SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

[X]	Joint Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

OR

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

Commission File Number: 1-7959

52-1193298

777 Westchester Avenue

(914) 640-8100

Maryland

52-0901263

777 Westchester Avenue

(914) 640-8100

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

Securities Registered Pursuant to Section 12(g) of the Act: None

      Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes [X] No [   ]

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

      As of March 27, 2000, the aggregate market value of the Registrants’ voting and non-voting common equity held by non-affiliates (for purposes of this Joint Annual Report only, includes all shares other than those held by the Registrants’ Directors, Trustees and executive officers) was $4,384,827,132.

      As of March 27, 2000, the Corporation had outstanding 189,415,206 Corporation Shares and the Trust had outstanding 189,415,206 Class B Shares and 100 Class A shares of beneficial interest, par value $0.01 per share (“Class A Shares”).

      For information concerning ownership of shares, see the Proxy Statement for the Corporation’s Annual Meeting of Stockholders that is currently expected to be held on May 24, 2000 (the “Proxy Statement”), which is incorporated by reference under various Items of this Joint Annual Report.

Document Incorporated by Reference:

TABLE OF CONTENTS

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

PART I

Forward-Looking Statements

      This Joint Annual Report contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Joint Annual Report, including, without limitation, the section of Item 1, “Business,” captioned “Business Strategy” and Item 5, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Such forward-looking statements may include statements regarding the intent, belief or current expectations of Starwood, its Directors or Trustees or its officers with respect to the matters discussed in this Joint Annual Report. All such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements including, without limitation, the risks and uncertainties set forth below. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect current or future events or circumstances.

The Reorganization

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

Ability to Manage Rapid Growth

      The Company’s future success and its ability to manage future growth depend in large part upon the efforts of its senior management and its ability to attract and retain key officers and other highly qualified personnel. Competition for such personnel is intense. Since January 1999, the Company has experienced significant changes in its senior management, including executive officers. (See Item 10, “Directors, Trustees

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Acquisition Opportunities

      The Company intends to make acquisitions that complement its business. There can be no assurance, however, that the Company will be able to identify acquisition candidates on commercially reasonable terms or at all. If additional acquisitions are made, there can also be no assurance that any anticipated benefits will actually be realized. Similarly, there can be no assurance that the Company will be able to obtain additional financing for acquisitions, or that the ability to obtain such financing will not be restricted by the terms of the Company’s current debt arrangements.

Tax Risks

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

Debt Financing

      As a result of incurring debt, the Company is subject to the following risks associated with debt financing: (i) the risk that cash flow from operations will be insufficient to meet required payments of principal and interest; (ii) the risk that (to the extent that the Company maintains floating rate indebtedness) interest rates will fluctuate; and (iii) risks resulting from the fact that the agreements governing the Company’s loan and credit facilities contain covenants imposing certain limitations on the Company’s ability to acquire and dispose of assets. In addition, although the Company anticipates that it will be able to repay or refinance its existing indebtedness and any other indebtedness when it matures, there can be no assurance that it will be able to do so or that the terms of such refinancings will be favorable.

      In connection with the acquisitions of Westin Hotels & Resorts Worldwide, Inc. and certain of its affiliates (“Westin”) and ITT Corporation (“ITT”), the Company incurred a substantial amount of additional debt, thereby increasing its exposure to the risks associated with debt financing. The Company’s increased leverage may have important consequences including the following: (i) the ability of the Company 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 the Company; (ii) a substantial decrease in operating cash flow or an increase in expenses of the Company could make it difficult for the Company to meet its debt service requirements and force it to modify its operations; (iii) the Company’s higher level of debt and resulting interest expense may place it at a competitive disadvantage with respect to certain competitors with lower amounts of indebtedness and/or higher credit ratings; and (iv) the Company’s greater leverage may make it more vulnerable to a downturn in its business or in the economy generally.

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Starwood Capital May Exert Influence Over Us

      Barry S. Sternlicht is the Chairman and Chief Executive Officer and a board member of the Corporation and the Trust. Mr. Sternlicht also serves as the President and Chief Executive Officer of, and may be deemed to control, Starwood Capital Group, L.L.C. (“Starwood Capital”), which owns limited partnership interests in the Realty Partnership and the Operating Partnership. In addition, Jonathan D. Eilian and Madison F. Grose, each of whom is a Director of the Corporation and a Trustee of the Trust, are also employed by or affiliated with Starwood Capital. Although our policy requires a majority of our Directors and Trustees to be “independent” of Starwood Capital, Starwood Capital may be able to exercise influence over our affairs. Because Starwood Capital’s tax situation is different from our tax situation, Starwood Capital may not have the same objectives as do our stockholders or our management with regard to the pricing, structure and timing of any sale of properties or mortgage loans.

Risks Relating to Hotel Operations

      Our Properties Are Subject to All the Operating Risks Common to the Hotel Industry. Operating risks common to the hotel industry include:

	•	changes in general economic conditions;
	•	decreases in the level of demand for rooms and related services;
	•	cyclical over-building in the hotel industry;
	•	restrictive changes in zoning and similar land use laws and regulations or in health, safety and environmental laws, rules and regulations; and
	•	changes in travel patterns.

      We Must Compete for Properties and Customers. The hotel industry is highly competitive. Our properties compete for customers with other hotel properties in their geographic markets, and we also compete with other hotel companies for properties. 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.

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

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

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

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

	•	construction delays or cost overruns that may increase project costs;
	•	receipt of zoning, occupancy and other required governmental permits and authorizations;
	•	incurring development costs for projects that are not pursued to completion;
	•	so-called “acts of God” such as hurricanes, floods or fires that could adversely impact a project; and
	•	governmental restrictions on the nature or size of a project.

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

      Our Timeshare Business Is Subject to Extensive Regulation and Risk of Default. In October 1999, the Company completed the acquisition of Vistana, Inc. (“Vistana”). Vistana markets and sells vacation ownership interests (“VOIs”), which typically entitle the buyer to ownership of a fully-furnished resort unit for a one-week period on either an annual or an alternate-year basis. Vistana also acquires, develops and operates timeshare resorts, and provides financing to purchasers of VOIs. These activities are all subject to extensive regulation by the federal government and the states in which timeshare resorts are located and in which its VOIs are marketed and sold. In addition, the laws of most states in which we sell VOIs grant the purchaser of this type of interest the right to rescind the purchase contract at any time within a statutory rescission period. Although we believe that we are in material compliance with all applicable federal, state, local and foreign laws and regulations to which timeshare marketing, sales and operations are currently subject, changes in these requirements or a determination by a regulatory authority that we were not in compliance could adversely affect us. Additionally, if the purchaser of a VOI defaults, we may not have recovered our marketing, selling, and general and administrative cost per VOI.

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

      General Economic Conditions May Negatively Impact Our Ability to Achieve Important Financial Tests. Moderate or severe economic downturns or adverse conditions may adversely affect our hotel operations. These conditions may be widespread or isolated to one or more geographic regions. As a result, recessions or other general economic conditions may have a negative impact on our ability to achieve or sustain substantial improvements in earnings.

