . . . . 332 74 48
Non-cash foreign currency (gains) losses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) (5) 11
Amortization of deferred gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (82) (83) (81)
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 64 43
Distributions in excess (deficit) of equity earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 21 10
Gain on sale of VOI notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24) (4) (2)
Loss (gain) on asset dispositions and impairments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 98 44
Non-cash portion of income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (260) 24 (142)
Changes in working capital:
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 102 134
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 34 (34)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (98) (280) (143)
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2 (2)
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44) 85 177
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (50) (22) 210
VOI notes receivable activity, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 (150) (209)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (51) 52 (87)
Cash (used for) from operating activities . ................................................ 571 646 884
Investing Activities
Purchases of plant, property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (196) (476) (384)
Proceeds from asset sales, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310 320 133
Issuance of notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) (2) (10)
Collection of notes receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5 55
Acquisitions, net of acquired cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (74)
Purchases of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) (37) (49)
Proceeds from investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 39 112
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26) (21) 2
Cash (used for) from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 (172) (215)
Financing Activities
Revolving credit facility and short-term borrowings (repayments), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (102) (570) 341
Long-term debt issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 726 986 1,400
Long-term debt repaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,681) (4) (799)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (165) (172) (90)
Proceeds from stock option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 120 190
Excess stock-based compensation tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 16 46
Share repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (593) (1,787)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 (26) (13)
Cash (used for) from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (993) (243) (712)
Exchange rate effect on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 7 11
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (302) 238 (32)
Cash and cash equivalents — beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389 151 183
Cash and cash equivalents — end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 87 $ 389 $ 151
Supplemental Disclosures of Cash Flow Information
Cash paid (received) during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 203 $ 186 $ 164
Income taxes, net of refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12 $ 58 $ 128

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

F-7
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS

Note 1. Basis of Presentation


The accompanying consolidated financial statements represent the consolidated financial position and
consolidated results of operations of Starwood Hotels & Resorts Worldwide, Inc. and its subsidiaries (the
“Company”). Starwood is one of the world’s largest hotel and leisure companies. The Company’s principal
business is hotels and leisure, which is comprised of a worldwide hospitality network of almost 1,000 full-service
hotels, vacation ownership resorts and residential developments primarily serving two markets: luxury and upscale.
The principal operations of Starwood Vacation Ownership, Inc. (“SVO”) include the acquisition, development and
operation of vacation ownership resorts; marketing and selling vacation ownership interests (“VOIs”) in the resorts;
and providing financing to customers who purchase such interests.
The consolidated financial statements include the accounts of the Company and all of its controlled
subsidiaries and partnerships. In consolidating, all material intercompany transactions are eliminated. We have
evaluated all subsequent events through February 25, 2010, the date the consolidated financial statements were
filed.

Note 2. Significant Accounting Policies


Principles of Consolidation. The accompanying consolidated financial statements of the Company and its
subsidiaries include the assets, liabilities, revenues and expenses of majority-owned subsidiaries over which the
Company exercises control. Intercompany transactions and balances have been eliminated in consolidation.
Cash and Cash Equivalents. The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Restricted Cash. Restricted cash primarily consists of deposits received on sales of VOIs and residential
properties that are held in escrow until a certificate of occupancy is obtained, the legal rescission period has expired
and the deed of trust has been recorded in governmental property ownership records. At December 31, 2009 and
2008, the Company had short-term restricted cash balances of $47 million and $96 million, respectively.
Inventories. Inventories are comprised principally of VOIs of $434 million and $729 million as of
December 31, 2009 and 2008, respectively, residential inventory of $315 million and $203 million at December 31,
2009 and 2008, respectively, and hotel inventory. VOI and residential inventory is carried at the lower of cost or net
realizable value and includes $31 million, $25 million and $37 million of capitalized interest incurred in 2009, 2008
and 2007, respectively. Hotel inventory includes operating supplies and food and beverage inventory items which
are generally valued at the lower of FIFO cost (first-in, first-out) or market. Hotel inventory also includes linens,
china, glass, silver, uniforms, utensils and guest room items. Significant purchases of these items with a useful life
of greater than one year are recorded at purchased cost and amortized over their useful life. Normal replacement
purchases are expensed as incurred.
Loan Loss Reserves. For the vacation ownership and residential segment, the Company records an estimate
of expected uncollectibility on its VOI notes receivable as a reduction of revenue at the time it recognizes profit on a
timeshare sale. The Company holds large amounts of homogeneous VOI notes receivable and therefore assesses
uncollectibility based on pools of receivables. In estimating loss reserves, the Company uses a technique referred to
as static pool analysis, which tracks uncollectible notes for each year’s sales over the life of the respective notes and
projects an estimated default rate that is used in the determination of its loan loss reserve requirements. As of
December 31, 2009, the average estimated default rate for the Company’s pools of receivables was 9.8%. Given the
significance of the Company’s respective pools of VOI notes receivable, a change in the projected default rate can
have a significant impact to its loan loss reserve requirements, with a 0.1% change estimated to have an impact of
approximately $3 million.
For the hotel segment, the Company measures loan impairment based on the present value of expected future
cash flows discounted at the loan’s original effective interest rate or the estimated fair value of the collateral. For

F-8
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

impaired loans, the Company establishes a specific impairment reserve for the difference between the recorded
investment in the loan and the present value of the expected future cash flows or the estimated fair value of the
collateral. The Company applies the loan impairment policy individually to all loans in the portfolio and does not
aggregate loans for the purpose of applying such policy. For loans that the Company has determined to be impaired,
the Company recognizes interest income on a cash basis.
Assets Held for Sale. The Company considers properties to be assets held for sale when management
approves and commits to a formal plan to actively market a property or group of properties for sale and a signed
sales contract and significant non-refundable deposit or contract break-up fee exist. Upon designation as an asset
held for sale, the Company records the carrying value of each property or group of properties at the lower of its
carrying value which includes allocable segment goodwill or its estimated fair value, less estimated costs to sell, and
the Company stops recording depreciation expense. Any gain realized in connection with the sale of a property for
which the Company has significant continuing involvement (such as through a long-term management agreement)
is deferred and recognized over the initial term of the related agreement (See Note 12). The operations of the
properties held for sale prior to the sale date, if material, are recorded in discontinued operations unless the
Company will have continuing involvement (such as through a management or franchise agreement) after the sale.
Investments. Investments in joint ventures are generally accounted for under the equity method of account-
ing when the Company has a 20% to 50% ownership interest or exercises significant influence over the venture. If
the Company’s interest exceeds 50% or, if the Company has the power to direct the economic activities of the entity
and the obligation to absorb losses, the results of the joint venture are consolidated herein. All other investments are
generally accounted for under the cost method.
The fair market value of investments is based on the market prices for the last day of the period if the
investment trades on quoted exchanges. For non-traded investments, fair value is estimated based on the underlying
value of the investment, which is dependent on the performance of the investment as well as the volatility inherent in
external markets for these types of investments. In assessing potential impairment for these investments, the
Company will consider these factors as well as forecasted financial performance of its investment. If these forecasts
are not met, the Company may have to record impairment charges.
Plant, Property and Equipment. Plant, property and equipment, including capitalized interest of $4 million,
$10 million and $10 million incurred in 2009, 2008 and 2007, respectively, applicable to major project expenditures
are recorded at cost. The cost of improvements that extend the life of plant, property and equipment are capitalized.
These capitalized costs may include structural improvements, equipment and fixtures. Costs for normal repairs and
maintenance are expensed as incurred. Depreciation is recorded on a straight-line basis over the estimated useful
economic lives of 15 to 40 years for buildings and improvements; 3 to 10 years for furniture, fixtures and
equipment; 3 to 20 years for information technology software and equipment and the lesser of the lease term or the
economic useful life for leasehold improvements. Gains or losses on the sale or retirement of assets are included in
income when the assets are sold provided there is reasonable assurance of the collectibility of the sales price and any
future activities to be performed by the Company relating to the assets sold are insignificant.
The Company evaluates the carrying value of its assets for impairment. For assets in use when the trigger
events specified in Accounting Standards Codification (“ASC”) 360, Property Plant, and Equipment occur, the
expected undiscounted future cash flows of the assets are compared to the net book value of the assets. If the
expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book
value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of
the assets at rates deemed reasonable for the type of asset and prevailing market conditions, comparative sales for
similar assets, appraisals and, if appropriate, current estimated net sales proceeds from pending offers.
Goodwill and Intangible Assets. Goodwill and intangible assets arise in connection with acquisitions,
including the acquisition of management contracts. The Company does not amortize goodwill and intangible assets
with indefinite lives. Intangible assets with finite lives are amortized on a straight-line basis over their respective

F-9
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

useful lives. The Company reviews all goodwill and intangible assets for impairment by comparisons of fair value to
book value annually, or upon the occurrence of a trigger event. Impairment charges, if any, are recognized in
operating results.
The Company recorded a goodwill impairment charge of $90 million to the vacation ownership reporting unit.
It is reasonably possible that the remaining carrying value of vacation ownership goodwill may become further
impaired if future operating results are below the Company’s estimates.
Frequent Guest Program. Starwood Preferred Guest» (“SPG”) is the Company’s frequent guest incentive
marketing program. SPG members earn points based on spending at the Company’s properties, as incentives to first-
time buyers of VOIs and residences, and through participation in affiliated partners’ programs such as co-branded
credit cards. Points can be redeemed at substantially all of the Company’s owned, leased, managed and franchised
properties as well as through other redemption opportunities with third parties, such as conversion to airline miles.
Properties are charged based on hotel guests’ expenditures. Revenue is recognized by participating hotels and
resorts when points are redeemed for hotel stays.
The Company, through the services of third-party actuarial analysts, determines the fair value of the future
redemption obligation based on statistical formulas which project the timing of future point redemption based on
historical experience, including an estimate of the “breakage” for points that will never be redeemed, and an
estimate of the points that will eventually be redeemed as well as the cost of reimbursing hotels and other third
parties in respect of other redemption opportunities for point redemptions. The Company’s management and
franchise agreements require that the Company be reimbursed currently for the costs of operating the program,
including marketing, promotion, communications with, and performing member services for the SPG members.
Actual expenditures for SPG may differ from the actuarially determined liability.
The liability for the SPG program is included in other long-term liabilities and accrued expenses in the
accompanying consolidated balance sheets. The total actuarially determined liability (see Note 16), as of
December 31, 2009 and 2008, is $689 million and $662 million, respectively, of which $244 million and
$232 million, respectively, is included in accrued expenses.
Legal Contingencies. The Company is subject to various legal proceedings and claims, the outcomes of
which are subject to significant uncertainty. ASC 450, Contingencies requires that an estimated loss from a loss
contingency be accrued with a corresponding charge to income if it is probable that an asset has been impaired or a
liability has been incurred and the amount of the loss can be reasonably estimated. Disclosure of a contingency is
required if there is at least a reasonable possibility that a loss has been incurred. The Company evaluates, among
other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of
the amount of loss. Changes in these factors could materially impact the Company’s financial position or its results
of operations.
Derivative Financial Instruments. The Company periodically enters into interest rate swap agreements,
based on market conditions, to manage interest rate exposure. The net settlements paid or received under these
agreements are accrued consistent with the terms of the agreements and are recognized in interest expense over the
term of the related debt.
The Company enters into foreign currency hedging contracts to manage exposure to foreign currency
fluctuations. All foreign currency hedging instruments have an inverse correlation to the hedged assets or liabilities.
Changes in the fair value of the derivative instruments are classified in the same manner as the classification of the
changes in the underlying assets or liabilities due to fluctuations in foreign currency exchange rates. These forward
contracts do not qualify as hedges.
The Company periodically enters into forward contracts to manage foreign exchange risk based on market
conditions. The Company enters into forward contracts to hedge fluctuations in forecasted transactions based on
foreign currencies that are billed in United States dollars. These forward contracts have been designated as cash

F-10
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

flow hedges, and their change in fair value is recorded as a component of other comprehensive income. As a
forecasted transaction occurs, the gain or loss is reclassified from other comprehensive income to management fees,
franchise fees and other income.
The Company does not enter into derivative financial instruments for trading or speculative purposes and
monitors the financial stability and credit standing of its counterparties.
Foreign Currency Translation. Balance sheet accounts are translated at the exchange rates in effect at each
period end and income and expense accounts are translated at the average rates of exchange prevailing during the
year. The national currencies of foreign operations are generally the functional currencies. Gains and losses from
foreign exchange and the effect of exchange rate changes on intercompany transactions of a long-term investment
nature are generally included in other comprehensive income. Gains and losses from foreign exchange rate changes
related to intercompany receivables and payables that are not of a long-term investment nature are reported
currently in costs and expenses and amounted to a net gain of $6 million in 2009, a net gain of $5 million in 2008 and
a net loss of $11 million in 2007.
Income Taxes. The Company provides for income taxes in accordance with ASC 740, Income Taxes. The
objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current
year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an
entity’s financial statements or tax returns.
Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in earnings in the period when the new rate is enacted.
Stock-Based Compensation. The Company calculates the fair value of share-based awards on the date of
grant. Restricted stock awards are valued based on the share price. The Company has determined that a lattice
valuation model would provide a better estimate of the fair value of options granted under its long-term incentive
plans than a Black-Scholes model. The lattice valuation option pricing model requires the Company to estimate key
assumptions such as expected life, volatility, risk-free interest rates and dividend yield to determine the fair value of
share-based awards, based on both historical information and management judgment regarding market factors and
trends. The Company amortizes the share-based compensation expense over the period that the awards are expected
to vest, net of estimated forfeitures. If the actual forfeitures differ from management estimates, additional
adjustments to compensation expense are recorded. Please refer to Note 21, Stock-Based Compensation.
Revenue Recognition. The Company’s revenues are primarily derived from the following sources: (1) hotel
and resort revenues at the Company’s owned, leased and consolidated joint venture properties; (2) vacation
ownership and residential revenues; (3) management and franchise revenues; (4) revenues from managed and
franchised properties; and (5) other revenues which are ancillary to the Company’s operations. Generally, revenues
are recognized when the services have been rendered. Taxes collected from customers and submitted to taxing
authorities are not recorded in revenue. The following is a description of the composition of revenues for the
Company:
• Owned, Leased and Consolidated Joint Ventures — Represents revenue primarily derived from hotel
operations, including the rental of rooms and food and beverage sales, from owned, leased or consolidated
joint venture hotels and resorts. Revenue is recognized when rooms are occupied and services have been
rendered.
• Vacation Ownership and Residential — The Company recognizes sales when the buyer has demonstrated a
sufficient level of initial and continuing investment, the period of cancellation with refund has expired and
receivables are deemed collectible. For sales that do not qualify for full revenue recognition as the project
has progressed beyond the preliminary stages but has not yet reached completion, all revenue and profit are
initially deferred and recognized in earnings through the percentage-of-completion method. Interest income

