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WHITE PLAINS-Starwood Hotels & Resorts Worldwide Inc. reports that its revenues fell 7% in the second quarter of this year.

Citing a still weak economy that has caused a drop in business travel, Starwood officials say that second quarter revenue totaled $1.032 billion which was seven percent lower than revenues posted during the same period a year ago. Earnings per share excluding special items in the second quarter of this year was $0.41 compared to $0.54 per share in the second quarter of 2001.

Starwood reports that operating income, excluding special items, was $189 million in the second quarter of 2002 compared to $254 million in the same period of 2001. Income from continuing operations, excluding special items, was $85 million compared to $112 million in 2001, the company reports. Revenue per available room for its North American hotels decreased 10.1 percent in the second quarter and 10.2 percent worldwide when compared to 2001.

Commenting on the results, company officials note that though its finances were in line with company’s expectations, “results were adversely impacted by the weakened worldwide economic environment. However, operating results continued the sequential quarterly improvement over the fourth quarter of 2001 and first quarter of 2002. Operating results continued to improve primarily as a result of an improving demand environment, a continued focus on cost control and an increase in vacation ownership interest results,” Starwood officials note.

Starwood Chairman and Chief Executive Officer Barry S. Sternlicht, says, “Though the economic environment remains extremely challenging and the speed of the economic recovery has clearly moderated from our expectations in the first quarter of 2002, there are very encouraging trends, both for the industry and for our company that remain intact. For the industry, future supply continues to decline rapidly, particularly in large urban markets where our assets are concentrated and where the recovery is likely to be most pronounced.”

Company officials say that due to the turbulent economy it is difficult predicting future results. The company cites continuing weakness in the North American and European economies along with the unstable political environment in Argentina and other parts of the world as having potential adverse impacts on travel this year.

Starwood expects full year revenues per available room in 2002 to decline two to three percent from last year’s levels.

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