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      International Operations Are Subject to Special Political and Monetary Risks. We have significant international operations which as of December 31, 1999 included 113 owned, managed or franchised properties in Europe (including 31 properties with majority ownership); 33 owned, managed or franchised properties in Latin America (including 15 properties with majority ownership); and 68 owned, managed or franchised properties in the Asia/ Pacific region (including three properties with majority ownership). International operations generally are subject to various political and other risks that are not present in U.S. operations. These risks include the risk of war or civil unrest, expropriation and nationalization. In addition, some international jurisdictions restrict the repatriation of non-U.S. earnings. Various international jurisdictions also have laws limiting the right and ability of non-U.S. entities to pay dividends and remit earnings to affiliated companies unless specified conditions have been met. In addition, sales in international jurisdictions typically are made in local currencies, which subject us to risks associated with currency fluctuations. Currency devaluations and unfavorable changes in international monetary and tax policies could have a material adverse effect on our profitability and financing plans, as could other changes in the international regulatory climate and international economic conditions. Other than Italy, where our risks are heightened due to the relatively large number of properties we own, our properties are geographically diversified and are not concentrated in any particular region.

      We Are Uncertain What Long-Term Effect the Adoption of the Euro Will Have on Us. On January 1, 1999, 11 of the 15 member countries of the European Union (the “Participating Countries”) established fixed conversion rates between their existing sovereign currencies and the Euro. Following the introduction of the Euro, the legacy currencies of the Participating Countries will remain legal tender during a transition period ending on January 1, 2002. During the transition period, both the legacy currency and the Euro will be legal tender in the respective Participating Countries, and currency conversions will be computed by a triangulation with reference to conversion rates between the respective currencies and the Euro. We currently operate in substantially all of the Participating Countries. Although the adoption of the Euro by the Participating Countries has not yet had any material effect on us, it is possible that over the long-term the Euro adoption will result in increased competition in the European hotel market.

      Pending the Disposition of the Desert Inn, Our Gaming Operations Subject Us to Certain Additional Risks. Although we have sold Caesars World, Inc. and other related gaming assets (“Caesars”) and intend to sell the Desert Inn Resort & Casino (the “Desert Inn”), our gaming operations are subject to regulatory requirements that will continue to impact Starwood until the sale of the Desert Inn is completed. These requirements include extensive licensing, regulatory controls for gaming operations that are administered by various governmental entities, the financial risk inherent in commercial gambling ventures and increased domestic and international competition from both established casinos and newly emerging gaming operations.

Risks Relating to Acts of God and War

      The Company’s financial and operating performance may be adversely affected by acts of God, such as natural disasters, in both the locations in which the Company owns and/or operates significant properties and areas of the world from which the Company draws a large number of customers. Similarly, wars, political unrest and other forms of civil strife have in the past, and may in the future, cause the Company’s results to differ materially from anticipated results.

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

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

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Item 1.  Business.

General

      Starwood is one of the world’s largest hotel and leisure companies. The Company conducts its hotel business both directly and through its subsidiaries, including ITT Sheraton Corporation (“Sheraton”), the Trust and Ciga S.p.A. (“Ciga”). The Company’s brand names include Sheraton™, Westin™ , The Luxury Collection™, St. Regis™, W™ and Four Points™. Through these brands, Starwood is well represented in most major markets around the world.

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

      The Company’s hotel and leisure business emphasizes the global operation of full-service hotels primarily in the luxury and upscale segment of the lodging industry. Starwood seeks to acquire interests in or management rights with respect to hotels in this segment. In the first quarter of 1998, Starwood completed two major transactions: the acquisition of Westin (the “Westin Merger”) and the acquisition of ITT (the “ITT Merger”). For further discussion of the ITT Merger and the Westin Merger, see the notes to financial statements of this Joint Annual Report. At December 31, 1999, the Company’s portfolio of owned, managed or franchised hotels totaled 716 hotels with approximately 218,000 rooms in 80 countries. This portfolio is comprised of 170 hotels that Starwood owns or leases or in which Starwood has a majority equity interest (substantially all of which hotels Starwood also manages), 248 hotels managed by Starwood on behalf of third-party owners (including entities in which Starwood has a minority equity interest) and 298 hotels for which Starwood receives franchise fees. Additionally, at December 31, 1999, the Company operated 12 vacation ownership resorts, with eight in active sales.

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

      The Company’s principal place of business is 777 Westchester Avenue, White Plains, New York, 10604, and its telephone number is (914) 640-8100.

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

Recent Developments

      As of September 30, 1999, Starwood owned approximately 70.3% of the ordinary shares and approximately 29% of the outstanding savings shares of Ciga. In October 1999, the Company announced its intention to purchase all of the outstanding shares of Ciga not owned by Starwood. Following completion of the tender offer in February 2000, Starwood now owns approximately 99% of the ordinary shares and approximately 86% of the savings shares. The aggregate purchase price of the incremental shares was approximately $290 million.

      On December 30, 1999, the Company completed the sale of Caesars for approximately $3.0 billion in cash. The Company used the proceeds to immediately pay off $2.5 billion of increasing rate notes and to reduce its bank revolver by approximately $500 million.

      In September and October 1999, the Company sold substantially all of its interest in Lampsa, SA, a Greek company that owns the Grande Bretagne Hotel in Athens, Greece. The Company owned its interest in Lampsa, SA through its then 70.3% ownership of Ciga. The Company received gross proceeds (before

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      On October 1, 1999, the Company completed the acquisition of Vistana. Vistana’s principal operations include the acquisition, development and operation of high quality vacation ownership resorts; marketing and selling VOIs in the resorts; and providing financing to customers who purchase such interests. The Company financed the acquisition of Vistana with cash of approximately $110 million, the assumption of approximately $280 million of debt and the issuance of approximately 10.1 million Shares.

      In April 1999, the Company disposed of its remaining interest in Madison Square Garden, L.P. (“MSG”) for net cash proceeds of approximately $87 million. Additionally, in February 1999, Starwood sold its remaining interest of approximately 9.5 million shares of ITT Educational Services, Inc. (“Educational Services”) in a public offering and contemporaneous sale to Educational Services for net proceeds of approximately $310 million.

Competitive Strengths

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

      Brand Strength. Starwood believes that it has strong brand leadership in major markets worldwide based on the global recognition of the Company’s lodging brands. The strength of the Company’s brands is evidenced, in part, by the superior ratings received from the Company’s hotel guests and from industry publications. For example, the Condé Nast Traveler Magazine 1999 Gold List Readers’ Choice Poll included 50 Starwood properties as part of the top 500 places to stay in the world. Starwood owns or manages more Gold List winners than any other hotel company in the world. With the Company’s well known lodging brands, Starwood benefits from a luxury and upscale branding strategy that provides strong operating performance from new customer penetration and customer loyalty. During 1999 and 1998, Starwood selected approximately 11 and 25, respectively, of its owned hotels, which had been operated on a non-branded or non-proprietary-branded basis, and converted them to proprietary brands owned by the Company. In 1999, the Company also added an additional 112 hotels with approximately 25,000 rooms to its branded hotel system. This program has enhanced and expanded the Company’s global presence and brand recognition.

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

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

      Premier and Distinctive Properties. Starwood controls a distinguished and diversified group of hotel properties throughout the world, including The St. Regis in New York, New York; The Phoenician in Scottsdale, Arizona; the Hotel Danieli in Venice, Italy; and the Palace Hotel in Madrid, Spain. These are among the leading hotels in the industry and are at the forefront of providing the highest quality and service.

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

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

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

      Starwood derives its cash flow from multiple sources, including owned hotels, management and franchise fees, and is geographically diverse with operations in six continents. The following table reflects the Company’s properties by revenue source for the year ended December 31, 1999:

     The following table shows the Company’s geographical presence by major geographic area for the year ended December 31, 1999:

Business Strategy

      The Company’s primary business objective is to maximize earnings and cash flow by increasing the profitability of the Company’s existing portfolio, selectively acquiring interests in additional assets, increasing the number of the Company’s hotel management contracts and franchise agreements and acquiring, developing and selling VOIs. The Company plans to increase earnings by leveraging its global assets, broad customer base and other resources by taking advantage of the Company’s scale to reduce costs.