F-11
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

associated with timeshare notes receivable is also included in vacation ownership and residential sales and
services revenue and totaled $48 million, $57 million and $40 million in 2009, 2008 and 2007, respectively.
The Company has also entered into licensing agreements with third-party developers to offer consumers
branded condominiums or residences. The fees from these arrangements are generally based on the gross
sales revenue of the units sold. Residential fee revenue is recorded in the period that a purchase and sales
agreement exists, delivery of services and obligations has occurred, the fee to the owner is deemed fixed and
determinable and collectibility of the fees is reasonably assured.
• Management and Franchise Revenues — Represents fees earned on hotels managed worldwide, usually
under long-term contracts, franchise fees received in connection with the franchise of the Company’s
Sheraton, Westin, Four Points by Sheraton, Le Méridien, St. Regis, W, Luxury Collection, Aloft and Element
brand names, termination fees and the amortization of deferred gains related to sold properties for which the
Company has significant continuing involvement, offset by payments by the Company under performance
and other guarantees. Management fees are comprised of a base fee, which is generally based on a
percentage of gross revenues, and an incentive fee, which is generally based on the property’s profitability.
Base fee revenues are recognized when earned in accordance with the terms of the contract. For any time
during the year, when the provisions of the management contracts allow receipt of incentive fees upon
termination, incentive fees are recognized for the fees due and earned as if the contract was terminated at that
date, exclusive of any termination fees due or payable. Franchise fees are generally based on a percentage of
hotel room revenues and are recognized as the fees are earned and become due from the franchisee.
• Revenues from Managed and Franchised Properties — These revenues represent reimbursements of costs
incurred on behalf of managed hotel properties and franchisees. These costs relate primarily to payroll costs
at managed properties where the Company is the employer. Since the reimbursements are made based upon
the costs incurred with no added margin, these revenues and corresponding expenses have no effect on the
Company’s operating income or net income.
Insurance Retention. Through its captive insurance company, the Company provides insurance coverage for
workers’ compensation, property and general liability claims arising at hotel properties owned or managed by the
Company through policies written directly and through reinsurance arrangements. Estimated insurance claims
payable represent expected settlement of outstanding claims and a provision for claims that have been incurred but
not reported. These estimates are based on the Company’s assessment of potential liability using an analysis of
available information including pending claims, historical experience and current cost trends. The amount of the
ultimate liability may vary from these estimates. Estimated costs of these self-insurance programs are accrued,
based on the analysis of third-party actuaries.
Costs Incurred to Sell VOIs. The Company capitalizes direct costs attributable to the sale of VOIs until the
sales are recognized. Selling and marketing costs capitalized under this methodology were approximately $3 million
and $7 million as of December 31, 2009 and 2008, respectively, and all such capitalized costs are included in
prepaid expenses and other assets in the accompanying consolidated balance sheets. Costs eligible for capitalization
follow the guidelines of ASC 978, Real Estate — Time Sharing Activities. If a contract is cancelled, the Company
charges the unrecoverable direct selling and marketing costs to expense and records forfeited deposits as income.
VOI and Residential Inventory Costs. Real estate and development costs are valued at the lower of cost or
net realizable value. Development costs include both hard and soft construction costs and together with real estate
costs are allocated to VOIs and residential units on the relative sales value method. Interest, property taxes and
certain other carrying costs incurred during the construction process are capitalized as incurred. Such costs
associated with completed VOI and residential units are expensed as incurred.
Advertising Costs. The Company enters into multi-media ad campaigns, including television, radio, internet
and print advertisements. Costs associated with these campaigns, including communication and production costs,
are aggregated and expensed the first time that the advertising takes place. If it becomes apparent that the media

F-12
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

campaign will not take place, all costs are expensed at that time. During the years ended December 31, 2009, 2008
and 2007, the Company incurred approximately $118 million, $146 million and $116 million of advertising
expense, respectively, a significant portion of which was reimbursed by managed and franchised hotels.

Retained Interests. The Company periodically sells notes receivable originated by its vacation ownership
business in connection with the sale of VOIs. The Company retains interests in the assets transferred to qualified and
non-qualified special purpose entities which are accounted for as over-collateralizations and interest only strips.
These retained interests are treated as “available-for-sale” transactions under the provisions of ASC 320 Invest-
ments — Debt and Equity Securities. The Company reports changes in the fair values of these Retained Interests
considered temporary through the accompanying consolidated statement of comprehensive income. A change in
fair value determined to be other-than-temporary is recorded as a loss in the Company’s consolidated statement of
income. The Company had Retained Interests of $25 million and $19 million at December 31, 2009 and 2008,
respectively. Additionally, as of December 31, 2009, the Company had $56 million of notes retained after the 2009
note sales.

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

Reclassifications. Certain reclassifications have been made to the prior years’ financial statements to
conform to the current year presentation (see Note 17).

Impact of Recently Issued Accounting Standards.

Adopted Accounting Standards

In August 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2009-05, which supplements the guidance included in the FASB Accounting Standards Codification
(“Codification”), ASC 820, Fair Value Measurements. This ASU clarifies how an entity should measure the fair
value of liabilities and that the restrictions on the transfer of a liability should not be included in its fair value
measurement. The effective date of this ASU is the first reporting period after August 26, 2009. The Company
adopted this topic on September 30, 2009 and it had no effect on the Company’s consolidated financial statements.

In June 2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 168, “The FASB
Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles a Replace-
ment of FASB Statement No. 162” (“SFAS No. 168”), included in the Codification as ASC 105, Generally Accepted
Accounting Principles. This topic is the source of authoritative accounting principles recognized by the FASB to be
applied by non-governmental entities in the preparation of financial statements in accordance with generally
accepted accounting principles. This topic is effective for interim and annual reporting periods ending after
September 15, 2009. The Company adopted this topic on September 30, 2009 and it had no effect on the Company’s
consolidated financial statements.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS No. 165”), included in the
Codification as ASC 855, Subsequent Events. This topic establishes the period in which management of a reporting
entity should evaluate events and transactions for recognition or disclosure in the financial statements. It also
describes the circumstances under which an entity should recognize events or transactions that occur after the
balance sheet date. This topic is effective for interim and annual reporting periods ending after June 15, 2009. On
June 30, 2009, the Company adopted this topic, which did not have a material effect on its consolidated financial
statements.

F-13
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

In April 2009, the FASB issued FASB Staff Position (“FSP”) Issue No. Financial Accounting Standard
(“FAS”) No. 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions that are not Orderly” (“FSP FAS No. 157-4”), included in the
Codification as ASC 820-10-65-4. This topic provides additional guidance for estimating fair value and is effective
in reporting periods ending after June 15, 2009. On June 30, 2009, the Company adopted this topic, which did not
have a material impact on its consolidated financial statements.
In April 2009, the FASB issued FSP No. FAS No. 107-1 and Accounting Principles Board (“APB”) No. 28-1
“Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS No. 107-1 and APB No 28-1”),
included in the Codification as ASC 825-10-65-1. This topic requires disclosures about the fair value of financial
instruments for annual and interim reporting periods of publicly traded companies and is effective in reporting
periods ending after June 15, 2009. On June 30, 2009, the Company adopted this topic, which did not have a
material impact on its consolidated financial statements.
In April 2009, the FASB issued FSP Issue No. FAS No. 115-2 and FAS No. 124-2 “Recognition and
Presentation of Other-Than-Temporary Impairments” (“FSP FAS No. 115-2 and 124-2”), included in the Cod-
ification as ASC 320-10-65-1. This topic amends the other-than-temporary impairment guidance for debt securities
to make the guidance more operational and to improve the disclosure of other-than-temporary impairments on debt
and equity securities in the financial statements. This topic is effective in reporting periods ending after June 15,
2009. On June 30, 2009, the Company adopted this topic, which did not have a material impact on its consolidated
financial statements.
In January 2009, the FASB issued FSP Issue No. FAS No. 132(R)-1 “Employers Disclosures about Pensions
and Other Postretirement Benefit Plan Assets” (“FSP FAS No. 132(R)-1”), included in the Codification as ASC
715-20-65-2. This topic provides guidance on an employer’s disclosures about plan assets of a defined benefit
pension or other postretirement plan. This topic is effective for fiscal years ending after December 15, 2009. The
Company adopted this topic on December 31, 2009 and incorporated it into its Employee Benefit Plan disclosure
(see Note 18).
In June 2008, the FASB ratified FSP Issue No. Emerging Issues Task Force (“EITF”) 03-6-1, “Determining
Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (FSP
No. EITF 03-6-1), included in the Codification as ASC 260-10-45-68B. This topic addresses whether instruments
granted in share-based payment awards are participating securities prior to vesting and, therefore, must be included
in the earnings allocation in calculating earnings per share under the two-class method. This topic requires that
unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend-equivalents be
treated as participating securities in calculating earnings per share. This topic is effective for the Company
beginning with the first interim period ending after December 15, 2008, and will be applied retrospectively to all
prior periods. On January 1, 2009 the Company adopted this topic, which did not have an impact on its consolidated
financial statements.
In April 2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP
No. 142-3”), included in the Codification as ASC 350-30-50-4. This topic amends the factors that should be
considered in developing renewal or extension assumptions used to determine the useful life of a recognized
intangible asset. This topic is effective for financial statements issued for fiscal years beginning after December 15,
2008 and interim periods within those fiscal years. On January 1, 2009, the Company adopted this topic, which did
not have any impact on its consolidated financial statements.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities-an amendment of FASB Statement No. 133” (“SFAS No. 161”), included in the Codification as ASC
815-10-65-1. This topic requires enhanced disclosure related to derivatives and hedging activities. This topic must
be applied prospectively to all derivative instruments and non-derivative instruments that are designated and qualify
as hedging instruments and related hedged items for all financial statements issued for fiscal years and interim

F-14
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

periods beginning after November 15, 2008. The Company adopted this topic on January 1, 2009. See Note 22 for
enhanced disclosures associated with the adoption.
Effective January 1, 2008, the Company adopted SFAS No. 157 related to its financial assets and liabilities and
elected to defer the option of SFAS No. 157 for non-financial assets and non-financial liabilities as allowed by FSP
No. SFAS 157-2 “Effective Date of FASB Statement No. 157,” which was issued in February 2008, included in the
Codification as ASC 820, Fair Value Measurements and Disclosures. This topic defines fair value, establishes a
framework for measuring fair value under generally accepted accounting principles and enhances disclosures about
fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. Valuation techniques used to measure fair value
must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a
fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last
unobservable, that may be used to measure fair value as follows:
• Level 1 — Quoted prices in active markets for identical assets or liabilities.
• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices
for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to
the fair value of the assets or liabilities.
On January 1, 2009, the Company adopted the provisions of this topic relating to non-financial assets and non-
financial liabilities. The adoption of this statement did not have a material impact on the Company’s consolidated
financial statements.
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations”
(“SFAS 141(R)”), which is a revision of SFAS 141, “Business Combinations”, included in the Codification as
ASC 805-10-05-2. The primary requirements of this topic are as follows: (i.) Upon initially obtaining control, the
acquiring entity in a business combination must recognize 100% of the fair values of the acquired assets, including
goodwill, and assumed liabilities, with only limited exceptions even if the acquirer has not acquired 100% of its
target. As a consequence, the current step acquisition model will be eliminated. (ii.) Contingent consideration
arrangements will be fair valued at the acquisition date and included on that basis in the purchase price
consideration. The concept of recognizing contingent consideration at a later date when the amount of that
consideration is determinable beyond a reasonable doubt, will no longer be applicable. (iii.) All transaction costs
will be expensed as incurred. This topic is effective as of the beginning of an entity’s first fiscal year beginning after
December 15, 2008. The Company adopted this topic on January 1, 2009 and it did not have an impact on its
consolidated financial statements.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements — An Amendment of ARB No. 51, or SFAS No. 160” (“SFAS No. 160”), included in the Codification
as ASC 810-10-65-1. This topic establishes new accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. Among other items, it requires that equity attributable to
noncontrolling interests be recognized in equity separate from that of the Company’s and that consolidated net
income now includes the results of operations attributable to noncontrolling interests. The Company adopted this
topic on January 1, 2009 and it did not have a material impact on the Company’s consolidated financial statements.

Future Adoption of Accounting Standards


In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets, an Amendment
of FASB Statement No. 140” (“SFAS No. 166”), expected to be included in the Codification as ASC 860, Transfers

F-15
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

and Servicing. This topic improves the comparability of information that a reporting entity provides regarding
transfers of financial assets and the effects on its financial statements. This topic is effective for interim and annual
reporting periods beginning after November 15, 2009. The Company is currently evaluating the effect that this topic
will have on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)”
(“SFAS No. 167”), expected to be included in the Codification as ASC 810, Consolidation. This topic changes
the consolidation guidance applicable to a variable interest entity. Among other things, it requires a qualitative
analysis to be performed in determining whether an enterprise is the primary beneficiary of a variable interest entity.
This topic is effective for interim and annual reporting periods beginning after November 15, 2009. The Company
has estimated that the adoption of this topic will require consolidation of its existing securitized loan vehicles
resulting in additional assets (primarily accounts receivable and other assets) of $400 million, and additional
liabilities (primarily short-term and long-term debt) of $445 million based on balances at December 31, 2009.
Additionally, vacation ownership pretax earnings are estimated to increase by approximately $20 million in 2010.
The Company is still evaluating other aspects of the topic.

In October 2009, the FASB issued ASU 2009-13 which supersedes certain guidance in ASC 605-25, Revenue
Recognition — Multiple Element Arrangements. This topic requires an entity to allocate arrangement consideration
at the inception of an arrangement to all of its deliverables based on their relative selling prices. This topic is
effective for annual reporting periods beginning after June 15, 2010. The Company is currently evaluating the
impact that this topic will have on its consolidated financial statements.

In January 2010, the FASB issued ASU 2010-06 which amends certain guidance of ASC 820-10. The
amendment will provide more robust disclosures about valuation techniques and inputs to fair value measurements.
This topic is effective for interim and annual Reporting periods beginning after December 15, 2009. The Company
is currently evaluating the impact that this topic will have on its consolidated financial statements.

Note 3. Earnings (Losses) per Share

Basic and diluted earnings (losses) per share are calculated using income (losses) from continuing operations
attributable to Starwood’s common shareholders (i.e. excluding amounts attributable to noncontrolling interests).

The following is a reconciliation of basic earnings (losses) per share to diluted earnings (losses) per share for
income (losses) from continuing operations (in millions, except per share data):
Year Ended December 31,
2009 2008 2007
Earnings Per Per Per
(Losses) Shares Share Earnings Shares Share Earnings Shares Share

Basic (losses) earnings from continuing operations . . . . $ (1) 180 $0.00 $249 181 $1.37 $532 203 $2.62
Effect of dilutive securities:
Employee options and restricted stock awards . . . . . . — — — 4 — 8
Diluted (losses) earnings from continuing operations . . . $ (1) 180 $0.00 $249 185 $1.34 $532 211 $2.52

Approximately 12 million shares, 7 million shares and 1 million shares were excluded from the computation of
diluted shares in 2009, 2008 and 2007, respectively, as their impact would have been anti-dilutive.