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      Growth Opportunities. Management has identified several internal growth opportunities that are expected to enhance the Company’s operating performance and profitability, including:

	•	Refining the positioning of the Company’s brands to further its strategy of strengthening brand identity. By re-branding certain owned hotels to one of Starwood’s proprietary brands, Starwood will seek to further solidify its brand reputation and market presence, leading to enhanced revenue per available room (“REVPAR”) performance;
	•	Expanding the Company’s role as a third-party manager of hotel properties. This allows Starwood to expand the presence of its lodging brands and gain additional cash flow generally with modest capital commitment;
	•	Franchising the Sheraton, Westin and Four Points brands to selected third-party operators, thereby expanding the Company’s market presence, enhancing the exposure of its hotel brands and providing additional income through franchise fees;
	•	Continuing the integration of the Company’s owned, managed and franchised hotels into a single, multi-brand reservations system, coordinating the global sales efforts, and expanding the Company’s Internet presence and sales capabilities to increase revenue and improve customer service;
	•	Growing the Company’s frequent guest program, which the Company believes will increase occupancy rates and provide the Company’s customers with benefits based upon loyalty to the Company’s hotels;
	•	Enhancing the Company’s marketing efforts by integrating the Company’s proprietary customer databases, so as to sell additional products and services to existing customers, improve occupancy rates and create additional marketing opportunities;
	•	Optimizing the Company’s use of its real estate assets to improve ancillary revenue, such as restaurant, beverage and parking revenue from the Company’s hotel properties;
	•	Continuing to build the new “W” hotel brand to appeal to upscale business travelers and other customers seeking full-service new brands such as St. Regis and hotels in major markets; and
	•	Developing additional vacation ownership resorts near select hotel locations.

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

	•	Luxury and upscale full-service hotels in major metropolitan areas and business centers;
	•	Major tourist hotels, destination resorts or conference centers that have favorable demographic trends and are located in markets with significant barriers to entry or with major room demand generators such as office or retail complexes, airports, tourist attractions or universities;
	•	Undervalued hotels whose performance can be increased by re-branding to one of the Company’s hotel brands, the introduction of better and more efficient management techniques and practices and/or the injection of capital for renovating, expanding or repositioning the property; and
	•	Portfolios of hotels or hotel companies that exhibit some or all of the criteria listed above, where the purchase of several hotels in one transaction enables Starwood to obtain favorable pricing or obtain attractive assets that would otherwise not be available.

      Starwood may also selectively choose to develop and construct desirable hotel properties to help the Company meet its strategic goals, such as the development of the W hotels in San Francisco, California and Seattle, Washington which opened in May 1999 and September 1999, respectively.

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

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

Governmental Regulation and Licensing

      Nevada Gaming Regulation. The ownership and operation of casino gaming facilities by Starwood in Nevada is subject to the Nevada Gaming Control Act and the regulations promulgated thereunder (the “Nevada Act”), and the extensive licensing and regulatory control of the Nevada Gaming Commission (the “Nevada Commission”), the Nevada State Gaming Control Board (the “Nevada Board”) and the Clark County Liquor and Gaming Licensing Board (the “Clark County Board,” and together with the Nevada Commission and the Nevada Board, collectively the “Nevada Gaming Authorities”).

      The gaming laws, regulations and supervisory procedures of Nevada seek to (i) prevent unsavory or unsuitable persons from having any direct or indirect involvement with gaming at any time or in any capacity; (ii) establish and maintain responsible accounting practices and procedures; (iii) maintain effective control over the financial practices of licensees, including establishing minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable record-keeping, and making periodic reports to the applicable casino gaming authority; (iv) prevent cheating and fraudulent practices; and (v) provide a source of state and local revenues through taxation and licensing fees. Changes to these laws, regulations and supervisor procedures could have an adverse effect on Starwood’s casino gaming operations in Nevada.

      Starwood and ITT are registered with the Nevada Commission as publicly traded corporations and Starwood has been found suitable by the Nevada Gaming Authorities to own all of the outstanding capital stock of ITT. The Nevada Gaming Authorities have found suitable ITT as the sole shareholder of Sheraton. Sheraton is registered with the Nevada Commission as an intermediary company and been found suitable by the Nevada Gaming Authorities to own all the outstanding capital stock of Sheraton Gaming Corporation (“SGC”). Similarly, SGC is registered with the Nevada Commission as an intermediary company and been found suitable by the Nevada Gaming Authorities to own all the outstanding capital stock of Sheraton Desert Inn Corporation (“SDI,” and together with Sheraton and SGC, collectively the “Sheraton Desert Inn Companies”). SDI operates the Desert Inn pursuant to a license granted by the Nevada Gaming Authorities. These casino gaming licenses are not transferable and must be renewed periodically by the payment of various gaming license fees and taxes.

      No person may become a stockholder of, or receive any percentage of profits from, SDI without first obtaining certain required licenses and approvals from the Nevada Gaming Authorities. The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, a corporation which is involved in gaming activities. Officers, directors and key employees of SDI must be individually licensed by, and changes in corporate positions must be reported to, the Nevada Gaming Authorities, which changes may be disapproved by the Nevada Gaming Authorities. Certain of Starwood’s officers, directors and key employees and those of Starwood’s subsidiaries who are actively and directly involved in Starwood’s gaming activities have been, and others may be, required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause which they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. If

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      Starwood, ITT and the Sheraton Desert Inn Companies are required to submit detailed financial and operating reports to the Nevada Commission. Substantially all loans, leases, sales of securities and similar financing transactions by SDI must be reported to or approved by the Nevada Commission. Nevada law prohibits a corporation registered by the Nevada Commission from making a public offering of its securities without the prior approval of the Nevada Commission if any part of the proceeds of the offering of the securities is, or the securities themselves are, to be used either to (i) finance the construction, acquisition or operation of gaming facilities in Nevada; or (ii) retire or extend obligations incurred for one or more such purposes.

      If it were determined that the Nevada Act was violated by SDI, the gaming license SDI holds could be limited, conditioned, suspended or revoked. In addition, at the discretion of the Nevada Commission, Starwood, ITT, the Sheraton Desert Inn Companies and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act. Furthermore, a supervisor could be appointed by the Nevada Commission to operate the gaming property of SDI and, under certain circumstances, earnings generated during the supervisor’s appointment (except for the reasonable rental value of the affected gaming property) could be forfeited to the State of Nevada. Any suspension or revocation of the licenses or approvals, the imposition of substantial fines, or the appointment of a supervisor, would have a material adverse effect on SDI, as the case may be.

      The Nevada Gaming Authorities may investigate and require a finding of suitability of any holder of any class of Starwood’s voting securities at any time. Nevada law requires any person who acquires more than 5% of any class of Starwood’s voting securities to report the acquisition to the Nevada Commission and such person may be investigated and found suitable or not suitable. Any person who becomes a beneficial owner of more than 10% of any class of Starwood’s voting securities must apply for a finding of suitability by the Nevada Commission within 30 days after the Nevada Board Chairman mails a written notice requiring such filing, and must pay the costs and fees incurred by the Nevada Board in connection with the investigation. Under certain circumstances, an “institutional investor,” as defined by the Nevada Act, that acquires more than 10% but not more than 15% of Starwood’s voting securities may apply to the Nevada Commission for a waiver of such finding of suitability requirements if such institutional investor holds the voting securities for investment purposes only. An institutional investor will not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of either the Board of Directors of the Corporation or the Board of Trustees of the Trust, any change in Starwood’s corporate charter, bylaws, management, policies or operations or any of Starwood’s casino gaming operations, or any other action which the Nevada Commission finds to be inconsistent with holding Starwood’s voting securities for investment purposes only. Activities that are not deemed to be inconsistent with holding voting securities for investment purposes only include (i) voting on all matters voted on by stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in its management, policies or operations; and (iii) such other activities as the Nevada Commission may determine to be consistent with such investment intent. If the stockholder who must be found suitable is a corporation, partnership, trust or other business entity, it must submit detailed business and financial information, including a list of beneficial holders of its ownership interests. Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the Nevada Commission or by the Chairman of the Nevada Board may be found unsuitable. Any person found unsuitable who holds, directly or indirectly, any beneficial ownership of Starwood’s debt or equity voting securities beyond such period or periods of time as may be prescribed by the Nevada Commission may be guilty of a gross misdemeanor. Starwood, ITT or the Sheraton Desert Inn Companies could be subject to disciplinary action if, without the prior approval of the Nevada Commission

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      Regulations of the Nevada Commission provide that control of a registered publicly traded corporation, such as Starwood and ITT, cannot be changed through merger, consolidation, acquisition of assets, management or consulting agreements, or any form of takeover without the prior approval of the Nevada Commission. Persons seeking approval to control a registered publicly traded corporation must satisfy the Nevada Commission as to a variety of stringent standards prior to assuming control of such corporation. The failure of a person to obtain such approval prior to assuming control over the registered publicly traded corporation may constitute grounds for finding such person unsuitable. Regulations of the Nevada Commission also prohibit certain repurchases of securities by registered publicly traded corporations without the prior approval of the Nevada Commission. Transactions covered by these regulations are generally aimed at discouraging repurchases of securities at a premium over market price from certain holders of more than three percent of the outstanding securities of the registered publicly traded corporation. The regulations of the Nevada Commission also require prior approval for a “plan of recapitalization.” Generally, a plan of recapitalization is a plan proposed by the management of a registered publicly traded corporation that contains recommended action in response to a proposed corporate acquisition opposed by management of the corporation if such acquisition would require the prior approval of the Nevada Commission.

      License fees and taxes, computed in various ways depending on the type of gaming involved, are payable to the State of Nevada and to Clark County where SDI’s gaming operations are conducted. Depending on the particular fee or tax involved, these assessments are payable either monthly, quarterly or annually and are based upon either (i) a percentage of the gross gaming revenues received by the casino operations; (ii) the number of slot machines or other gaming devices operated by the casino; or (iii) the number of table games operated by the casino. A casino entertainment tax also is paid by the licensees where entertainment is furnished in connection with the selling of food or refreshments.

      The sale of alcoholic beverages by SDI is subject to licensing, control and regulation by the Clark County Board. Such liquor licenses are revocable and are not transferable. The Clark County Board has full power to limit, condition, suspend or revoke any liquor license, and any disciplinary action of this nature or license revocation would have a material adverse effect on SDI’s gaming operations.

      Provisions of the Corporation’s Articles of Incorporation Related to Casino Gaming. The Articles of Incorporation provide that (i) all Starwood’s securities are subject to redemption to the extent necessary to prevent the loss, or to secure the reinstatement, of any casino gaming license held by any of Starwood’s subsidiaries in any jurisdiction within or without the United States; (ii) all Starwood’s securities are held subject to the condition that if a holder is found by a gaming authority in any jurisdiction to be disqualified or unsuitable pursuant to any gaming law, such holder will be required to dispose of all such securities; failing such disposition, the Corporation may redeem the securities at the lesser of their market price or the disqualified holder’s original purchase price; and (iii) it is unlawful for any such disqualified person to (a) receive payments of interest or dividends on any such securities; (b) exercise, directly or indirectly, any rights conferred by any such securities; or (c) receive any remuneration in any form, for services rendered or otherwise, from the subsidiary that holds the gaming license in the applicable jurisdiction.

Environmental Matters

      Starwood is subject to certain requirements and potential liabilities under various federal, state and local environmental laws, ordinances and regulations (“Environmental Laws”). For example, a current or previous owner or operator of real property may become liable for the costs of removal or remediation of hazardous or

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

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

Seasonality and Diversification

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

Comparability of Owned Hotel Results

      Starwood continually updates and renovates its owned, leased and consolidated joint venture hotels. While undergoing renovation, these hotels are generally not operating at full capacity and, as such, these renovations can negatively impact Starwood’s revenues and EBITDA.⁽¹⁾

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Employees

      At December 31, 1999, Starwood employed approximately 120,000 persons at its corporate offices, owned and managed hotels and timeshare resorts, of whom approximately 45% were employed in the United States. At December 31, 1999, approximately 33% of the U.S.-based employees were covered by various collective bargaining agreements providing, generally, for basic pay rates, working hours, other conditions of employment and orderly settlement of labor disputes. Generally, labor relations have been maintained in a normal and satisfactory manner, and management believes that the Company’s employee relations are good.

Item 2.  Properties.

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

      The Company’s lodging business included 716 owned, managed or franchised hotels with approximately 218,000 rooms at December 31, 1999, predominantly under six brands: St. Regis (luxury full-service hotels and resorts), The Luxury Collection (luxury full-service hotels and resorts), Westin (luxury and upscale full-service hotels and resorts), Sheraton (upscale full-service hotels and resorts), W (stylish boutique full-service urban hotels) and Four Points (moderately priced hotels). At December 31, 1999, 170 of these hotels were owned or leased by Starwood or an entity in which Starwood has a majority equity interest, 248 were managed by Starwood on behalf of third-party owners (including entities in which Starwood has a minority equity interest), 298 were owned and operated by franchisees using one of the Company’s brands or were otherwise represented by Starwood. Additionally, at December 31, 1999, Starwood operated 12 vacation ownership resorts, with eight in active sales.

      The following table sets forth the number of hotels, number of rooms, average daily rate (“ADR”), average occupancy rate and REVPAR achieved by the Company’s 144 owned, leased and consolidated joint venture hotels (excluding 24 hotels under significant renovation in 1999 and two hotels without prior year results) (“Same-Store Hotels”) by region and worldwide at December 31, 1999 and 1998.

Hotel Management and Franchising

      Hotel and resort properties in the United States are often owned by entities that neither manage hotels nor own a brand name. Hotel owners typically enter into management contracts with hotel management

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      Managed Hotels. Through its subsidiaries, Starwood manages hotels worldwide, usually under a long-term agreement with the hotel owner (including entities in which Starwood has a minority equity interest). The Company’s responsibilities under hotel management contracts typically include hiring, training and supervising the managers and employees that operate these facilities. For additional fees, Starwood provides reservation services and coordinates national advertising and certain marketing and promotional services. Starwood prepares and implements annual budgets for the hotels it manages and is responsible for allocating property-owner funds for periodic maintenance and repair of buildings and furnishings. At December 31, 1999, Starwood managed 248 hotels worldwide under long-term agreements.

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

      Brand Franchising. Through its subsidiaries, Starwood franchises its Sheraton, Westin and Four Points brand names and generally derives licensing and other fees from franchisees based on a fixed percentage of franchise hotel 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. Starwood approves certain plans for, and the location of, franchised hotels and reviews their design.