Income from continuing operations was adjusted for dispositions that occurred in 2009 and were reclassified to
discontinued operations for all periods presented (see Note 17). The previously reported basic earnings per share
were $1.40 and $2.67 for 2008 and 2007, respectively, and diluted earnings per share were $1.37 and $2.57 for 2008
and 2007, respectively.

F-16
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 4. Significant Acquisitions

Acquisition of the Sheraton Full Moon Maldives Resort and Spa

During the fourth quarter of 2008, the Company entered into a joint venture that acquired the Sheraton Full
Moon Maldives Resort and Spa. The Company invested approximately $28 million in this venture in exchange for a
45% ownership interest.

Note 5. Asset Dispositions and Impairments

As a result of the current economic climate, during 2009 and 2008, the Company reviewed the recoverability of
its carrying values of its owned hotels and determined that certain hotels were impaired. The fair values of the hotels
were estimated by using discounted cash flows, comparative sales for similar assets and recent letters of intent to
sell certain assets. Impairment charges of $41 million and $64 million, relating to 11 hotels, were recorded in the
years ended December 31, 2009 and 2008, respectively. These assets are reported in the Hotels operating segment. It
is reasonably possible that there will be additional impairments on owned hotels in 2010 if economic conditions
worsen.

Additionally, during 2009, the Company recorded a $13 million impairment of an investment in a hotel
management contract that has been cancelled, a $5 million impairment of certain technology-related fixed assets
and a $4 million loss on the sale of a wholly-owned hotel.

During 2009 and 2008, as a result of market conditions and its impact on the timeshare industry, the Company
reviewed the fair value of its economic interests in securitized VOI notes receivable and concluded these interests
were impaired. The fair value of the Company’s investment in these retained interests was determined by estimating
the net present value of the expected future cash flows, based on expected default and prepayment rates (See
Note 10.) The Company recorded impairment charges of $22 million and $23 million in the years ended
December 31, 2009 and 2008, respectively, related to these retained interests. These assets are reported in the
Vacation Ownership and Residential operating segment.

During the third quarter of 2009, the Company sold a wholly-owned hotel for cash proceeds of approximately
$90 million. This sale was subject to a long-term management contract, and the Company recorded a deferred gain
of $8 million in connection with the sale.

During the fourth quarter of 2008, the Company sold a wholly-owned hotel for net cash proceeds of
$99 million. This sale was subject to a long term management contract and the Company recorded a deferred
gain of $27 million in connection with the sale.

During the third quarter of 2008, the Company recorded a loss of $11 million primarily related to an investment
in which the Company holds a minority interest. This investment was fully written off as the joint venture’s lenders
began foreclosure proceedings on the underlying assets of the venture.

Note 6. Assets Held for Sale

During the fourth quarter of 2009, the Company entered into purchase and sale agreements for the sale of two
wholly owned hotels for total expected cash consideration of approximately $78 million. The Company received an
$8 million non-refundable deposit from the prospective buyer during the quarter. The Company classified these
assets and the estimated goodwill to be allocated as assets held for sale, ceased depreciating them and reclassified
the operating results to discontinued operations. Reclassifications have been made to the 2008 balance in order to be
comparable to the 2009 presentation (see Note 17).

F-17
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 7. Plant, Property and Equipment


Plant, property and equipment, excluding assets held for sale, consisted of the following (in millions):
December 31,
2009 2008

Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 597 $ 591


Buildings and improvements. . . . . . . . . . . . . . ......................... 3,222 3,144
Furniture, fixtures and equipment . . . . . . . . . . ......................... 1,824 1,702
Construction work in process . . . . . . . . . . . . . ......................... 180 194
5,823 5,631
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . (2,473) (2,284)
$ 3,350 $ 3,347

Reclassifications have been made to the 2008 balance in order to be comparable to the 2009 presentation (see
Note 17).
The above balances include unamortized capitalized computer software costs of $136 million and $129 million
at December 31, 2009 and 2008 respectively. Amortization of capitalized computer software costs was $36 million,
$24 million and $23 million for the years ended December 31, 2009, 2008 and 2007 respectively.

Note 8. Goodwill and Intangible Assets


The changes in the carrying amount of goodwill for the year ended December 31, 2009 are as follows (in
millions):
Vacation
Hotel Ownership
Segment Segment Total
(a)
Balance at January 1, 2009 . . . . . . . . . . . . . . . . ............. $1,324 $241 $1,565
Cumulative translation adjustment . . . . . . . . . . . . . ............. 7 — 7
Asset dispositions . . . . . . . . . . . . . . . . . . . . . . . . . ............. — — —
Impairment charge . . . . . . . . . . . . . . . . . . . . . . . . ............. — (90) (90)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............. 1 — 1
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,332 $151 $1,483

(a) Goodwill associated with discontinued operations total $74 million in 2009. This amount was reclassified in
the December 31, 2008 balance sheet as reflected in the beginning balance above.
The Company performed its annual goodwill impairment test as of October 31, 2009 for its hotel and vacation
ownership reporting units and determined that the vacation ownership goodwill was impaired, resulting in a charge
of $90 million ($90 million after-tax) to the restructuring, goodwill and impairment and other charges line item in
the consolidated statement of operations.
During the fourth quarter of 2009, the Company completed a comprehensive review of its vacation ownership
business (see Note 13). As a result of this review, the Company decided not to develop certain vacation ownership
sites and future phases of certain existing projects. These actions reduced the future expected cash flows of the
vacation ownership reporting unit which contributed to impairment of its goodwill.
The first step of the goodwill impairment test compares the fair value of the reporting unit with its carrying
value. If the fair value of the reporting unit exceeds its carrying amount then goodwill of the reporting unit is not

F-18
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

considered impaired. For the Company’s hotel reporting unit the fair value exceeded its carrying value. However,
the fair value of the vacation ownership reporting unit was less than its carrying value, as such goodwill was deemed
to be impaired, and step two of goodwill impairment test was performed. In the second step of the impairment test
the Company determined the implied fair value of goodwill for the vacation ownership reporting unit by deducting
the fair value of all tangible and intangible net assets as if it was acquired in a business combination, from the fair
value determined in step one. This step resulted in an implied goodwill fair value of $151 million compared to an
actual goodwill balance of $241 million, with the difference of $90 million representing the impairment charge. In
determining fair values associated with the goodwill impairment steps, the Company primarily used the income and
the market approaches. Under the income approach, fair value was determined based on the estimated future cash
flows of the reporting units taking into account assumptions such as, REVPAR, operating margins and sales pace of
vacation ownership units and discounting these cash flows using a discount rate commensurate with the risk
inherent in the calculations. Under the market approach, the fair value of the reporting units were determined based
on market valuation techniques such as comparable revenue and EBITDA multiples of similar companies in the
hospitality industry. The vacation ownership goodwill had not been previously impaired.
Based on the economic climate and the deterioration of results in the timeshare industry, it is reasonably
possible that the fair value of the vacation ownership segment could continue to decline, which could result in a
further impairment of its goodwill in the near term.
Intangible assets consisted of the following (in millions):
December 31,
2009 2008

Trademarks and trade names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 309 $ 315


Management and franchise agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376 354
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 90
761 759
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (181) (163)
$ 580 $ 596

The intangible assets related to management and franchise agreements have finite lives, and accordingly, the
Company recorded amortization expense of $35 million, $32 million and $26 million, respectively, during the years
ended December 31, 2009, 2008 and 2007. The other intangible assets noted above have indefinite lives.
Amortization expense relating to intangible assets with finite lives for each of the years ended December 31 is
expected to be as follows (in millions):
2010 . .................................................. ................ $36
2011 . .................................................. ................ $33
2012 . .................................................. ................ $32
2013 . .................................................. ................ $32
2014 . .................................................. ................ $32

F-19
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 9. Other Assets


Other assets include the following (in millions):
December 31,
2009 2008

VOI notes receivable, net . . . . . . . . . . ................................... $222 $444


Other notes receivable, net . . . . . . . . . ................................... 34 32
Prepaid taxes . . . . . . . . . . . . . . . . . . . ................................... 103 130
Deposits and other . . . . . . . . . . . . . . . ................................... 101 76
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $460 $682

Included in these balances at December 31, 2009 and 2008 are the following fixed rate notes receivable related
to the financing of VOIs (in millions):
December 31,
2009 2008

Gross VOI notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $336 $581


Allowance for uncollectible VOI notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . (94) (91)
Net VOI notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242 490
Less current maturities of gross VOI notes receivable . . . . . . . . . . . . . . . . . . . . . . . . (30) (54)
Current portion of the allowance for uncollectible VOI notes receivable. . . . . . . . . . . 10 8
Long-term portion of net VOI notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $222 $444

The current maturities of net VOI notes receivable are included in accounts receivable in the Company’s
balance sheets.
As discussed in Note 2, as the Company holds large amounts of similar VOI notes receivable, the Company
assesses its loan loss reserves based on pools of receivables. As of December 31, 2009, the average estimated default
rate for the Company’s pool of receivables was 9.8%. Given the significance of the Company’s respective pools of
VOI notes receivable, a change in the projected default rate can have a significant impact to its loan loss reserve
requirements, with a 0.1% change estimated to have an impact of approximately $3 million. It is reasonably
possible that the carrying value of the VOI notes receivable could materially change in 2010 if the economy
continues to worsen.
The interest rates of the owned VOI notes receivable are as follows:
December 31,
2009 2008

Range of stated interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0% - 18% 0% - 18%


Weighted average interest rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1% 11.9%

F-20
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

The maturities of the gross VOI notes receivable are as follows (in millions):
December 31,
2009 2008

Due in 1 year. . . . . . . . . . . . . . . . . . . ................................... $ 30 $ 54


Due in 2 years . . . . . . . . . . . . . . . . . . ................................... 25 47
Due in 3 years . . . . . . . . . . . . . . . . . . ................................... 29 52
Due in 4 years . . . . . . . . . . . . . . . . . . ................................... 34 64
Due in 5 years . . . . . . . . . . . . . . . . . . ................................... 41 66
Due beyond 5 years . . . . . . . . . . . . . . ................................... 177 298
Total gross VOI notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $336 $581

The activity in the allowance for VOI loan losses was as follows (in millions):
Balance at January 1, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 91
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Write-offs of uncollectible receivables and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (61)
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94

Note 10. Notes Receivable Securitizations


From time to time, the Company securitizes, without recourse, its fixed rate VOI notes receivable. To
accomplish these securitizations, the Company transfers a pool of VOI notes receivable to third-party special
purpose entities (together with the special purpose entities in the next sentence, the “SPEs”) and the SPEs transfer
the VOI notes receivable to qualifying special purpose entities (“QSPEs”). The Company continues to service the
securitized VOI notes receivable pursuant to servicing agreements negotiated at arms-length based on market
conditions; accordingly, the Company has not recognized any servicing assets or liabilities. All of the Company’s
VOI notes receivable securitizations to date have qualified to be, and have been, accounted for as sales. In order to
be accounted for as a sale, the transferor must surrender control of the financial assets and receive consideration
other than beneficial interests in the transferred asset.
With respect to those transactions still outstanding at December 31, 2009, the Company retains economic
interests (the “Retained Interests”) in securitized VOI notes receivables through SPE ownership of QSPE beneficial
interests. The Retained Interests, which are comprised of subordinated interests and interest only strips in the related
VOI notes receivable, provide credit enhancement to the third-party purchasers of the related QSPE beneficial
interests. Retained Interests cash flows are limited to the cash available from the related VOI notes receivable, after
servicing and other related fees, absorbing 100% of any credit losses on the related VOI notes receivable and QSPE
fixed rate interest expense. With respect to those transactions still outstanding at December 31, 2009, the Retained
Interests are classified and accounted for as “available-for-sale” securities. Securities are classified as “available for
sale” if the Company does not have the intent and ability to hold these securities to maturity or these securities were
not bought with the intent to be sold in the near term. These securities are reported at fair value, with credit losses
recorded in the statement of income and other unrealized gains and losses reported in stockholders’ equity.
The Company’s securitization agreements provide the Company with the option, subject to certain limitations,
to repurchase or replace defaulted VOI notes receivable at their outstanding principal amounts. Such activity totaled
$29 million, $23 million and $21 million during 2009, 2008 and 2007, respectively. The Company has been able to
resell the VOIs underlying the VOI notes repurchased or replaced under these provisions without incurring
significant losses. The Company’s replacement of the defaulted VOI notes receivable under the securitization
agreements with new VOI notes receivable resulted in net gains of approximately $3 million, $4 million and

F-21
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

$2 million during 2009, 2008 and 2007, respectively, which are included in vacation ownership and residential sales
and services in the Company’s consolidated statements of income.
In June 2009, the Company securitized approximately $181 million of VOI notes receivable (the “2009-A
Securitization”) resulting in cash proceeds of approximately $125 million. The Company retained $44 million of
interests in the QSPE, which included $43 million of notes the Company effectively owned after the transfer and
$1 million related to the interest only strip. The related loss on the 2009-A Securitization of $2 million is included in
vacation ownership and residential sales and services in the Company’s consolidated statements of income.
Key assumptions used in measuring the fair value of the Retained Interests at the time of the 2009-A
Securitization were as follows: an average discount rate of 12.8%, an average expected annual prepayment rate
including defaults of 17.9%, and an expected weighted average remaining life of prepayable notes receivable of
52 months. These key assumptions are based on the Company’s historical experience.
In December 2009, the Company securitized approximately $200 million of VOI notes receivable (the “2009-
B Securitization”) resulting in cash proceeds of approximately $166 million. The Company retained $31 million of
interests in the QSPE, which included $22 million of notes the Company effectively owned after the transfer and
$9 million related to the interest only strip. The related gain on the 2009-B Securitization of $19 million is included
in vacation ownership and residential sales and services in the Company’s consolidated statements of income.
Key assumptions used in measuring the fair value of the Retained Interests at the time of the 2009-B
Securitization were as follows: an average discount rate of 7.5%, an average expected annual prepayment rate
including defaults of 24.4%, and an expected weighted average remaining life of prepayable notes receivable of
69 months. These key assumptions are based on the Company’s historical experience.
In December 2009, the Company entered into an amendment with the third-party beneficial interest owner
regarding the notes issued in the 2009-A Securitization (the 2009-A Amendment). The amendment to the terms
included a reduction of the coupon rate and an increase in the effective advance rate. As the increase in the advance
rate produced additional cash proceeds of $9 million, this resulted effectively in additional loans sold to the QSPE
from the original over collateralization. The discount rates used in measuring the fair value of the Retained Interests
at the time of the 2009-A Amendment were 6.5% for the interest only strip and 12.8% for the remaining loans
effectively not sold (unchanged from June 2009). The resulting retained interest was $6 million and resulting loans
effectively owned were $33 million. The related gain on the 2009-A Amendment of $4 million is included in
vacation ownership and residential sales and services in the Company’s consolidated statements of income.
Although the notes effectively owned after the transfers were measured at fair value on the transfer date, they
require prospective accounting treatment as notes receivable and will be carried at the basis established at the date of
transfer and accrete interest over time to return to the historical cost basis. If the Company deems such amount to be
non-recoverable in the future, it will record a valuation allowance. During 2009, the Company recorded a valuation
allowance of $4 million. As of December 31, 2009, the value of the notes that the Company effectively owned from
the 2009-A Securitization, the 2009-B Securitization and the 2009-A Amendment was approximately $56 million,
which the Company classified as “Other assets” in its consolidated balance sheets.
At December 31, 2009, the aggregate outstanding principal balance of VOI notes receivable that has been
securitized was $529 million. The aggregate principal amount of those VOI notes receivables that were more than
90 days delinquent at December 31, 2009 was approximately $6 million.
Gross credit losses for all VOI notes receivable that have been securitized totaled $42 million, $31 million and
$23 million during 2009, 2008 and 2007, respectively.
The Company received aggregate cash proceeds of $21 million, $26 million and $33 million from the Retained
Interests during 2009, 2008 and 2007, respectively. The Company received aggregate servicing fees of $4 million,
$3 million and $4 million related to these VOI notes receivable during 2009, 2008 and 2007, respectively.

F-22
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

At the time of each VOI notes receivable securitization and at the end of each financial reporting period, the
Company estimates the fair value of its Retained Interests using a discounted cash flow model. All assumptions used
in the models are reviewed and updated, if necessary, based on current trends and historical experience. The key
assumptions used in measuring the fair value associated with its note securitizations as of December 31, 2009 was as
follows: an average discount rate of 7.8%, an average expected annual prepayment rate including defaults of 15.8%
and an expected weighted average remaining life of prepayable notes receivable of 86 months.
The fair value of the Company’s Retained Interest as of December 31, 2009 and 2008 was $25 million and
$19 million with amortized cost basis of $22 million and $21 million, respectively. Temporary differences in the fair
value of the retained interests recorded in other comprehensive income totaled a $3 million gain for the year ended
December 31, 2009 and a $2 million loss for the year ended December 31, 2008. Total other-than-temporary
impairments related to credit losses recorded in loss on asset dispositions and impairments totaled $22 million,
$23 million and $3 million during 2009, 2008 and 2007, respectively.
The Company completed a sensitivity analysis on the net present value of the Retained Interests to measure the
change in value associated with independent changes in individual key variables. The methodology applied
unfavorable changes for the key variables of expected prepayment rates, discount rates and expected gross credit
losses as of December 31, 2009. The decreases in value of the Retained Interests that would result from various
independent changes in key variables are shown in the chart that follows (in millions). The factors may not move
independently of each other.
Annual prepayment rate:
100 basis points-dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.1
100 basis points-percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5%
200 basis points-dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.2
200 basis points-percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8%
Discount rate:
100 basis points-dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.5
100 basis points-percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9%
200 basis points-dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.9
200 basis points-percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8%
Gross annual rate of credit losses:
100 basis points-dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.0
100 basis points-percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1%
200 basis points-dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9.1
200 basis points-percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.5%

F-23
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 11. Fair Value

The following table presents the Company’s fair value hierarchy for its financial assets and liabilities measured
at fair value on a recurring basis as of December 31, 2009 (in millions):
Level 1 Level 2 Level 3 Total

Assets:
Interest Rate Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $— $ 7 $— $ 7
Retained Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 25 25
$— $ 7 $25 $32
Liabilities:
Forward contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $— $ 7 $— $ 7

The forward contracts are over the counter contracts that do not trade on a public exchange. The fair values of
the contracts are based on inputs such as foreign currency spot rates and forward points that are readily available on
public markets, and as such, are classified as Level 2. The Company considered both its credit risk, as well as its
counterparties’ credit risk in determining fair value and no adjustment was made as it was deemed insignificant
based on the short duration of the contracts and the Company’s rate of short-term debt.

The interest rate swaps are valued using an income approach. Expected future cash flows are converted to a
present value amount based on market expectations of the yield curve on floating interest rates, which is readily
available on public markets.

The Company estimates the fair value of its Retained Interests using a discounted cash flow model with
unobservable inputs, which is considered Level 3. See Note 10 for the assumptions used to calculate the estimated
fair value and sensitivity analysis based on changes in assumptions.

The following table presents a reconciliation of the Company’s Retained Interests measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2009 (in millions):

Balance at January 1, 2009 . . . . . . . . . . . . . . . . . . . . . . . . .......................... $ 19


Total losses (realized/unrealized)
Included in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . .......................... (19)
Included in other comprehensive income. . . . . . . . . . . .......................... 3
Purchases, issuances, and settlements . . . . . . . . . . . . . . . .......................... 22
Transfers in and/or out of Level 3 . . . . . . . . . . . . . . . . . .......................... —
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25

Note 12. Deferred Gains

The Company defers gains realized in connection with the sale of a property for which the Company continues
to manage the property through a long-term management agreement and recognizes the gains over the initial term of
the related agreement. As of December 31, 2009 and 2008, the Company had total deferred gains of $1.093 billion
and $1.151 billion, respectively, included in accrued expenses and other liabilities in the Company’s consolidated
balance sheets. Amortization of deferred gains is included in management fees, franchise fees and other income in
the Company’s consolidated statements of income and totaled approximately $82 million, $83 million and
$81 million in 2009, 2008 and 2007, respectively.

F-24
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 13. Restructuring, Goodwill Impairment and Other Special Charges, Net
During the year ended December 31, 2009, the Company completed a comprehensive review of its vacation
ownership business. The Company decided not to develop certain vacation ownership sites and future phases of
certain existing projects. As a result of these decisions, the Company recorded a primarily non-cash impairment
charge of $255 million. The impairment included a charge of approximately $148 million primarily related to land
held for development; a charge of $64 million for the reduction in inventory values at four properties; the write-off
of fixed assets of $21 million; facility exit costs of $15 million and $7 million in other costs. Additionally, as a result
of this decision and the current economic climate, the Company recorded a $90 million non-cash charge for the
impairment of goodwill in the vacation ownership reporting unit (see Note 8).
Additionally, in 2009, the Company recorded restructuring and other special charges of $34 million, primarily
related to severance charges and costs to close vacation ownership sales galleries, associated with its ongoing
initiative of rationalizing its cost structure.
During the year ended December 31, 2008, the Company recorded restructuring and other special charges of
$141 million, including $62 million of severance and related charges associated with its ongoing initiative of
rationalizing its cost structure. The Company also recorded impairment charges of approximately $79 million
primarily related to the decision not to develop two vacation ownership projects as a result of the current economic
climate and its impact on business conditions.
During the year ended December 31, 2007, the Company recorded net restructuring and other special charges
of approximately $53 million primarily related to the Company’s redevelopment of the Sheraton Bal Harbour Beach
Resort (“Bal Harbour”). The Company demolished the hotel in late 2007 and is in the process of rebuilding a St.
Regis hotel along with branded residences and fractional units. Bal Harbour was closed for business on July 1, 2007,
and the majority of employees were terminated. The charge primarily related to accelerated depreciation,
demolition, and severance costs.
In determining the fair value associated with the impairment charges the Company primarily used the income
and market approaches. Under the income approach, fair value was determined based on estimated future cash
flows taking into consideration items such as operating margins and the sales pace of vacation ownership intervals,
discounted using a rate commensurate with the inherent risk of the project. Under the market approach, fair value
was determined with comparable sales of similar assets and appraisals.
Restructuring, Goodwill Impairment and Other Special Charges by operating segment are as follows:
Year Ended
December 31,
2009 2008 2007

Segment
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21 $ 41 $53
Vacation Ownership & Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358 100 —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $379 $141 $53

F-25
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

The Company had remaining accruals of $34 million as of December 31, 2009, which are primarily recorded in
accrued expenses and other liabilities. The following table summarizes activity in the restructuring and other special
charges related accounts during the year ended December 31, 2009 (in millions):
December 31, Non-cash December 31,
2008 Expenses Payments Other 2009

Retained reserves established by Sheraton


Holding prior to its merger with the
Company in 1998 . . . . . . . . . . . . . . . . . $ 8 $ — $— $ — $ 8
Le Méridien Acquisition reserves . . . . . . . — (2) — 2 —
Consulting fees associated with cost
reduction initiatives. . . . . . . . . . . . . . . . 3 5 (7) — 1
Severance. . . . . . . . . . . . . . . . . . . . . . . . . 23 24 (43) — 4
Closure of vacation ownership facilities . . 7 7 (4) (4) 6
Impairments of land, inventory and
construction in progress . . . . . . . . . . . . — 255 — (240) 15
Impairment of goodwill . . . . . . . . . . . . . . — 90 — (90) —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $41 $379 $(54) $(332) $34

Note 14. Income Taxes

Income tax data from continuing operations of the Company is as follows (in millions):
Year Ended December 31,
2009 2008 2007

Pretax income
U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(408) $185 $ 501
Foreign. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 136 215
$(296) $321 $ 716
Provision (benefit) for income tax
Current:
U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (84) $ (15) $ 161
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 32 7
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 48 157
(34) 65 325
Deferred:
U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (117) 28 (105)
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18) (23) —
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (124) 2 (37)
(259) 7 (142)
$(293) $ 72 $ 183

No provision has been made for U.S. taxes payable on undistributed foreign earnings amounting to approx-
imately $759 million as of December 31, 2009 since these amounts are permanently reinvested.

F-26
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and
liabilities. Deferred tax assets (liabilities) include the following (in millions):
December 31,
2009 2008

Plant, property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 502 $ 389


Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 7 10
Allowances for doubtful accounts and other reserves . . . . . . . . . . . . . . . . . ..... 225 132
Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 99 105
Net operating loss, capital loss and tax credit carryforwards . . . . . . . . . . . . ..... 503 605
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... (83) (238)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 180 98
1,433 1,101
Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (482) (488)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 951 $ 613

At December 31, 2009, the Company had federal and state net operating losses, which have varying expiration
dates extending through 2028, of approximately $1 million and $2.4 billion, respectively. The Company had federal
tax credit carryforwards, which are expected to be realized, of $13 million which will fully expire by 2029. The
Company also had foreign net operating loss and tax credit carryforwards of approximately $58 million and
$19 million, respectively. The majority of foreign net operating loss carryforwards are in jurisdictions with an
indefinite carryforward period and the tax credit carryforwards will fully expire by 2016. The Company has
established a valuation allowance against substantially all of the tax benefit for the federal and state loss
carryforwards and all foreign carryforwards as it is unlikely that the benefit will be realized prior to their
expiration. The Company is currently considering certain tax-planning strategies that may allow it to utilize these
tax attributes within the statutory carryforward period.
The Company generated a federal capital loss in connection with a disposition transaction in 2006 which was
originally estimated at approximately $2.6 billion at December 31, 2006. During 2007, the Company completed its
2006 tax return which included the transaction and adopted FIN 48. As a result, the Company reduced its original
estimate of this capital loss and corresponding valuation allowance by approximately $1.2 billion, resulting in a
revised amount of $1.4 billion at December 31, 2006. Through December 31, 2009, approximately $594 million of a
$1.4 billion capital loss has been utilized to offset 2009 and prior years’ capital gains. The remaining $782 million
of capital loss is available to offset federal capital gains through 2011. The Company also had state capital losses
generated by the disposition transaction in 2006 of approximately $961 million, substantially all of which expire in
2011. Due to the uncertainty of realizing the tax benefit of the federal and state capital loss carryforwards, the entire
tax benefit of the losses has been offset by a valuation allowance.
In February 1998, the Company disposed of ITT World Directories. The Company recorded $551 million of
income taxes relating to this transaction. While the Company strongly believes this transaction was completed on a
tax-deferred basis, in 2002 the IRS proposed an adjustment to fully tax the gain in 1998, which would increase
Starwood’s taxable income by approximately $1.4 billion in that year. During 2004, the Company filed a petition in
United States Tax Court to contest the IRS’s proposed adjustment. As a result of an August 2005 United States Tax
Court decision against another taxpayer, the Company decided to treat this transaction as if it were taxable in 1998
for accounting purposes. As such, the Company applied substantially all of its federal net operating loss
carryforwards against the gain and accrued interest, resulting in a $360 million net current liability. The Company
paid the entire current liability to the IRS in October 2005 in order to eliminate any future interest accruals
associated with the pending dispute. In January 2009, the Company and the IRS reached an agreement in principle
to settle the litigation pertaining to the tax treatment of this transaction. The Company expects to finalize the details
of the agreement and obtain the refund during 2010.

F-27
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

A reconciliation of the tax provision of the Company at the U.S. statutory rate to the provision for income tax as
reported is as follows (in millions):
Year Ended December 31,
2009 2008 2007

Tax provision at U.S. statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(104) $112 $ 251


U.S. state and local income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) 8 13
Tax on repatriation of foreign earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . (45) (14) (29)
Foreign tax rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25) (20) 12
Italian incentive program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (120) — —
Nondeductible goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 — 6
Change in uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 — 13
Tax settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 — 2
Tax benefit on the deferred gain from asset sales . . . . . . . . . . . . . . . . . . . . (3) (10) (3)
Adjustment to tax benefits recognized in disposition transaction . . . . . . . . . — — 97
Basis difference on asset sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29) 16 (2)
Change in of valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (31) (158)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13) 11 (19)
Provision for income tax (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(293) $ 72 $ 183

During 2009, the Company completed an evaluation of its ability to claim U.S. foreign tax credits generated in
prior years on its federal tax return. As a result of this analysis, the Company determined that it can realize the
credits for the 2001 through and 2004 tax years. The Company had not previously accrued this benefit since the
realization of the benefit was determined to be unlikely. Therefore, during 2009, a $37 million tax benefit, net of
incremental taxes and interest, was recorded for these foreign tax credits. During 2007, the Company determined
that it can realize similar U.S. foreign tax credits generated in 1999 and 2000. As a result of that determination, the
Company recognized a $28 million tax benefit, net of incremental taxes and interest.

During 2009, the Company entered into an Italian tax incentive program through which the tax basis of its
Italian owned hotels were stepped up in exchange for paying $9 million of current tax over a three year period. As a
result, the Company was able to recognize a tax benefit of $129 million to establish the deferred tax asset related to
the basis step up. This benefit was offset by a $9 million tax charge to accrue the current tax payable under the
program, resulting in a net benefit of $120 million.

During 2009, the Company recognized goodwill impairments associated with the sale of a wholly-owned hotel
and the overall value of its timeshare operations. For tax purposes, the impairments are not deductible. As a result,
the Company did not recognize a tax benefit on the impairments and the provision for income tax was unfavorably
impacted by a $39 million charge. During 2007, the Company recognized goodwill impairments associated with the
sale of a wholly-owned hotel. These impairments were also not deductible for tax purposes and the provision for
income tax was unfavorably impacted by a $6 million charge.

Pursuant to FIN 48, the Company is required to accrue tax and associated interest and penalty on uncertain tax
positions. The Company recorded charges of $9 million, $0 million and $13 million, for the years ended
December 31, 2009, 2008, and 2007, respectively, primarily associated with interest due on existing uncertain
tax positions.