      As of December 31, 1999, there were 291 franchised properties with approximately 71,000 rooms operating under the Sheraton, Westin, and Four Points brands.

External Growth

      On October 1, 1999, the Company completed the acquisition of Vistana, one of the premier developers and operators of high quality vacation interval ownership. Vistana’s principal operations include the acquisition, development and operation of vacation ownership resorts; marketing and selling VOIs in the resorts; and providing financing to customers who purchase such interests. The Company financed the acquisition of Vistana with cash of approximately $110 million, the assumption of approximately $280 million of debt and the issuance of approximately 10.1 million Shares.

      During the year ended December 31, 1999, the Company signed management and franchise agreements for 112 hotels with approximately 25,000 rooms under its brands.

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Internal Growth

      The following table summarizes average occupancy rates, ADR and REVPAR on a year-to-year basis for the Company’s Same-Store Hotels for the years ended December 31, 1999 and 1998:

Item 3.  Legal Proceedings.

      Incorporated by reference to the description of legal proceedings in Note 21, “Commitments and Contingencies,” in the notes to financial statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data.”

      Not applicable.

Executive Officers of the Registrants

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

PART II

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

Market Information

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

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

Holders

      As of March 27, 2000, there were approximately 31,800 holders of record of Shares and one holder of record (the Corporation) of the Class A Shares.

Distributions Made/ Declared

      The following table sets forth the frequency and amount of distributions made by the Trust to holders of Shares for the years ended December 31, 1999 and 1998:

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

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

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Conversion of Securities; Sale of Unregistered Securities

      During 1999, the Trust consented to the exchange of approximately 320,000 shares of Class B Exchangeable Preferred Shares (“Class B EPS”) by certain stockholders for an equal number of shares of Class A Exchangeable Preferred Shares (“Class A EPS”). Additionally, the Trust consented to the exchange of approximately 1.0 million shares of Class A EPS for an equal number of Shares.

      During 1999, the Company exchanged approximately 5.2 million limited partnership units (“LP Units”) of the Realty Partnership and the Operating Partnership held by third parties for Shares on a one-for-one basis.

Item 6.  Selected Financial Data.

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

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

      To facilitate a meaningful comparison between periods, this Management’s Discussion and Analysis focuses on the comparison of historical information for the year ended December 31, 1999 with the Historical As Adjusted (as defined below) information for the year ended December 31, 1998. Pro forma information for selling, general and administrative and interest expense for these same periods is also provided. Management

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UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS

      The following unaudited condensed consolidated pro forma statement of operations for the year ended December 31, 1999 gives effect as of January 1, 1999 to certain actual and planned asset dispositions and certain cost savings relating to the ITT Merger. The pro forma information is based upon the historical financial information for the Company for the year ended December 31, 1999 and the assumptions and adjustments set forth below. The pro forma information does not purport to present what actual results would have been had such transactions, in fact, occurred at January 1, 1999, or to project results for any future period.

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UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS

      The following unaudited condensed consolidated pro forma statement of operations for the year ended December 31, 1998 gives effect as of January 1, 1998 to the ITT Merger and certain actual and planned asset dispositions. The pro forma information for the year ended December 31, 1998 is based upon the historical information for the Company for the year ended December 31, 1998 combined with the historical results of the Corporation and the Trust, inclusive of Westin, from January 1, 1998 to the closing of the ITT Merger on February 23, 1998 (“Historical As Adjusted”) and other assumptions and adjustments set forth below. This statement does not purport to present what actual results would have been had such transactions, in fact, occurred at January 1, 1998, or to project results for any future period.

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(c)	Represents the amortization expense related to the goodwill and intangible assets recorded as a result of the purchase consideration exceeding the fair market value of the combined net assets of Starwood (inclusive of Westin), as if the merger transactions had taken place on January 1, 1998.
(d)	Represents the interest expense on the additional debt incurred to finance the ITT Merger for the period January 1, 1998 through February 23, 1998 at the Company’s average borrowing rate.
(e)	Represents the reduction of interest expense assuming the paydown of a portion of the Senior Credit Facility with the net proceeds of approximately $932 million from the dispositions of certain non-core assets, as if the dispositions had occurred on January 1, 1998. The dispositions include ITT’s interest in WBIS+, Channel 31 in New York City; MSG; Educational Services; and the sale of an aircraft.
(f)	Represents the reduction of interest expense assuming the partial paydown of the Senior Secured Notes Facility with the net proceeds of approximately $3.0 billion from the December 30, 1999 sale of Caesars and the estimated $275 million of net proceeds from the planned disposition of the Desert Inn, net of the interest allocated to discontinued operations in the historical results (see Notes  5 and 24 in the notes to financial statements), as if these dispositions had occurred on January 1, 1998.
(g)	Represents the reduction of interest expense for the paydown of term loans with the net proceeds of $239 million from the sale of 4.6 million Shares on February 24, 1998 as if such offering had taken place on January 1, 1998.
(h)	Represents reduced deferred loan fee amortization on debt assumed to have been paid down as of January 1, 1998 with proceeds from the actual and planned asset dispositions described in (e) and (f) above.
(i)	Represents the adjustment needed to reflect an effective tax rate of 40% on historical net income and the pro forma adjustments, assuming the Reorganization had occurred effective January 1, 1998.

YEAR ENDED DECEMBER 31, 1999 COMPARED WITH

Continuing Operations

      Revenues. Revenues increased 7.7% to $3.862 billion for the year ended December 31, 1999 when compared to the corresponding period in 1998, primarily due to the 5.2% increase in revenues for the Company’s owned, leased and consolidated joint venture hotels to $3.391 billion for the year ended December 31, 1999 when compared to the corresponding period of 1998. The increase resulted primarily from the 5.5% increase in revenues at the Company’s Same-Store Hotels to $2.826 billion for the year ended December 31, 1999 when compared to $2.679 billion in the same period of 1998. The increase also resulted from the acquisition, in July 1999, of the Westin hotel in Maui, Hawaii (the Company previously had a 95% non-controlling interest in this property), the opening of the 423-room W hotel in San Francisco, California in May 1999 and the 426-room W hotel in Seattle, Washington in September 1999 and the reopening of the W hotel in New York, New York in December 1998, which was partially closed during most of 1998 due to significant renovation and conversion from the former Doral Inn. The increase in revenues for the year ended December 31, 1999 was offset, in part, by a $39 million decrease in revenues as a result of the sale of nine hotels in May 1998 and the sales of The Westin Central Park South in New York, New York in July 1999 and the Ritz Carlton in Kansas City, Missouri in November 1999. The increase in revenues at the Same-Store Hotels resulted from an increase in REVPAR at these hotels of 4.3% to $106 for the year ended December 31, 1999 when compared to the same period of 1998. The increase in REVPAR at these hotels was attributed to an increase in ADR of 3.1% to $150 for the year ended December 31, 1999 when compared to the corresponding 1998 period. Occupancy for Same-Store Hotels rose to 70.7% from 69.9% in the year ended December 31, 1999 when compared to the same period in 1998. REVPAR at Same-Store Hotels in North America increased 4.9% for the year ended December 31, 1999 when compared to the same period of 1998. REVPAR at the Company’s international owned, leased and consolidated joint venture hotels increased 3.0% for the year ended December 31, 1999 when compared to the same period of 1998.

      Management and franchise fees earned by Starwood increased 22.8% to $285 million for the year ended December 31, 1999 when compared to $232 million in the corresponding period of 1998. The increase resulted from the addition of hotels to the Company’s management and franchise system, the stronger performance at the Company’s existing managed and franchised hotels, and fees earned as a result of the early termination of certain management contracts. The Company added 112 hotels to the management and franchise system during the year ended December 31, 1999, offset by 25 hotels deleted from the system during the same period.

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      Other revenues, which include the revenues from unconsolidated joint ventures, the sale of VOIs, fees earned on the operation of vacation ownership resorts and gains realized from the financing of timeshare receivables, increased to $186 million for the year ended December 31, 1999 from $130 million in the same period of 1998. The increase was primarily due to the acquisition of Vistana on October 1, 1999. VOI sales in the fourth quarter of 1999 increased 4.9% when compared to VOI sales reported by Vistana in the same period of 1998.

      Costs and Expenses. Costs and expenses for the Company’s owned, leased and consolidated joint venture hotels increased 4.9% to $2.313 billion for the year ended December 31, 1999 when compared to $2.206 billion in the corresponding period of 1998. The increase in costs and expenses is due primarily to the reopening of hotels in late 1998 that were not operating at full capacity during most of 1998 because they were under renovation as well as the addition of the Westin hotel in Maui, Hawaii and the opening of the W hotels in San Francisco, California and Seattle, Washington discussed above. EBITDA margins at Same-Store Hotels increased to 32.7% for the year ended December 31, 1999 from 31.7% in 1998.

      Selling, general and administrative expenses were $173 million and $221 million for the years ended December 31, 1999 and 1998, respectively. The decrease was primarily due to the inclusion, in the 1998 period, of a $30 million charge primarily related to the vesting of certain restricted stock granted in 1998 to the former President and Chief Operating Officer of the Company. The decrease was also due to savings associated with the ITT Merger and Westin Merger that resulted in the ITT World Headquarters closure in New York, New York and a significant downsizing at the Westin office in Seattle, Washington and the Sheraton office in Boston, Massachusetts, partially offset by the increase in corporate employees at the Company’s new headquarters in White Plains, New York.

      EBITDA. EBITDA at the Company’s owned, leased and consolidated joint venture hotels rose approximately 6.4% to $1.078 billion for the year ended December 31, 1999 when compared to the same period in 1998. This increase is due, in part, to the addition of the Westin hotel in Maui, Hawaii and the W hotels in San Francisco, California and Seattle, Washington and the reopening of the W hotel in New York, New York discussed previously, offset by an approximate $13 million reduction in EBITDA as a result of the sale of nine hotels in May 1998 and The Westin Central Park South in New York, New York in July 1999 and the Ritz Carlton in Kansas City, Missouri in November 1999. EBITDA for the Company’s Same-Store Hotels increased to $924 million for the year ended December 31, 1999 from $849 million for the year ended December 31, 1998. The EBITDA improvement at the Same-Store Hotels was due primarily to the increase in ADR discussed previously.

      Depreciation and Amortization. Depreciation and amortization expense increased to $476 million in the year ended December 31, 1999 compared to $442 million in the corresponding period of 1998. The increase in depreciation expense for the year ended December 31, 1999 was primarily attributed to the addition of the Westin hotel in Maui, Hawaii and the opening of the W hotels in San Francisco, California and Seattle, Washington, offset by a reduction in depreciation expense as a result of the sale of nine hotels in May 1998 and two hotels in 1999. The increase in depreciation expense for the year ended December 31, 1999 was also attributed to the completion, in December 1998, of a significant renovation of the W hotel in New York, New York.

      Net Interest Expense. Interest expense for the years ended December 31, 1999 and 1998, which is net of interest income of $23 million and $26 million, respectively, and discontinued operations allocations of $163 million and $175 million, respectively, was $493 million and $472 million, respectively. The increase relates primarily to the debt incurred to finance the ITT Merger and Westin Merger and the repurchase of Shares and capital expenditures, offset by the reduction in debt with approximately $6.8 billion in proceeds from dispositions of non-core assets since February 1998. In addition, 1998 interest expense included a $40 million non-recurring charge associated with the settlement of certain forward interest rate swap agreements.

Discontinued Operations

      Results for the Company’s gaming operations and former investments in WD and Educational Services are included in discontinued operations in the years ended December 31, 1999 and 1998. Net loss from

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

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

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

PRO FORMA YEAR ENDED DECEMBER 31, 1999 COMPARED WITH

      The discussion and analysis above regarding Historical and Historical As Adjusted results is applicable to the operating results of the Company on a pro forma basis except for selling, general and administrative expenses and interest expense. Therefore, the following discussion and analysis of pro forma results is provided to facilitate a meaningful comparison of these expenses between periods.

Continuing Operations

      Costs and Expenses. Selling, general and administrative expenses decreased to $166 million from $179 million for the year ended December 31, 1999 and 1998, respectively. The decrease was primarily due to the inclusion, in the 1998 period, of a $30 million charge primarily related to the vesting of certain restricted stock granted earlier in 1998 to the former President and Chief Operating Officer of the Company. Excluding this $30 million charge, selling, general and administrative expenses increased approximately $17 million primarily due to the increase in corporate employees at the Company’s new headquarters in White Plains, New York. The Company increased its corporate staff in White Plains primarily during the latter part of 1998 despite closing down the ITT World Headquarters in New York, New York and significantly downsizing the Westin corporate office in Seattle, Washington and the Sheraton corporate office in Boston, Massachusetts during the early part of 1998.

      Net Interest Expense. Interest expense for the years ended December 31, 1999 and 1998, which is net of interest income of $23 million and $26 million, respectively, and discontinued operations allocations of $294 million and $281 million in 1999 and 1998, respectively, increased to $362 million in 1999 from $357 million in 1998. This increase primarily relates to the increase in the average debt balance due to capital expenditures and the repurchase of approximately $451 million of Shares since the middle of the second quarter of 1998 in connection with the Company’s Share repurchase program, partially offset by the inclusion, in the third

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HISTORICAL AS ADJUSTED YEAR ENDED DECEMBER 31, 1998

      Because the ITT Merger was accounted for using reverse purchase accounting, the historical statement of income for the year ended December 31, 1998 includes the accounts of the Trust and the Corporation for the period from the closing of the ITT Merger on February 23, 1998 through December 31, 1998 and the accounts of ITT for the twelve months ended December 31, 1998. The historical statement of operations for the year ended December 1997 includes the results of ITT only. This Management’s Discussion and Analysis focuses on the comparison of Historical As Adjusted information for the year ended December 31, 1998 with the historical information for the year ended December 31, 1997.

Continuing Operations

      Revenues. Revenues increased to $3.586 billion for the year ended December 31, 1998 when compared to $1.762 billion in the corresponding period in 1997. The increase in revenues was primarily due to the increase in revenues for the Company’s owned, leased and consolidated joint venture hotels to $3.224 billion for the year ended December 31, 1998 when compared to $1.550 billion in the corresponding period of 1997. Since the ITT Merger is accounted for as a reverse purchase and the reflected historical amounts accordingly are those of ITT, the increase in hotel revenue was due primarily to the inclusion of the results of approximately 120 hotels owned by Starwood (including Westin) as of the date of the ITT Merger, including hotels acquired as a result of the Westin Merger.

      Management and franchise fees earned by Starwood increased 33.3% to $232 million for the year ended December 31, 1998 when compared to $174 million in the corresponding period of 1997. The increase resulted primarily from the reverse purchase accounting treatment and the inclusion of approximately 50 hotels managed by Starwood and Westin and approximately 30 hotels franchised by Westin in the 1998 results as a result of the ITT Merger and Westin Merger.