When the Company sells a wholly-owned hotel subject to a long-term management contract, the pretax gain is
deferred and is recognized over the life of the contract. In such instances, the Company establishes a deferred tax
asset on the deferred gain and recognizes the related tax benefit through the tax provision. The Company recorded

F-28
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

benefits of $3 million, $10 million and $3 million, for the years ended December 31, 2009, 2008, and 2007,
respectively, to establish the deferred tax assets on these types of dispositions.
In 2007, the Company recognized a net $97 million tax charge as an adjustment to a tax benefit accrued in 2006
related to a disposition transaction.
During 2008 and 2007, the Company completed certain transactions that generated capital gains for U.S. tax
purposes. These gains were offset by capital losses generated in 2006. As discussed above, the Company had not
previously accrued a benefit for the capital loss since the realization was determined to be unlikely. Therefore,
during 2008 and 2007, the Company recorded tax benefits of $31 million and $158 million, respectively, to reverse
the capital loss valuation allowance.
As a result of the implementation of FIN 48 in 2007, the Company recognized a $35 million cumulative effect
adjustment to the beginning balance of retained earnings in the period. As of December 31, 2009, the Company had
approximately $999 million of total unrecognized tax benefits, of which $73 million would affect its effective tax
rate if recognized. As discussed above, the Company expects to resolve the tax litigation related to the ITT World
Directories transaction during 2010 and expects to reduce that amount of unrecognized tax benefits by approx-
imately $499 million. It is reasonably possible that zero to substantially all of the Company’s other remaining
unrecognized tax benefits will reverse within the next twelve months. A reconciliation of the beginning and ending
balance of unrecognized tax benefits is as follows (in millions):
Balance at January 1, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 968
Additions based on tax positions related to the current year . . . . . . . . . . . . . . . . . . . . . . . 41
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Settlements with tax authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)
Reductions due to the lapse of applicable statutes of limitation . . . . . . . . . . . . . . . . . . . . (1)
Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,003
Balance at January 1, 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,003
Additions based on tax positions related to the current year . . . . . . . . . . . . . . . . . . . . . . . 4
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Settlements with tax authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1)
Reductions due to the lapse of applicable statutes of limitation . . . . . . . . . . . . . . . . . . . . (2)
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 999

F-29
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

The Company recognizes interest and penalties related to unrecognized tax benefits through income tax
expense. The Company had $233 million and $224 million accrued for the payment of interest and no accrued
penalties as of December 31, 2009 and December 31, 2008, respectively.

The Company is subject to taxation in the U.S. federal jurisdiction, as well as various state and foreign
jurisdictions. As of December 31, 2009, the Company is no longer subject to examination by U.S. federal taxing
authorities for years prior to 2004 and to examination by any U.S. state taxing authority prior to 1998. All
subsequent periods remain eligible for examination. In the significant foreign jurisdictions in which the Company
operates, the Company is no longer subject to examination by the relevant taxing authorities for any years prior to
2001.

Note 15. Debt

Long-term debt and short-term borrowings consisted of the following (in millions):
December 31,
2009 2008

Senior Credit Facilities:


Revolving Credit Facilities, interest rates ranging from 3.70% to 3.94% at December 31,
2009, maturing 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 114 $ 213
Term loan repaid during 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,375
Senior Notes, interest at 7.875%, maturing 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608 799
Senior Notes, interest at 6.25%, maturing 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 601
Senior Notes, interest at 7.875%, maturing 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485 —
Senior Notes (former Sheraton Holding notes), interest at 7.375%, maturing 2015. . . . . . . . 449 449
Senior Notes, interest at 6.75%, maturing 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400 400
Senior Notes, interest at 7.15%, maturing 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 —
Mortgages and other, interest rates ranging from 5.80% to 8.56%, various maturities. . . . . . 162 171
2,960 4,008
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) (506)
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,955 $3,502

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

2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................... $ 5
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................... 122
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................... 653
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................... 550
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................... 488
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................... 1,142
$2,960

The Company maintains lines of credit under which bank loans and other short-term debt are drawn. In
addition, smaller credit lines are maintained by the Company’s foreign subsidiaries. The Company had approx-
imately $1.6 billion of available borrowing capacity under its domestic and foreign lines of credit as of
December 31, 2009. The short-term borrowings at December 31, 2009 and 2008 were insignificant.

F-30
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

The Company is subject to certain restrictive debt covenants under its short-term borrowing and long-term debt
obligations including defined financial covenants, limitations on incurring additional debt ability to pay dividends,
escrow account funding requirements for debt service, capital expenditures, tax payments and insurance premiums,
among other restrictions. The Company was in compliance with all of the short-term and long-term debt covenants
at December 31, 2009.
During 2009, the Company reduced debt by over $1 billion. The Company issued new debt of $750 million and
prepaid debt of $1.675 billion including term loans maturing in 2009, 2010, and 2011 totaling $1.375 billion.
Additional sources of cash generated to pay down debt were proceeds from asset sales, securitizations and a co-
branding arrangement, as described in Notes 5, 10 and 16.
During 2009, the Company entered into six interest rate swap agreements with a notional amount of
$500 million, under which the Company pays floating and receives fixed interest rates (see Note 22).
On December 7, 2009, the Company used the proceeds from a public offering of Senior Notes described below,
together with other borrowings, to complete a tender offer to repurchase $195 million of the principal amount of its
7.875% Senior Notes due 2012 and $105 million of its 6.25% Senior Notes due 2013. In connection with this tender
offer, the Company recorded a $17 million charge to interest expense related to the tender premium and
unamortized debt issue costs.
On November 24, 2009, the Company completed a public offering of $250 million of Senior Notes (“the
7.15% Notes”) due December 1, 2019. The Company received net proceeds of approximately $241 million, which
were used to repurchase a portion of outstanding Senior Notes (discussed above). Interest on the 7.15% Notes is
payable semi-annually on June 1 and December 1. The Company may redeem all or a portion of the 7.15% Notes at
any time at the Company’s option at a price equal to the greater of (1) 100% of the aggregate principal plus accrued
and unpaid interest and (2) the sum of the present values of the remaining scheduled payments of principal and
interest discounted at the redemption rate on a semi-annual basis at the Treasury rate plus 50 basis points, plus
accrued and unpaid interest. The 7.15% Notes rank parri passu with all other unsecured and unsubordinated
obligations. Upon a change in control of the Company, the holders of the 7.15% Notes will have the right to require
repurchase of the respective 7.15% Notes at 101% of the principal amount plus accrued and unpaid interest. Certain
covenants on the 7.15% Notes include restrictions on liens, sale and leaseback transactions, mergers, consolidations
and sale of assets.
On April 30, 2009, the Company completed a public offering of $500 million of senior notes with a coupon rate
of 7.875% (the “7.875% Notes”) due October 15, 2014, issued at a discount price of 96.285%. The Company
received net proceeds of approximately $475 million which were used to reduce the outstanding borrowings under
its Amended Credit Facilities and for general purposes. Interest on the 7.875% Notes is payable semi-annually on
April 15 and October 15. The Company may redeem all or a portion of the 7.875% Notes at any time at the
Company’s option at a discount rate of Treasury plus 50 basis points. The 7.875% Notes will rank parri passu with
all other unsecured and unsubordinated obligations. Upon a change in control of the Company, the holders of the
7.875% Notes will have the right to require repurchase of the 7.875% Notes at 101% of the principal amount plus
accrued and unpaid interest. Certain covenants on the 7.875% Notes include restrictions on liens, sale and leaseback
transactions, mergers, consolidations and sale of assets.
On April 27, 2009, the Company amended its revolving credit and term loan facilities (collectively with prior
amendments the “Amended Credit Facilities”) with the consent of the lenders thereunder. The Amended Credit
Facilities enhance the Company’s financial flexibility by increasing the Company’s maximum Consolidated
Leverage Ratio (as defined in the Amended Credit Facilities) from 4.50x to 5.50x. Additionally, the definition of
Consolidated EBITDA used in the Amended Credit Facilities has been modified to exclude certain cash severance
expenses from Consolidated EBITDA.
In connection with the amendment, the Company agreed to increase the pricing on the outstanding Amended
Credit Facilities based upon the Company’s Consolidated Leverage Ratio, the Company’s unsecured debt rating and

F-31
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

the type of loan borrowed. The margin increases range from 2.00% to 3.50% for term loans maintained as
Eurodollar Loans, 1.75% to 3.00% for revolving loans maintained as Euro Rate Loans, and 0.00% to 1.50% for Base
Rate and Canadian Prime Rate Loans. The applicable margin for the Facility Fee ranges from 0.25% to 0.50%. The
amendment further modifies the Amended Credit Facilities by (i.) restricting the Company’s ability to pay
dividends and repurchase stock depending on the Company’s free cash flow and Consolidated Leverage Ratio and
(ii.) decreasing the Company’s permitted lien basket from 10% of Net Tangible Assets (as defined in the Amended
Credit Facilities) to 5% of Net Tangible Assets. An amendment fee of 50 basis points was also paid to all consenting
lenders who approved the Amended Credit Facilities, with no amendment fee being paid on the repaid portion of the
term loan.
On May 23, 2008, the Company completed a public offering of $600 million of senior notes, consisting of
$200 million aggregate principal amount 6.25% Senior Notes (“6.25% Notes”) due February 15, 2013 and
$400 million aggregate principal amount 6.75% Senior Notes (“6.75% Notes”) due May 15, 2018 (collectively, the
“Notes”). The Company received net proceeds of approximately $596 million, which were used to reduce the
outstanding borrowings under its Revolving Credit Facilities. Interest on the 6.25% Notes is payable semi-annually
on February 15 and August 15 and interest on the 6.75% Notes is payable semi-annually on May 15 and
November 15. The Company may redeem all or a portion of the Notes at any time at the Company’s option at a price
equal to the greater of (1) 100% of the aggregate principal plus accrued and unpaid interest and (2) the sum of the
present values of the remaining scheduled payments of principal and interest discounted at the redemption rate on a
semi-annual basis at the Treasury rate plus 35 basis points for the 6.25% Notes and 45 basis points for the
6.75% Notes, plus accrued and unpaid interest. The Notes rank parri passu with all other unsecured and
unsubordinated obligations. Upon a change in control of the Company, the holders of the Notes will have the
right to require repurchase of the respective Notes at 101% of the principal amount plus accrued and unpaid interest.
Certain covenants on the Notes include restrictions on liens, sale and leaseback transactions, mergers, consoli-
dations and sale of assets.

Note 16. Other Liabilities


Other liabilities consisted of the following (in millions):
December 31,
2009 2008

Deferred gains on asset sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,009 $1,069


SPG point liability(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 634 430
Deferred income including VOI and residential sales . . . . . . . . . . . . . . . . . ..... 33 55
Benefit plan liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 65 106
Insurance reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 46 50
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 116 133
$1,903 $1,843

(a) Includes the actuarially determined liability related to the SPG program and the liability associated with the
American Express transaction discussed below.
In June 2009, the Company entered into an amendment to its existing co-branded credit card agreement
(“Amendment”) with American Express and extended the term of its co-branding agreement to June 15, 2015. In
connection with the Amendment in July 2009, the Company received $250 million in cash and, in return, sold SPG
points to American Express. In accordance with ASC 470, Debt, the Company has recorded the sale of these points
as a financing arrangement with an implicit interest rate of 4.5%. The liability associated with this financing
arrangement will be reduced ratably over a five year period beginning in October 2009. In accordance with the terms
of the Amendment, if the Company fails to comply with certain financial covenants the Company would have to

F-32
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

repay the remaining liability and, if the Company does not repay such liability, the Company is required to pledge
certain receivables as collateral for the remaining balance of the liability.

Note 17. Discontinued Operations

Summary financial information for discontinued operations is as follows (in millions):


Year Ended December 31,
2009 2008 2007

Income Statement Data


Gain (loss) on disposition, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $76 $75 $ (1)
Income (loss) from operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) 5 11

For the year ended December 31, 2009, the $76 million (net of tax) gain on dispositions includes the gains from
the sale of the Company’s Bliss spa business, other non-core assets and three hotels. The operations from the Bliss
spa business, and the revenues and expenses from two hotels which are in the process of being sold, are included in
discontinued operations, resulting in a loss of $2 million, net of tax.

The assets sold in 2009 and the two hotels recorded in assets held for sale at December 31, 2009 were
reclassified in the December 31, 2008 balance sheet as assets held for sale in order to segregate the discontinued
operations assets from continuing operations assets. The impact of the current assets and liabilities related to the
discontinued operations were not reclassified as the change was inconsequential.
Previously As
Reported Restated Change

Goodwill and intangible assets, net. . . . . . . . . . . . . . . . . . . . . . . . . . $2,235 $2,161 $ (74)


Plant, property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . 3,599 3,347 (252)
Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 336 326

For the year ended December 31, 2008, the gain on dispositions includes a $124 million gain ($129 million pre
tax) on sale of three hotels which were sold unencumbered by management or franchise contracts partially offset by
a $49 million tax charge as a result of a 2008 administrative tax ruling for an unrelated taxpayer that impacts the tax
liability associated with the disposition of one of the Company’s businesses several years ago. Additionally,
$5 million ($9 million pretax) of 2008 results from operations relating to Bliss and the two owned hotels that were in
the process of being sold at December 31, 2009, were reclassified to discontinued operations for the year ended
December 31, 2008.

For the year ended December 31, 2007, the income from discontinued operations represents $11 million
($17 million pretax) of 2007 results from operations relating to Bliss and the two hotels that were in the process of
being sold at December 31, 2009 and that were reclassified to discontinued operations. The loss on disposition includes a
$1 million tax assessment associated with the disposition of the Company’s former gaming business in 1999.

Note 18. Employee Benefit Plans

During the year ended December 31, 2009, the Company recorded net actuarial gain and gains from
settlements and curtailments of $10 million (net of tax) and $23 million (net of tax) respectively. These gains
were recorded in other comprehensive income. The amortization of actuarial loss, a component of accumulated
other comprehensive income, for the year ended December 31, 2009 was $5 million (net of tax).

Included in accumulated other comprehensive (loss) income at December 31, 2009 are unrecognized net
actuarial losses of $63 million ($53 million, net of tax) that have not yet been recognized in net periodic pension

F-33
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

cost. The actuarial loss included in accumulated other comprehensive (loss) income and expected to be recognized
in net periodic pension cost during the year ended December 31, 2010 is $1 million ($1 million, net of tax).
Defined Benefit and Postretirement Benefit Plans. The Company and its subsidiaries sponsor or previously
sponsored numerous funded and unfunded domestic and international pension plans. All defined benefit plans
covering U.S. employees are frozen. Certain plans covering non-U.S. employees remain active.
The Company also sponsors the Starwood Hotels & Resorts Worldwide, Inc. Retiree Welfare Program. This
plan provides health care and life insurance benefits for certain eligible retired employees. The Company has
prefunded a portion of the health care and life insurance obligations through trust funds where such prefunding can
be accomplished on a tax effective basis. The Company also funds this program on a pay-as-you-go basis.
The following table sets forth the projected benefit obligation, fair value of plan assets, the funded status and
the accumulated benefit obligation of the Company’s defined benefit pension and postretirement benefit plans at
December 31, 2009 and 2008 (in millions):
Domestic Postretirement
Pension Benefits Foreign Pension Benefits Benefits
2009 2008 2009 2008 2009 2008

Change in Projected Benefit Obligation


Benefit obligation at beginning of year . . . . . . $ 17 $ 17 $199 $206 $ 18 $ 20
Service cost . . . . . . . . . . . . . . . . . . . . . . . . — — 5 4 — —
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . 1 1 13 11 1 1
Actuarial loss (gain) . . . . . . . . . . . . . . . . . . — — 11 20 3 —
Settlements and curtailments . . . . . . . . . . . . — — (50) (7) — —
Effect of foreign exchange rates . . . . . . . . . — — 8 (27) — —
Plan participant contributions . . . . . . . . . . . — — — — 1 —
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . (1) (1) (6) (6) (4) (3)
Plan amendments . . . . . . . . . . . . . . . . . . . . — — (2) (2) — —
Benefit obligation at end of year . . . . . . . . . . . $ 17 $ 17 $178 $199 $ 19 $ 18
Change in Plan Assets
Fair value of plan assets at beginning of
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $— $— $132 $185 $ 2 $ 5
Actual return on plan assets, net of
expenses . . . . . . . . . . . . . . . . . . . . . . . . . — — 28 (35) — —
Employer contribution . . . . . . . . . . . . . . . . 1 1 21 20 2 3
Plan participant contributions . . . . . . . . . . . — — — — 1 —
Effect of foreign exchange rates . . . . . . . . . — — 9 (26) — —
Settlements and curtailments . . . . . . . . . . . . — — (25) (6) — —
Asset transfer . . . . . . . . . . . . . . . . . . . . . . . — — — — — (3)
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . (1) (1) (6) (6) (4) (3)
Fair value of plan assets at end of year . . . . . . $— $— $159 $132 $ 1 $ 2
Unfunded status . . . . . . . . . . . . . . . . . . . . . . . $(17) $(17) $ (19) $ (67) $(18) $(16)
Accumulated benefit obligation . . . . . . . . . . . . $ 17 $ 17 $176 $174 n/a n/a
Plans with Accumulated Benefit Obligations
in Excess of Plan Assets
Projected benefit obligation . . . . . . . . . . . . . $ 17 $ 17 $117 $132 $ 19 $ 18
Accumulated benefit obligation . . . . . . . . . . $ 17 $ 17 $115 $108 n/a n/a
Fair value of plan assets . . . . . . . . . . . . . . . $— $— $ 87 $ 57 $ 1 $ 2

F-34
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

The net underfunded status of the plans at December 31, 2009 was $54 million, of which $57 million is in other
liabilities and $3 million is in accrued expenses and $6 million is in other assets in the accompanying balance sheet.

All domestic pension plans are frozen plans, where employees do not accrue additional benefits. Therefore, at
December 31, 2009 and 2008, the projected benefit obligation is equal to the accumulated benefit obligation. In
2009, the Company elected to freeze its foreign service pension plan and settled its defined benefit pension plans in
Canada, resulting in a $50 million reduction in the projected benefit obligation.

The following table presents the components of net periodic benefit cost and the impact of the plan
curtailments and settlements for the years ended December 31, 2009, 2008 and 2007 (in millions):
Domestic
Pension Benefits Foreign Pension Benefits Postretirement Benefits
2009 2008 2007 2009 2008 2007 2009 2008 2007

Service cost . . . . . . . . . . . . . . . . . . . . . . . . $— $— $— $ 5 $ 4 $ 5 $— $— $—
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1 13 11 12 1 1 1
Expected return on plan assets . . . . . . . . . . — — — (10) (10) (11) — — (1)
Amortization of actuarial loss . . . . . . . . . . . — — — 5 2 2 — — —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — 1 — — — —
ASC 715 Compensation . . . . . . . . . . . . . . . 1 1 1 13 8 8 1 1 —
Settlement and curtailment (gain) loss. . . . . — — — (4) 1 — — — —
Net periodic benefit cost. . . . . . . . . . . . . . . $ 1 $ 1 $ 1 $ 9 $ 9 $ 8 $ 1 $ 1 $—

For measurement purposes, an 8% annual rate of increase in the per capita cost of covered health care benefits
was assumed for 2010, gradually decreasing to 5% in 2016. A one-percentage-point change in assumed health care
cost trend rates would have approximately a $0.5 million effect on the postretirement obligation and a nominal
impact on the total of service and interest cost components of net periodic benefit cost. The majority of participants
in the Foreign Pension Plans are employees of managed hotels, for which the Company is reimbursed for costs
related to their benefits. The impact of these reimbursements is not reflected above.

The weighted average assumptions used to determine benefit obligations at December 31 were as follows:
Foreign Pension Postretirement
Pension Benefits Benefits Benefits
2009 2008 2009 2008 2009 2008

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.51% 5.99% 5.93% 6.19% 5.50% 6.00%


Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . n/a n/a 3.50% 3.93% n/a n/a

The weighted average assumptions used to determine net periodic benefit cost for the years ended December
31 were as follows:
Pension Benefits Foreign Pension Benefits Postretirement Benefits
2009 2008 2007 2009 2008 2007 2009 2008 2007

Discount rate . . . . . . . . . . . . . . . . . . . . . 5.99% 5.75% 5.75% 6.19% 5.88% 5.46% 6.00% 5.74% 5.74%
Rate of compensation increase . . . . . . . . n/a n/a n/a 3.93% 3.89% 3.90% n/a n/a n/a
Expected return on plan assets . . . . . . . . n/a n/a n/a 6.25% 6.38% 6.40% 7.50% 7.50% 7.50%

A number of factors were considered in the determination of the expected return on plan assets. These factors
included current and expected allocation of plan assets, the investment strategy, historical rates of return and
Company and investment expert expectations for investment performance over approximately a ten year period.

F-35
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

The following table presents the Company’s fair value hierarchy of the plan assets measured at fair value on a
recurring basis as of December 31, 2009 (in millions):
Level 1 Level 2 Level 3 Total

Assets:
Mutual Funds . . . . . . . . . . . . . . . . . . . . ................ $85 $— $— $ 85
Common Collective Trusts . . . . . . . . . . ................ — 5 — 5
Equity Index Funds . . . . . . . . . . . . . . . . ................ — 22 — 22
Bond Index Funds . . . . . . . . . . . . . . . . . ................ — 48 — 48
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $85 $75 $— $160

The mutual funds are valued using quoted market prices in active markets.

The common collective trusts, equity index funds and bond index funds are not publicly traded but are valued
based on the underlying assets which are publicly traded.

The primary investment strategy of the foreign pension plans and postretirement benefit plan is to meet the
obligations as required. The secondary goal is to earn the highest return possible, without jeopardizing its primary
goal, and without subjecting the Company to an undue amount of contribution rate volatility. In order to achieve the
investment objectives, each plan includes a strategic asset allocation target. The allocation is reviewed regularly by
the named fiduciaries of the plan to ensure the objectives are being met.

The following table represents the Company’s expected pension and postretirement benefit plan payments for
the next five years and the five years thereafter (in millions):

Pension Foreign Pension Postretirement


Benefits Benefits Benefits

2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1 $ 6 $2
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1 $ 7 $2
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1 $ 7 $2
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1 $ 8 $2
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1 $ 8 $2
2015 — 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7 $49 $7

Defined Contribution Plans. The Company and its subsidiaries sponsor various defined contribution plans,
including the Starwood Hotels & Resorts Worldwide, Inc. Savings and Retirement Plan, which is a voluntary
defined contribution plan allowing participation by employees on U.S. payroll who meet certain age and service
requirements. Each participant may contribute on a pretax basis between 1% and 50% of his or her compensation to
the plan subject to certain maximum limits. The plan also contains provisions for matching contributions to be made
by the Company, which are based on a portion of a participant’s eligible compensation. The amount of expense for
matching contributions totaled $15 million in 2009, $16 million in 2008 and $13 million in 2007. Included as an
investment choice is the Company’s publicly traded common stock, which had a balance of $59 million and
$30 million at December 31, 2009 and 2008, respectively.

Multi-Employer Pension Plans. Certain employees are covered by union sponsored multi-employer pen-
sion plans. Pursuant to agreements between the Company and various unions, contributions of $9 million in 2009,
$9 million in 2008 and $9 million in 2007 were made by the Company and charged to expense.

F-36
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 19. Leases and Rentals

The Company leases certain equipment for the hotels’ operations under various lease agreements. The leases
extend for varying periods through 2015 and generally are for a fixed amount each month. In addition, several of the
Company’s hotels are subject to leases of land or building facilities from third parties, which extend for varying
periods through 2089 and generally contain fixed and variable components. The variable components of leases of
land or building facilities are primarily based on the operating profit or revenues of the related hotels.

In June 2008, the Company entered into an agreement to lease the W London Leicester Square Hotel for
40 years, commencing once the hotel reopens following a major renovation. The commencement of the lease term is
contingent upon the completion of the renovation which is under way and is expected to be completed in January
2011. The minimum future rent payments due upon completion of the hotel is £3.5 million in year one, £4.5 million
in year two, and £5.5 million in year three. After the third year the rent changes based on the United Kingdom RRI
Index. Due to the uncertain opening date, the payments are not included in the table below.

The Company’s minimum future rents at December 31, 2009 payable under non-cancelable operating leases
with third parties are as follows (in millions):

2010 . . . . . . . . . . .................................................. ...... $ 87


2011 . . . . . . . . . . .................................................. ...... $ 88
2012 . . . . . . . . . . .................................................. ...... $ 67
2013 . . . . . . . . . . .................................................. ...... $ 66
2014 . . . . . . . . . . .................................................. ...... $ 65
Thereafter. . . . . . . .................................................. ...... $676

Rent expense under non-cancelable operating leases consisted of the following (in millions):
Year Ended December 31,
2009 2008 2007

Minimum rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $89 $93 $86


Contingent rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 10 10
Sublease rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) (6) (6)
$88 $97 $90

Note 20. Stockholders’ Equity

Share Repurchases. During the year ended December 31, 2009, the Company did not repurchase any
Company common shares. During the year ended December 31, 2008, the Company repurchased 13.6 million
shares at a total cost of $593 million. As of December 31, 2009, no repurchase capacity remained under the Share
Repurchase Authorization.

Note 21. Stock-Based Compensation

In 2004, the Company adopted the 2004 Long-Term Incentive Compensation Plan (“2004 LTIP”), which
superseded the 2002 Long-Term Incentive Compensation Plan (“2002 LTIP”) and provides the terms of equity
award grants to directors, officers, employees, consultants and advisors. Although no additional awards will be
granted under the 2002 LTIP, the Company’s 1999 Long-Term Incentive Compensation Plan or the Company’s
1995 Share Option Plan, the provisions under each of the previous plans will continue to govern awards that have

F-37
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

been granted and remain outstanding under those plans. The aggregate award pool for non-qualified or incentive
stock options, performance shares, restricted stock and units or any combination of the foregoing which are
available to be granted under the 2004 LTIP at December 31, 2009 was approximately 53 million.

Compensation expense, net of reimbursements during 2009, 2008 and 2007 was approximately $53 million,
$68 million and $99 million, respectively, resulting in tax benefits of $21 million, $26 million and $33 million,
respectively.

The Company utilizes the Lattice model to calculate the fair value of option grants. Weighted average
assumptions used to determine the fair value of option grants were as follows:
Year Ended December 31,
2009 2008 2007

Dividend yield . . . . . . ........................................ 3.50% 1.50% 1.40%


Volatility:
Near term . . . . . . . . ........................................ 74.0% 38% 25%
Long term . . . . . . . . ........................................ 43.0% 36% 37%
Expected life . . . . . . . ........................................ 7 yrs 6 yrs 6 yrs
Yield curve:
6 month . . . . . . . . . ........................................ 0.45% 1.90% 5.12%
1 year . . . . . . . . . . . ........................................ 0.72% 1.91% 4.96%
3 year . . . . . . . . . . . ........................................ 1.40% 2.17% 4.55%
5 year . . . . . . . . . . . ........................................ 1.99% 2.79% 4.52%
10 year . . . . . . . . . . ........................................ 3.02% 3.73% 4.56%

The dividend yield is estimated based on the current expected annualized dividend payment and the average
price of the Company’s common shares during the prior year.

The estimated volatility is based on a combination of historical share price volatility as well as implied
volatility based on market analysis. The historical share price volatility was measured over an 8-year period, which
is equal to the contractual term of the options. The weighted average volatility for 2009 grants was 53.1%.

The expected life represents the period that the Company’s stock-based awards are expected to be outstanding
and was determined based on an actuarial calculation using historical experience, giving consideration to the
contractual terms of the stock-based awards and vesting schedules.

The yield curve (risk-free interest rate) is based on the implied zero-coupon yield from the U.S. Treasury yield
curve over the expected term of the option.

The following table summarizes the Company’s stock option activity during 2009:
Weighted Average
Options Exercise
(In millions) Price Per Share

Outstanding at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . ... 8.7 $40.66


Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 5.3 11.39
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... (0.1) 23.36
Forfeited, Canceled or Expired . . . . . . . . . . . . . . . . . . . . . . . . ... (0.8) 39.02
Outstanding at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1 $29.15
Exercisable at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 $38.72

F-38
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

The weighted-average fair value per option for options granted during 2009, 2008 and 2007 was $4.69, $17.24
and $20.54, respectively, and the service period is typically four years. The total intrinsic value of options exercised
during 2009, 2008 and 2007 was approximately $1 million, $89 million and $187 million, respectively, resulting in
tax benefits of approximately $0.3 million, $35 million and $56 million, respectively. As of December 31, 2009,
there was approximately $24 million of unrecognized compensation cost, net of estimated forfeitures, related to
nonvested options, which is expected to be recognized over a weighted-average period of 2.94 years on a straight-
line basis.
The aggregate intrinsic value of outstanding options as of December 31, 2009 was $161 million. The aggregate
intrinsic value of exercisable options as of December 31, 2009 was $34 million. The weighted-average contractual
life was 4.74 years for outstanding options and 2.98 years for exercisable option as of December 31, 2009.
The Company recognizes compensation expense equal to the fair market value of the stock on the date of grant
for restricted stock and unit grants over the service period. The service period is typically three or four years except
in the case of restricted stock and units issued in lieu of a portion of an annual cash bonus where the restriction lapse
period is typically in equal installments over a two year period.
At December 31, 2009, there was approximately $105 million (net of estimated forfeitures) in unamortized
compensation cost related to restricted stock and units. The weighted average remaining term was 1.94 years for
restricted stock and units outstanding at December 31, 2009. The fair value of restricted stock and units for which
the restrictions lapsed during 2009 was $33 million.
The following table summarizes the Company’s restricted stock and units activity during 2009:
Number of
Restricted Weighted Average
Stock and Units Grant Date Value
(In millions) Per Share

Outstanding at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . .. 5.4 $52.05


Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5.3 $11.15
Lapse of restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (2.0) $44.94
Forfeited or Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (0.7) $32.78
Outstanding at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . 8.0 $28.48

2002 Employee Stock Purchase Plan


In April 2002, the Board of Directors adopted (and in May 2002 the shareholders approved) the Company’s
2002 Employee Stock Purchase Plan (the “ESPP”) to provide employees of the Company with an opportunity to
purchase shares through payroll deductions and reserved 10,000,000 shares for issuance under the ESPP. The ESPP
commenced in October 2002.
All full-time regular employees who have completed 30 days of continuous service and who are employed by
the Company on U.S. payrolls are eligible to participate in the ESPP. Eligible employees may contribute up to 20%
of their total cash compensation to the ESPP. Amounts withheld are applied at the end of every three month
accumulation period to purchase shares. The value of the shares (determined as of the beginning of the offering
period) that may be purchased by any participant in a calendar year is limited to $25,000. The purchase price to
employees is equal to 95% of the fair market value of shares on the date of purchase. Participants may withdraw
their contributions at any time before shares are purchased.
Approximately 265,000 shares were issued under the ESPP during the year ended December 31, 2009 at
purchase prices ranging from $11.01 to $30.42. Approximately 200,000 shares were issued under the ESPP during
the year ended December 31, 2008 at purchase prices ranging from $16.02 to $45.98.

F-39
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 22. Derivative Financial Instruments

The Company enters into forward contracts to manage foreign exchange risk. Beginning in January 2008, the
Company entered into forward contracts to hedge forecasted transactions based in certain foreign currencies,
including the Euro, Canadian Dollar and Yen. These forward contracts have been designated and qualify as cash
flow hedges, and their change in fair value is recorded as a component of other comprehensive income and
reclassified into earnings in the same period or periods in which the forecasted transaction occurs. To qualify as a
hedge, the Company needs to formally document, designate and assess the effectiveness of the transactions that
receive hedge accounting. During 2009, the Company cancelled notional amounts of $4 million related to two
hedges and received cash proceeds of approximately $0.3 million. The notional dollar amounts of the outstanding
Euro and Yen forward contracts at December 31, 2009 are $24 million and $4 million, respectively, with average
exchange rates of 1.4 and 90.5, respectively, with terms of primarily less than one year. The Canadian forward
contracts expired during 2009. The Company reviews the effectiveness of its hedging instruments on a quarterly
basis and records any ineffectiveness into earnings. The Company discontinues hedge accounting for any hedge that
is no longer evaluated to be highly effective. From time to time, the Company may choose to de-designate portions
of hedges when changes in estimates of forecasted transactions occur. During 2009, the Company de-designated
notional amounts of $4 million related to three hedges. Other than the de-designated portions, each of these hedges
was highly effective in offsetting fluctuations in foreign currencies. An insignificant amount of gain due to
ineffectiveness was recorded in the consolidated statements of income during 2009. Additionally, during the year
ended December 31, 2009, 26 forward contracts matured.

The Company also enters into forward contracts to manage foreign exchange risk on intercompany loans that
are not deemed permanently invested. These forward contracts are not designated as hedges, and their change in fair
value is recorded in the Company’s consolidated statements of income at each reporting period.

The Company enters into interest rate swap agreements to manage interest expense. The Company’s objective
is to manage the impact of interest rates on the results of operations, cash flows and the market value of the
Company’s debt. At December 31, 2009, the Company has six interest rate swap agreements with an aggregate
notional amount of $500 million under which the Company pays floating rates and receives fixed rates of interest
(“Fair Value Swaps”). The Fair Value Swaps hedge the change in fair value of certain fixed rate debt related to
fluctuations in interest rates and mature in 2012, 2013 and 2014. The Fair Value Swaps modify the Company’s
interest rate exposure by effectively converting debt with a fixed rate to a floating rate. These interest rate swaps
have been designated and qualify as fair value hedges and have met the requirements to assume zero ineffectiveness.

In the Company’s most recent securitization transaction, the unconsolidated QSPE entered into a balance
guaranteed interest rate swap to fix the interest rate on its debt in order to mitigate interest rate risk for the investors.
In connection with the QSPE swap, the Company also entered into two swaps. The first swap provides a
counterparty to the investors of the QSPE swap and is a balance guaranteed interest rate swap, with the Company
paying a floating rate and receiving a fixed rate. To mitigate the potential impact of the floating to fixed swap, the
Company also entered into a second swap, whereby the Company pays a fixed rate and receives a floating rate, with
interest paid based on an expected amortization schedule rather than a balance guaranteed notional. In December
2009, the second swap was amended for the expected amortization tail. The swaps do not qualify to receive hedge
accounting, and, therefore, the change in fair values will be marked to market at each reporting period with the
change in fair value recorded in the consolidated statements of income. The swaps have the legal right of offset and
resulted in an insignificant net liability at December 31, 2009.

The counterparties to the Company’s derivative financial instruments are major financial institutions. The
Company evaluates the bond ratings of the financial institutions and believes that credit risk is at an acceptable level.

F-40
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

The following tables summarize the fair value of our derivative instruments, the effect of derivative
instruments on our Consolidated Statements of Comprehensive Income, the amounts reclassified from “Other
comprehensive income” and the effect on the Consolidated Statements of Income during the year.

Fair Value of Derivative Instruments


(in millions)
December 31, 2009 December 31, 2008
Balance Sheet Fair Balance Sheet Fair
Location Value Location Value

Derivatives designated as hedging instruments


Asset Derivatives
Forward contracts . . . . . . . . . . . . . . . . . . . . . . . . Prepaid and other $— Prepaid and other $6
current assets current assets
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . Other assets 7 Other assets —
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $7 $6
December 31, 2009 December 31, 2008
Balance Sheet Fair Balance Sheet Fair
Location Value Location Value

Derivatives not designated as hedging


instruments
Asset Derivatives
Forward contracts . . . . . . . . . . . . . . . . . . . . . . . . Prepaid and other $— Prepaid and other $—
current assets current assets
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $— $—
Liability Derivatives
Forward contracts . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses $7 Accrued expenses $3
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . $7 $3

F-41
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Consolidated Statements of Income and Comprehensive Income


For the Years Ended December 31, 2009 and 2008
(in millions)

Balance at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—


Mark-to-market gain on forward exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)
Reclassification of loss from OCI to management fees, franchise fees, and other income . . . . (2)
Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (6)
Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (6)
Mark-to-market gain on forward exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Reclassification of gain from OCI to management fees, franchise fees, and other income . . . 6
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—

Amount of Gain
Derivatives Not Location of Gain or (Loss) Recognized
Designated as Hedging or (Loss) Recognized in Income on
Instruments in Income on Derivative Derivative
Year Ended
December 31,
2009 2008 2007

Foreign forward exchange contracts Interest expense, net $(15) $14 $4


Total (loss) gain included in income $(15) $14 $4

Note 23. Fair Value of Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial
instruments (in millions):
December 31, 2009 December 31, 2008
Carrying Fair Carrying Fair
Amount Value Amount Value

Assets :
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7 $ 7 $ 6 $ 6
VOI notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 253 444 419
Other notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 36 32 32
Total financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 265 $ 296 $ 482 $ 457
Liabilities:
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,955 $3,071 $3,502 $2,725
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 8 7 7
Total financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,963 $3,079 $3,509 $2,732
Off-Balance sheet:
Letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 168 $ — $ 115
Surety bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 21 — 91
Total Off-Balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 189 $ — $ 206

F-42
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

The Company believes the carrying values of its financial instruments related to current assets and liabilities
approximate fair value. The Company records its retained interests and derivative assets and liabilities at fair value.
See Note 11 for recorded amounts and the methods and assumptions used to estimate fair value.
The carrying value of the Company’s restricted cash approximates its fair value. The Company estimates the
fair value of its VOI notes receivable by discounting the expected future cash flows with discount rates
commensurate with the risk of the underlying notes, primarily determined by the credit worthiness of the borrowers
based on their Fair Isaac Corporation (“FICO”) scores. The fair value of other notes receivable is estimated based on
terms of the instrument and current market conditions. These financial instrument assets are recorded in the other
assets line item in the Company’s consolidated balance sheet.
The Company estimates the fair value of its publicly traded debt based on the bid prices in the public debt
markets. The carrying amount of its floating rate debt is a reasonable basis of fair value due to the variable nature of
the interest rates. The Company’s non-public fixed rate debt fair value is determined based upon discounted cash
flows for the debt rates deemed reasonable for the type of debt, prevailing market conditions and the length to
maturity for the debt. Other long-term liabilities represent a financial guarantee. The carrying value of this liability
approximates its fair value based on expected funding under the guarantee.
The fair values of the Company’s letters of credit and surety bonds are estimated to be the same as the contract
values based on the nature of the fee arrangements with the issuing financial institutions.

Note 24. Commitments and Contingencies


The Company had the following contractual obligations outstanding as of December 31, 2009 (in millions):
Due in Less Due in Due in Due After
Total Than 1 Year 1-3 Years 3-5 Years 5 Years

Unconditional purchase obligations(a) . . . . . . . . . . . . . $308 $86 $136 $80 $ 6


Other long-term obligations . . . . . . . . . . . . . . . . . . . . 4 1 3 — —
Total contractual obligations . . . . . . . . . . . . . . . . . . . $312 $87 $139 $80 $ 6

(a) Included in these balances are commitments that may be reimbursed or satisfied by the Company’s managed
and franchised properties.
The Company had the following commercial commitments outstanding as of December 31, 2009 (in millions):
Amount of Commitment Expiration Per Period
Less Than After
Total 1 Year 1-3 Years 3-5 Years 5 Years

Standby letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . $168 $165 $— $— $3


Variable Interest Entities. Of the over 900 hotels that the Company manages or franchises for third party
owners, the Company has evaluated approximately 22 hotels that it has a variable interest in, generally in the form of
investments, loans, guarantees, or equity. The Company determines if it is the primary beneficiary of the hotel by
considering qualitative and quantitative factors. Qualitative factors include evaluating distribution terms, propor-
tional voting rights, decision making ability, and the capital structure. Quantitatively, the Company evaluates
financial forecasts to determine which would absorb over 50% of the expected losses of the hotel. The Company has
determined it is not the primary beneficiary of any of the variable interest entities (“VIEs”) and they should not be
consolidated in the Company’s financial statements.
In all cases, the VIEs associated with the Company’s variable interests are hotels for which the Company has
entered into management or franchise agreements with the hotel owners. The Company is paid a fee primarily based
on financial metrics of the hotel. The hotels are financed by the owners, generally in the form of working capital,
equity, and debt.

F-43
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

At December 31, 2009, the Company has approximately $81 million of investments associated with 18 VIEs,
equity investments of $11 million associated with one VIE, and a loan balance of $5 million associated with one
VIE. As the Company is not obligated to fund future cash contributions under these agreements, the maximum loss
equals the carrying value. In addition, the Company has not contributed amounts to the VIEs in excess of their
contractual obligations.

At December 31, 2008, the Company had approximately $66 million of investments associated with 19 VIEs,
equity investments of $10 million associated with one VIE and loan balances of $5 million associated with one VIE.

Guaranteed Loans and Commitments. In limited cases, the Company has made loans to owners of or
partners in hotel or resort ventures for which the Company has a management or franchise agreement. Loans
outstanding under this program totaled $28 million at December 31, 2009. The Company evaluates these loans for
impairment, and at December 31, 2009, believes these loans are collectible. Unfunded loan commitments
aggregating $59 million were outstanding at December 31, 2009, $1 million of which is expected to be funded
in 2010 and in total. These loans typically are secured by pledges of project ownership interests and/or mortgages on
the projects. The Company also has $78 million of equity and other potential contributions associated with managed
or joint venture properties, $41 million of which is expected to be funded in 2010.

During 2004, the Company entered into a long-term management contract to manage the Westin Boston,
Seaport Hotel in Boston, Massachusetts, which opened in June 2006. In connection with this project, the Company
agreed to provide up to $28 million in mezzanine loans and other investments (all of which has been funded) as well
as various guarantees, including a principal repayment guarantee for the term of the senior debt which was capped at
$40 million, a debt service guarantee during the term of the senior debt, which was limited to the interest expense on
the amounts drawn under such debt and principal amortization and a completion guarantee for this project. In
January 2007 this hotel was sold and the senior debt was repaid in full. In addition, the $28 million in mezzanine
loans and other investments, together with accrued interest, was repaid in full. In accordance with the management
agreement, the sale of the hotel also resulted in the payment of a fee to the Company of approximately $18 million,
which is included in management fees, franchise fees and other income in the consolidated statement of income for
the year ended December 31, 2007. The Company continues to manage this hotel subject to the pre-existing
management agreement.

Surety bonds issued on behalf of the Company at December 31, 2009 totaled $21 million, the majority of
which were required by state or local governments relating to the Company’s vacation ownership operations and by
its insurers to secure large deductible insurance programs.

To secure management contracts, the Company may provide performance guarantees to third-party owners.
Most of these performance guarantees allow the Company to terminate the contract rather than fund shortfalls if
certain performance levels are not met. In limited cases, the Company is obliged to fund shortfalls in performance
levels through the issuance of loans. At December 31, 2009, excluding the Le Méridien management agreement
mentioned below, the Company had three management contracts with performance guarantees with possible cash
outlays of up to $68 million, $53 million of which, if required, would be funded over several years and would be
largely offset by management fees received under these contracts. Many of the performance tests are multi-year
tests, are tied to the results of a competitive set of hotels, and have exclusions for force majeure and acts of war and
terrorism. The Company does not anticipate any significant funding under these performance guarantees in 2010. In
connection with the acquisition of the Le Méridien brand in November 2005, the Company assumed the obligation
to guarantee certain performance levels at one Le Méridien managed hotel for the periods 2007 through 2013. This
guarantee is uncapped. However, the Company has estimated its exposure under this guarantee and does not
anticipate that payments made under the guarantee will be significant in any single year. The estimated fair present
value of this guarantee of $8 million is reflected in other liabilities in the accompanying consolidated balance sheet
at December 31, 2009 and 2008. The Company does not anticipate losing a significant number of management or
franchise contracts in 2010.

F-44
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

In connection with the purchase of the Le Méridien brand in November 2005, the Company was indemnified
for certain of Le Méridien’s historical liabilities by the entity that bought Le Méridien’s owned and leased hotel
portfolio. The indemnity is limited to the financial resources of that entity. However, at this time, the Company
believes that it is unlikely that it will have to fund any of these liabilities.

In connection with the sale of 33 hotels in 2006, the Company agreed to indemnify the buyer for certain
liabilities, including operations and tax liabilities. At this time, the Company believes that it will not have to make
any material payments under such indemnities.

Litigation. The Company is involved in various legal matters that have arisen in the normal course of
business, some of which include claims for substantial sums. Accruals have been recorded when the outcome is
probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be determined,
the Company does not expect that the resolution of all legal matters will have a material adverse effect on its
consolidated results of operations, financial position or cash flow. However, depending on the amount and the
timing, an unfavorable resolution of some or all of these matters could materially affect the Company’s future
results of operations or cash flows in a particular period.

Collective Bargaining Agreements. At December 31, 2009, approximately 39% of the Company’s
U.S.-based employees were covered by various collective bargaining agreements providing, generally, for basic
pay rates, working hours, other conditions of employment and orderly settlement of labor disputes. Generally, labor
relations have been maintained in a normal and satisfactory manner, and management believes that the Company’s
employee relations are satisfactory.

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

Captive Insurance Company. Estimated insurance claims payable at December 31, 2009 and 2008 were
$74 million and $83 million, respectively. At December 31, 2009 and 2008, standby letters of credit amounting to
$83 million and $86 million, respectively, had been issued to provide collateral for the estimated claims. The letters
of credit are guaranteed by the Company.

ITT Industries. In 1995, the former ITT Corporation, renamed ITT Industries, Inc. (“ITT Industries”),
distributed to its stockholders all of the outstanding shares of common stock of ITT Corporation, then a wholly
owned subsidiary of ITT Industries (the “Distribution”). In connection with this Distribution, ITT Corporation,
which was then named ITT Destinations, Inc., changed its name to ITT Corporation. Subsequent to the acquisition
of ITT Corporation in 1998, the Company changed the name of ITT Corporation to Sheraton Holding Corporation.

For purposes of governing certain of the ongoing relationships between the Company and ITT Industries after
the Distribution and spin-off of ITT Corporation and to provide for an orderly transition, the Company and ITT
Industries have entered into various agreements including a spin-off agreement, Employee Benefits Services and
Liability Agreement, Tax Allocation Agreement and Intellectual Property Transfer and License Agreements. The
Company may be liable to or due reimbursement from ITT Industries relating to the resolution of certain pre-spin-
off matters under these agreements. Based on available information, management does not believe that these
matters would have a material impact on the Company’s consolidated results of operations, financial position or
cash flows.

F-45
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 25. Business Segment and Geographical Information


The Company has two operating segments: hotels and vacation ownership and residential. The hotel
segment generally represents a worldwide network of owned, leased and consolidated joint venture hotels and
resorts operated primarily under the Company’s proprietary brand names including St. Regis», The Luxury
Collection», Sheraton», Westin», W», Le Méridien», Four Points» by Sheraton, Aloft» and Element» as well as
hotels and resorts which are managed or franchised under these brand names in exchange for fees. The vacation
ownership and residential segment includes the development, ownership and operation of vacation ownership
resorts, marketing and selling VOIs, providing financing to customers who purchase such interests, licensing fees
from branded condominiums and residences and the sale of residential units.
The performance of the hotels and vacation ownership and residential segments is evaluated primarily on
operating profit before corporate selling, general and administrative expense, interest expense, net of interest
income, losses on asset dispositions and impairments, restructuring and other special charges and income tax
benefit (expense). The Company does not allocate these items to its segments.

F-46
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

The following table presents revenues, operating income, assets and capital expenditures for the Company’s
reportable segments (in millions):
2009 2008 2007

Revenues:
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,038 $4,860 $4,846
Vacation ownership and residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674 894 1,153
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,712 $5,754 $5,999
Operating income:
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 471 $ 776 $ 861
Vacation ownership and residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 136 246
Total segment operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 544 912 1,107
Selling, general, administrative and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (139) (161) (213)
Restructuring, goodwill impairment and other special charges, net. . . . . . . . . . . . (379) (141) (53)
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 610 841
Equity earnings and gains and losses from unconsolidated ventures, net:
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) 12 55
Vacation ownership and residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4 11
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (227) (207) (147)
Loss on asset dispositions and impairments, net . . . . . . . . . . . . . . . . . . . . . . . . . (91) (98) (44)
Income (loss) from continuing operations before taxes and minority interest . . . . $ (296) $ 321 $ 716
Depreciation and amortization:
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 229 $ 241 $ 233
Vacation ownership and residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 29 21
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 43 43
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 309 $ 313 $ 297
Assets:
Hotel(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,924 $6,728
Vacation ownership and residential(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,639 2,183
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,198 792
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,761 $9,703

(a) Includes $294 million and $315 million of investments in unconsolidated joint ventures at December 31, 2009
and 2008, respectively.
(b) Includes $25 million and $38 million of investments in unconsolidated joint ventures at December 31, 2009
and 2008, respectively.

F-47
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Capital expenditures:
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $132 $282 $211
Vacation ownership and residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 110 96
Corporate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 84 77
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $196 $476 $384

The following table presents revenues and long-lived assets by geographical region (in millions):
Revenues Long-Lived Assets
2009 2008 2007 2009 2008

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,401 $4,058 $4,409 $2,334 $2,625


Italy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 370 380 399 402
All other international . . . . . . . . . . . . . . . . . . . . . 1,136 1,326 1,210 1,032 1,028
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,712 $5,754 $5,999 $3,765 $4,055

Other than Italy, there were no individual international countries, which comprised over 10% of the total
revenues of the Company for the years ended December 31, 2009, 2008 or 2007, or 10% of the total long-lived
assets of the Company as of December 31, 2009 or 2008.

F-48
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 26. Quarterly Results (Unaudited)


Three Months Ended
March 31 June 30 September 30 December 31 Year
(In millions, except per share data)
2009
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,091 $1,190 $1,192 $1,283 $4,756
Costs and expenses . . . . . . . . . . . . . . . . . . . . . . . $1,030 $1,091 $1,106 $1,503 $4,730
Income from continuing operations . . . . . . . . . . . $ 7 $ 140 $ 36 $ (186) $ (3)
Discontinued operations . . . . . . . . . . . . . . . . . . . $ (3) $ (6) $ 4 $ 79 $ 74
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4 $ 134 $ 40 $ (107) $ 71
Earnings per share:
Basic —
Income (loss) from continuing operations. . . . . $ 0.04 $ 0.79 $ 0.20 $ (1.03) $ (0.00)
Discontinued operations . . . . . . . . . . . . . . . . . $ (0.01) $ (0.04) $ 0.02 $ 0.44 $ 0.41
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.03 $ 0.75 $ 0.22 $ (0.59) $ 0.41
Diluted —
Income (loss) from continuing operations. . . . . $ 0.04 $ 0.78 $ 0.20 $ (1.03) $ (0.00)
Discontinued operations . . . . . . . . . . . . . . . . . $ (0.01) $ (0.04) $ 0.02 $ 0.44 $ 0.41
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.03 $ 0.74 $ 0.22 $ (0.59) $ 0.41
2008
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,427 $1,532 $1,497 $1,298 $5,754
Costs and expenses . . . . . . . . . . . . . . . . . . . . . . . $1,284 $1,338 $1,289 $1,233 $5,144
Income from continuing operations . . . . . . . . . . . $ 77 $ 104 $ 113 $ (45) $ 249
Discontinued operations . . . . . . . . . . . . . . . . . . . $ (45) $ 1 $ — $ 124 $ 80
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32 $ 105 $ 113 $ 79 $ 329
Earnings per share:
Basic —
Income (loss) from continuing operations. . . . . $ 0.42 $ 0.56 $ 0.63 $ (0.25) $ 1.37
Discontinued operations . . . . . . . . . . . . . . . . . $ (0.25) $ 0.01 $ — $ 0.69 $ 0.44
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.17 $ 0.57 $ 0.63 $ 0.44 $ 1.81
Diluted —
Income (loss) from continuing operations. . . . . $ 0.41 $ 0.55 $ 0.62 $ (0.25) $ 1.34
Discontinued operations . . . . . . . . . . . . . . . . . $ (0.24) $ 0.01 $ — $ 0.69 $ 0.43
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.17 $ 0.56 $ 0.62 $ 0.44 $ 1.77
Due to the dispositions in the fourth quarter of 2009 that were recorded as discontinued operations (see
Note 17), certain amounts in the table above have been reclassified to present comparable results for all periods
presented.

F-49
SCHEDULE II
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
VALUATION AND QUALIFYING ACCOUNTS
(In millions)
Additions (Deductions)
Charged
to/reversed Charged
Balance from to/from Other Payments/ Balance
January 1, Expenses Accounts(a) Other December 31,
2009
Trade receivables — allowance for doubtful
accounts . . . . . . . . . . . . . . . . . . . . . . . . .. $ 49 $ 8 $ 7 $(10) $ 54
Notes receivable — allowance for doubtful
accounts . . . . . . . . . . . . . . . . . . . . . . . . .. $117 $ 64 $ (3) $(60) $118
Reserves included in accrued and other
liabilities:
Restructuring and other special charges . . .. $ 41 $379 $(332) $(54) $ 34
2008
Trade receivables — allowance for doubtful
accounts . . . . . . . . . . . . . . . . . . . . . . . . .. $ 50 $ 8 $ 3 $(12) $ 49
Notes receivable — allowance for doubtful
accounts . . . . . . . . . . . . . . . . . . . . . . . . .. $ 94 $ 55 $ — $(32) $117
Reserves included in accrued and other
liabilities:
Restructuring and other special charges . . .. $ 9 $141 $ (83) $(26) $ 41
2007
Trade receivables — allowance for doubtful
accounts . . . . . . . . . . . . . . . . . . . . . . . . .. $ 49 $ 6 $ 6 $(11) $ 50
Notes receivable — allowance for doubtful
accounts . . . . . . . . . . . . . . . . . . . . . . . . .. $ 74 $ 37 $ (9) $ (8) $ 94
Reserves included in accrued and other
liabilities:
Restructuring and other special charges . . .. $ 11 $ 53 $ (46) $ (9) $ 9

(a) Charged to/from other accounts:


Description of
Charged to/from
Other Accounts
2009
Plant, property and equipment . . . . . . . . . . . . . ......................... $(178)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................... (90)
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................... (61)
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . ......................... (5)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . ......................... (1)
Accounts receivable . . . . . . . . . . . . . . . . . . . . ......................... 2
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . ......................... 5
Total charged to/from other accounts . . . . . . . . ......................... $(328)
2008
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . ......................... $ (7)
Plant, property and equipment . . . . . . . . . . . . . ......................... (66)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . ......................... 3
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . ......................... (14)
APIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................... 4
Total charged to/from other accounts . . . . . . . . ......................... $ (80)
2007
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2
Plant, property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
Total charged to/from other accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (49)

S-1
corporate
information

Starwood Hotels & Resorts Worldwide, Inc.


CORPORATE OFFICES FORM 10-K AND OTHER INVESTOR INFORMATION
Starwood Hotels & Resorts Worldwide, Inc. A copy of the Annual Report of Starwood Hotels & Resorts
1111 Westchester Avenue, White Plains, New York 10604 Worldwide, Inc. (“Starwood”) on Form 10-K filed with the
914 640 8100, www.starwoodhotels.com Securities and Exchange Commission may be obtained
online at www.starwoodhotels.com and by shareholders of
INDEPENDENT REGISTERED record of Starwood without charge by calling 914 640 8100
PUBLIC ACCOUNTING FIRM
or upon written request to:
Ernst & Young LLP, New York, New York
INVESTOR RELATIONS
STOCK REGISTRAR & TRANSFER AGENT
Starwood Hotels & Resorts Worldwide, Inc.
Registered shareholders with questions concerning stock 1111 Westchester Avenue, White Plains, New York 10604
certificates, account information, dividend payments or
stock transfers should contact our transfer agent at:
American Stock Transfer & Trust Company
59 Maiden Lane, New York, New York 10038
800 350 6202, www.amstock.com

Note: This Annual Report 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 timing and robustness of a recovery from the current
global economic downturn, the impact of war and terrorist activity, business and financing conditions, foreign exchange fluctuations,
cyclicality of the real estate, including the sale of residential units, and the hotel and vacation ownership businesses, operating risks
associated with the sale of residential units, hotel and vacation ownership businesses, relationships with associates, 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 other circumstances and uncertainties. These risks and uncertainties are
presented in detail in our filings with the Securities and Exchange Commission. Although we believe the expectations reflected in such
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.

©2010 Starwood Hotels & Resorts Worldwide, Inc.


2009 NEW OPENINGS
The St. Regis Atlanta Hotel W Santiago The Westin Pune Sheraton Roanoke Hotel
The St. Regis Deer Crest Resort W South Beach Koregaon Park & Conference Center

The St. Regis Mexico City W Washington D.C. The Westin Tampa Bay Sheraton Shunde Hotel

The Andaman Le Méridien The Westin Washington Sheraton Toronto Airport


A Luxury Collection Resort Chongqing, Nan’ an Dulles Airport Hotel & Conference Centre

Hotel Paracas Le Méridien Dallas North Sheraton Augusta Hotel Sheraton Vancouver
A Luxury Collection Hotel Sheraton Herndon Dulles Airport Hotel
Le Méridien Panama
ITC Royal Gardenia Airport Hotel Aloft Abu Dhabi
Le Méridien Qingdao
A Luxury Collection Hotel Sheraton Incheon Hotel Aloft Arundel Mills
The Westin Hyderabad
W Atlanta – Downtown Mindspace Sheraton Istanbul Ataköy Hotel Aloft Austin at The Domain
W Barcelona The Westin Jersey City Sheraton Jinan Hotel Aloft Baltimore Washington
W Boston Newport Sheraton Hotel Newfoundland International Airport

W Doha Hotel & Residences The Westin Lake Mary Sheraton Prague Charles Square Aloft Birmingham Soho Square

W Fort Lauderdale Orlando North Sheraton Puerto Rico Aloft Bolingbrook

W Hoboken Le Westin Montreal Hotel & Casino Aloft Broomfield Denver


Aloft Charlotte Ballantyne Aloft Tallahassee Downtown Four Points by Sheraton Four Points by Sheraton
Aloft Charlotte Uptown Aloft Tempe Cybercity Navi Mumbai, Vashi
at EpiCentre Aloft Washington Four Points by Sheraton Four Points by Sheraton
Aloft Dallas Downtown National Harbor Guangzhou, Dongpu Ontario – Rancho Cucamonga

Aloft Green Bay Element Arundel Mills Four Points by Sheraton Four Points by Sheraton
Indianapolis Carmel Punta Gorda Harborside
Aloft Houston Element Dallas Fort Worth
by the Galleria Airport North Four Points by Sheraton Jaipur Four Points by Sheraton
City Square Raleigh – Cary
Aloft Jacksonville Airport Element Denver Park Meadows
Four Points by Sheraton Four Points by Sheraton
Aloft Leawood Element Houston Vintage Park Kuching Raleigh Durham Airport
Aloft Milwaukee Downtown Four Points by Sheraton Four Points by Sheraton Four Points by Sheraton
Aloft Mount Laurel Cambridge Los Angeles San Antonio Downtown
Aloft Phoenix – Airport Four Points by Sheraton Four Points by Sheraton Four Points by Sheraton
Charlotte Midtown – Times Square San Antonio Northwest
Aloft Richmond West
Four Points by Sheraton Four Points by Sheraton Four Points by Sheraton
Aloft San Antonio Airport Columbus Ohio Airport Monterrey Linda Vista Winnipeg South
SHERATON
DAMEISHA RESORT
SHENZHEN, CHINA
FOUR POINTS
BY SHERATON
PANORAMAHAUS
DORNBIRN
AUSTRIA