      Other revenues were $130 million for the year ended December 31, 1998 versus $38 million in the same period of 1997. The increase was due primarily to the reverse purchase accounting treatment and the inclusion of investments in unconsolidated joint venture hotels owned by Starwood and Westin in the 1998 results as a result of the ITT Merger and Westin Merger.

      Costs and Expenses. Costs and expenses for the Company’s owned, leased and consolidated joint venture hotels increased to $2.206 billion for the year ended December 31, 1998 when compared to $1.116 billion in the corresponding period of 1997. The increase was due primarily to the reverse purchase accounting treatment and the inclusion of the results of approximately 120 hotels owned, leased or consolidated by Starwood (including Westin) in the 1998 results.

      Selling, general and administrative expenses were $221 million and $137 million for the years ended December 31, 1998 and 1997, respectively. The increase was primarily due to the reverse purchase accounting treatment, the inclusion of Starwood and Westin in the 1998 results and the increase in corporate employees at the Company’s new headquarters in White Plains, New York, offset by the savings associated with the ITT Merger and Westin Merger that resulted in the ITT World Headquarters closure in New York, New York and a significant downsizing at the Westin office in Seattle, Washington and the Sheraton office in Boston, Massachusetts.

      Depreciation and Amortization. Depreciation and amortization expense increased to $442 million in the year ended December 31, 1998 compared to $199 million in the corresponding period of 1997. The increase was primarily due to the reverse purchase accounting treatment and the inclusion of approximately 120 hotels owned by Starwood (including Westin) prior to the ITT Merger, the amortization of goodwill related to the ITT Merger and the commencement of depreciation on certain newly completed hotel projects.

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      Net Interest Expense. Interest expense for the years ended December 31, 1998 and 1997, which is net of interest income of $26 million and $17 million, respectively, and discontinued operations allocations of $175 million and $210 million, respectively, was $472 million and $16 million, respectively. The increase relates primarily to the $4 billion of debt incurred to finance the ITT Merger and Westin Merger.

Discontinued Operations

      Results for the Company’s gaming operations and former investments in WD and Educational Services are included in discontinued operations in the years ended December 31, 1998 and 1997. Net loss from discontinued operations was $80 million and $12 million for the years ended December 31, 1998 and 1997, respectively. These results include the allocation of pretax corporate interest expense of $175 million and $210 million in the years ended December 31, 1998 and 1997, respectively.

      After-tax gains of $1.162 billion were recognized in the year ended December 31, 1998 in connection with the sale of Educational Services and the disposition of WD.

      Revenues from discontinued gaming operations increased 13.6% to $1.377 billion for the year ended December 31, 1998 when compared to the corresponding period of 1997. Costs and expenses from discontinued gaming operations for the year ended December 31, 1998 increased 17.8% to $1.156 billion when compared to the same period of 1997. Costs and expenses include a third quarter 1998 restructuring charge of $55 million relating to a write-down of certain receivables and an investment in a shared services center established by ITT. The increase in revenues and costs and expenses resulted primarily from additional rooms and gaming capacity at Caesars Palace and Caesars Atlantic City.

      EBITDA from discontinued gaming operations for the year ended December 31, 1998 was $276 million (excluding the third quarter 1998 restructuring charge of $55 million discussed above) compared to $225 million in the corresponding period of 1997. The increase in gaming EBITDA resulted from additional rooms and gaming capacity at Caesars Palace and Caesars Atlantic City.

LIQUIDITY AND CAPITAL RESOURCES

Capital Expenditures

      Starwood incurs capital expenditures for upgrading and ongoing maintenance of acquired and existing hotels to the Company’s standards. During the year ended December 31, 1999, the Company spent approximately $521 million on improving and upgrading its owned hotel properties.

Cash Flow from Operating Activities

      Cash flow from operating activities is the principal source of cash to be used to fund the Company’s operating expenses, interest expense, capital expenditures and distribution payments by the Trust. Starwood anticipates that cash flow provided by operating activities will be sufficient to service short-and long-term indebtedness, fund maintenance requirements and capital expenditures and meet operating cash requirements, including distributions to shareholders by the Trust. During each of the quarters of 1999, the Trust paid a distribution of $0.15 per Share. The Company’s annual dividend was increased 15% in 2000 to an annual rate of $0.69 per Share.

Cash Flow from Investing and Financing Activities

      In addition to cash flow from operating activities, Starwood intends to finance the acquisition of additional hotel properties, investments, hotel renovations and capital improvements and provide for general corporate purposes through the Company’s credit facilities described below, through dispositions of certain non-core assets and, when market conditions warrant, through the issuance of additional equity or debt securities. Since February 1998 through the date of this filing, Starwood has completed over $6.8 billion of asset sales and dispositions, the proceeds of which were used primarily to reduce existing debt.

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      As a result of the Reorganization, Starwood will pay significantly more in federal income taxes and, due to lower distribution requirements, will have the ability to retain significantly more earnings than was previously the case. Starwood anticipates that its enhanced ability to retain earnings will allow it to utilize cash flow from operating activities to fund both capital expenditures and acquisitions.

      Loans and Credit Facilities. On February 23, 1998, Starwood obtained two credit facilities ($5.6 billion in total) with Lehman Brothers, Bankers Trust Company and The Chase Manhattan Bank to fund the cash portion of the ITT Merger consideration, to refinance a portion of the Company’s existing indebtedness and to provide funds for general corporate purposes. The Senior Credit Facility and the Senior Secured Notes Facility comprise Starwood’s primary remaining credit facilities. On December 30, 1999, Starwood completed the sale of Caesars and repaid $2.5 billion of the Senior Secured Notes Facility and paid down approximately $500 million under the Revolving Credit Facility.

      In September 1998, the Company entered into a $1 billion, five-year term borrowing facility (“Tranche II”). In January 1999, the Company completed a $542 million long-term financing (the “Mortgage Loan”), secured by mortgages on a portfolio of 11 hotels. The Mortgage Loan is due in February 2009 and the proceeds from the Mortgage Loan were used to pay down the one-year term loan under the Senior Credit Facility.

      Following is a summary of the Company’s debt portfolio as of December 31, 1999:

     Starwood has a substantial amount of indebtedness and a working capital deficiency of $1.1 billion at December 31, 1999. Starwood has no significant debt maturing until November 2000, at which time $700 million of the ITT public debt is due. Based upon the current level of operations, management believes that the Company’s cash flow from operations, together with available borrowings under the Senior Credit Facility (approximately $816 million at December 31, 1999) and capacity with additional borrowings, will be adequate to meet the Company’s anticipated requirements for working capital, capital expenditures, marketing and advertising expenditures, program and other discretionary investments, interest payments and scheduled

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Stock Sales and Repurchases

      At December 31, 1999, Starwood had approximately 189 million Shares, 9.9 million LP Units and 3.7 exchangeable preferred shares outstanding.

      In 1998, the Board of Directors of the Company approved the repurchase of up to $1 billion of Shares under a Share repurchase program (the “Share Repurchase Program”). Pursuant to the Share Repurchase Program, Starwood has repurchased 13.3 million Shares (including 500,000 Shares of equity put option contracts) in the open market for an aggregate cost of $451 million. Additionally, the Company repurchased 6.8 million Shares for an aggregate cost of $385 million as settlement of the forward equity transactions (see Note 17 in the notes to financial statements).

      During 1999, the Trust consented to the exchange of approximately 320,000 shares of Class B EPS into an equal number of shares of Class A EPS. Additionally, the Trust consented to the exchange of approximately 1.0 million shares of Class A EPS for an equal number of Shares.

OTHER MATTERS

Year 2000

      The Company did not experience any significant malfunctions or errors in its computer systems when the date changed from 1999 to 2000. Based on operations since January 1, 2000, the Company does not expect any significant impact to its ongoing business as a result of the Year 2000 issue. The Company is not aware of any significant Year 2000 issues or problems that may have arisen for its significant customers and suppliers. Although Year 2000 problems may not become evident until long after January 1, 2000, based on the Company’s Year 2000 readiness process and experience at the end of 1999 and in early 2000, the Company does not expect significant Year 2000-related business disruptions in the future.

      The Company expended approximately $15 million through December 31, 1999 on its Year 2000 readiness efforts. These efforts included review, evaluation, assessment and remediation efforts for the central facilities and owned hotel properties.

European Union Currency Conversions

      On January 1, 1999, the Participating Countries established fixed conversion rates between their existing sovereign currencies and the Euro. Following the introduction of the Euro, the legacy currencies of the Participating Countries will remain legal tender during a transition period ending on January 1, 2002. During the transition period, both the legacy currency and the Euro will be legal tender in the respective Participating Countries. During the transition period, currency conversions will be computed by a triangulation with reference to conversion rates between the respective currencies and the Euro. The Company currently operates in substantially all of the Participating Countries. The effect on the Company of the adoption of the Euro by the Participating Countries in which it operates is currently uncertain. However, it is possible that the Euro adoption will result in increased competition within the European market. In addition, a number of the

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

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

      Interest rate swap agreements are the primary instruments used to manage interest rate fluctuation affecting the Company’s variable rate debt. The Company currently has six outstanding long-term interest rate swap agreements under which the Company pays a fixed interest rate and receives variable interest rates. At year-end, the Company had an additional nine short-term swap agreements ($2.2 billion) in place to protect against potential high LIBOR rates due to Year 2000 concerns. All of the short-term Year 2000 swaps have since expired. The following table sets forth the scheduled maturities and the total fair value of the Company’s debt portfolio:

      Foreign currency forward transactions are used by the Company to hedge exposure to foreign currency exchange rate fluctuations. As of December 31, 1999, the British Pound and French Franc were the principal currencies hedged by the Company. Changes in the value of forward foreign exchange contracts designated as hedges of foreign currency denominated assets and liabilities are classified in the same manner as changes in the underlying assets and liabilities. At December 31, 1999, the notional amount of the Company’s open forward foreign exchange contracts protecting the value of the Company’s foreign currency denominated assets and liabilities was approximately $46 million. These three-month contracts matured in February 2000. A hypothetical 10% change in currency exchange rates would result in an increase or decrease of approximately $5 million to the fair value of the forward foreign exchange contracts at December 31, 1999, which would be offset by an opposite effect on the related hedged positions.

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

      See Notes 16 and 19 in the notes to financial statements filed as part of this Joint Annual Report and incorporated herein by reference for further description of derivative financial instruments.

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Item 8.  Financial Statements and Supplementary Data.

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

      Not applicable.

PART III

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

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

Directors and Trustees Whose Terms Expire at the 2002 Annual Meeting

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Executive Officers of the Registrants

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

      Barry S. Sternlicht. Mr. Sternlicht has been Chairman (since September 1997) and Chief Executive Officer (since January 1999) of the Corporation. Mr. Sternlicht has served as Chairman and Chief Executive Officer of the Trust since January 1995. Mr. Sternlicht also has been the President and Chief Executive Officer of Starwood Capital and its predecessor entities since its formation in 1991. Mr. Sternlicht is currently the Chairman of the Board of Trustees of Starwood Financial Inc.

      Robert F. Cotter. Mr. Cotter was named Chief Operating Officer of the Corporation in February 2000. Mr. Cotter was named President, International Operations, in December of 1999 after serving as President, Europe, for Starwood since March of 1998. Mr. Cotter previously served as President, Sheraton Europe Division, from June 1994 to March 1998; President, Sheraton Asia-Pacific Division, from January 1993 to June 1994; and held numerous sales and marketing positions in the United States and Asia since 1973.

      Ronald C. Brown. Mr. Brown has been Vice President, Chief Financial Officer and Chief Accounting Officer of the Trust since January 1999 and Executive Vice President and Chief Financial Officer of the Corporation since March 1998 and was Senior Vice President and Chief Financial Officer of the Trust from July 1995 through March 1998. Prior to joining the Trust, Mr. Brown was President of Sonoran Hotel Advisors, L.L.C., a hotel REIT advisory firm, from August 1994 to July 1995. From December 1990 to August 1994, Mr. Brown held various positions with Doubletree Corporation, a hotel operating company, including Chief Financial Officer and President. From December 1990 to April 1992, Mr. Brown was Executive Vice President Chief Financial Officer for Canadian Pacific Hotels Corporation, a hotel operating company. Mr. Brown is also a Director of Phoenix Children’s Hospital.

      Steven R. Goldman. Mr. Goldman has been a Vice President of the Trust and the Executive Vice President, Acquisitions and Development, of the Corporation since January 1999 and was Executive Vice President of the Trust from March 1998 to January 1999. Mr. Goldman was Senior Vice President of the Trust from September 1996 through March 1998 and Senior Vice President of the Corporation from March 1995 to September 1996. Mr. Goldman was a Vice President of Starwood Capital, specializing in hotel acquisitions and hotel asset management from August 1993 to February 1995. From 1990 to 1993, he was Senior Development Manager of Disney Development Company, the real estate investment development and management division of Disney.

      Thomas C. Janson, Jr. Mr. Janson joined the Corporation as Executive Vice President, General Counsel and Secretary in October 1998 and became Vice President, General Counsel and Assistant Secretary of the Trust in January 1999. Prior to joining the Corporation, Mr. Janson practiced law as a partner with Skadden, Arps, Slate, Meagher & Flom LLP for more than five years.

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      The executive officers of Starwood serve at the pleasure of the Board of Directors or the Board of Trustees, as applicable. There is no family relationship among any of the Directors, Trustees or executive officers of the Corporation or the Trust.

Section 16(a) Beneficial Ownership Reporting Compliance

      Section 16(a) of the Exchange Act requires the Directors, Trustees and executive officers of Starwood, and persons who own more than 10 percent of the outstanding Shares, to file with the SEC (and provide a copy to Starwood) certain reports relating to their ownership of Shares and other equity securities of Starwood.

      To Starwood’s knowledge, based solely on a review of the copies of these reports furnished to Starwood during the fiscal year ended December 31, 1999, and written representations that no other reports were required, all Section 16(a) filing requirements applicable to its Directors, Trustees, executive officers and greater than 10 percent beneficial owners were complied with for the most recent fiscal year, except that Earle F. Jones failed to timely file a Form 4 in January 2000 reporting a transfer of Shares to a charitable annuity trust in December 1999 and L. Dennis Kozlowski failed to timely file a Form 4 in October 1999 reporting a purchase of Shares in September 1999.

Item 11.  Executive Compensation.

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

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

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

Item 13.  Certain Relationships and Related Transactions.

      The information called for by Item 13 is incorporated by reference from the information under the caption “Certain Relationships and Related Transactions” in the Proxy Statement.

PART IV

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

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

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

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           2.  Exhibits: