I have worked in Brand Communications and Management for more than 20 years in the US, Europe and Asia. Having spent my whole career working with some of the , p g p y gbest brands in the world it was a very deliberate choice to join Starwood a little under 3 years ago.

• This is a company that has a great legacy in building lifestyle brands

• Truly focuses on creating emotional connections with guests• Truly focuses on creating emotional connections with guests

• Continues to sharpen its design and innovation edge

• Has a leadership position in the loyalty space and marketing communications

• And delivers all of this on a truly Global scale

I will talk to each of these in detail later but first I wanted to take a step back to putI will talk to each of these in detail later but first I wanted to take a step back to put our branding work in context

Our relationships with brands have changed a lot since most of us were growing up...

L ki b k b d b k h j i f f i dLooking back, brands back then were just a promise of safety, consistency and reliability

• Brands were built through a simple formula.

• Image advertising• Image advertising

• The pithy slogan, the catchy tune

• And of course, the iconic personality

Like any other business, hotel brands were segmented purely by price: good, better, bestbest

The promise of reliability got us through the 70s and 80s, but...

Companies across all industries got so good at delivering consistency, it became mind numbing

• Consumers woke up wanting something new

• Today reliability puts us to sleep and not in a Heavenly way• Today, reliability puts us to sleep...and not in a Heavenly way

• The hotel industry was slow in adapting beyond "clean and safe"...as Frits said, basically swap a flag and a Marriott could be a Hyatt could be a Hilton

That's why when Starwood introduced W in 1998, it was seen as such a breakthrough.. .it blew up that notion of good, better, best, and instead sought to g p g , , , gdeliver an aspirational lifestyle product.

Here was a hotel where you could party in the lobby, mingle with a cool crowd and still get the convenience and service of a business hotel. ..

Our biggest problems with W in the early days were replacing the floors from wear and tear, and figuring out how to price it. To our surprise, rates kept getting pulled upwards...and we found ourselves playing closer to the luxury space...a high class up a ds a d e ou d ou se es p ay g c ose to t e u u y space a g c assproblem!

We knew we had a hit on our hands with W, but more than that it provided a real light bulb moment for the company...because while W appealed to a certain set, like the best and most clearly defined brands, it definitely wasn't for everyone...We realized that with multiple brands we had a real opportunity to segment not by price or location, but by differing consumer needs.

And in fact defining and refining our brand offerings against consumer demands is increasingly important for Starwood as we complete our Journey from being a real g y p p J y gestate investment company to a true branded lifestyle company – as Frits said in the opening as we move from "Owning Hotels" to "Owning Guests. "

Maintaining and growing our base of guests is what will drive our success moving forward.

Clearly we have to deliver on the fundamentals but providing a comfortable stay at appropriate price with some reward points thrown in is not enough. We have to go beyond the purely rational and create emotional connections.

Now, I realize that going on about "emotional connections" to a group of financial types may be akin to asking the bartender for a Cosmo at my local Irish pub back home in Shepherd's Bush so a little context.home in Shepherd s Bush so a little context.

Far too often, we think of brand propositions in rational terms... but the fact is that human beings are at times irrational- if we were wholly rational, no one would smoke, buy $1,500 handbags or show up to Giants Stadium in December like this...

Starwood takes a unique approach to branding to help build those connections. We are clear that every brand is a lifestyle brand in that it has to deliver for the varied y yneeds and travel mindsets of our guests.

As we looked to target our brands against lifestyle needs the first thing we set out to do was bring absolute clarity to what each brand stood for and what guest need we g y gwere addressing.

As part of that exercise we really focused on the things that make a difference to our guests. g

By aligning our approach across the whole portfolio we were able to see where overlap would blur the individual personalities versus drive efficiency. p y

And of course we needed to communicate our brand vision across all functions and geographies so we could work in an integrated fashion to deliver on brand product g g p g pglobally.

The end result of this work was an overall brand philosophy of "Individual Spirit, Collective Strength" - ensuring our 9 brands are compelling and distinct whilst g g p gleveraging the unified strength of a system of more than 1000 hotels - essentially maximizing our effectiveness and efficiency.

IMAGINATION 07/12/2010 23:22

At the highest level we set an overall simple but focused Starwood goal: "To give every guest a great experience".y g g p

We defined what the distinctive and compelling positioning was for each brand and who the guest inspiration was. Very simply summarised it is:

St. Regis – The best address in town, authentic luxury heritage and bespoke butler service delivering “Beyond Expectation” for The Connoisseur – a guest used to and g y p gwho demands the very best.

Luxury Collection – offering Global Explorers unique and indigenous experiences around the world – curated to the highest luxury standards.g y

W – Delivering contemporary cool design and lively destination bars and brand happenings inspired by the trendsetters but appealing to broader group of pp g p y pp g g ptrendseekers.

Le Meridien – reinvented with the Creative Guest in mind – a growing target ideas industries expand. Timeless Chic design combined with strong delivery of curated p g g ycontemporary art offering a new perspective on travel.

Westin – helping to preserve wellness in travel for those guests seeking balance – to work hard but also look after themselves mind and body. The Heavenly Bed, bath and y y ,spa provide the key foundations.

Sheraton – the World’s most Global hotel brand. Delivering approachable luxury and opportunities to connect for successful and socialable executives and their families ppworldwide.

Aloft – delivering urban cool in unexpected places for a new generation of travelers who are used to and expect great contemporary design.p g p y g

Element – the world’s first fully LEED certified hotel chain answering the demands of similar new generation of Healthy Active guests for whom Green and Sustainable g y gdelivery is key

Four Points – delivering honest, uncomplicated comfort to self-sufficient guests within a warm contemporary environment.p y

In terms of collective strength as we identified the key items that differentiated the individual brands we were able to run the deep and broad review of all our brand standards and product deliverables that Matt mentioned removing more than a third of our SKU’s and driving significant brand operational cost savings.

And equally importantly we elevated the visibility and utilization of our most powerful collective weapon – our award-winning SPG loyalty programme integrating p p g y y p g g gacross every element of communication and consumer touchpoint. The result is that today, nearly one in every two guests who check into our hotels are SPG members. We will talk in more detail on the programme and its performance later given how significant it is to our business.

Finally we've sharpened our focus on two key areas that we feel have really separated Starwood from our competition - namely innovation and design leadership.p y g p

We talked about W innovation in the opening. And how learnings from the brand created a momentum for the whole company - innovation begets innovation. It p y gbecame our first Innovation Lab - a great example of leveraging our portfolio.

The Westin Heavenly Bed which re-defined the sleep experience was originally tested in the W.

It worked so well we gave it scale through the broader Westin brand footprint.

Two years ago Sheraton introduced The Link - a cyber cafe concept in the lobby based on the learning from the W Living Room - people want an alternative to being in their g g p p groom. The Link is now in place in 93% of our Sheratons around the world which is an example of really executing against our innovation agenda. And more importantly it has created a real buzz amongst our guests - more than 50% spend time there during their stay... more than eat breakfast, go to the gym or visit our bars and usage significant elevates their overall stay satisfaction.

W also inspired us to create a brand for that new generation of travelers Frits spoke about...Gen Y and Millenials who have grown up with brands like IKEA, i-pods and g p , pTarget and expect design everywhere they go...

So we re-imagined another old hotel concept, the roadside motel. In the case of Aloft, we turned the concept upside down and all around. Think Route 66 meets the Information super-highway.

With a cutting-edge design and lively social scene aloft really is delivering style at a steal aloft and re-defining the select serve space.steal aloft and re defining the select serve space.

As we think about younger generations, one thing is clear...they are leading a seismic shift in the way we think about green and sustainability....and they are looking for y g y y ggreen leadership in all consumer areas.

And our new Element brand is providing it. In fact it is not just an Innovation lab but a "Greenovation Lab" with a real focus on sustainability, the environment and whole y,living. From being the first hotel brand to commit to LEED certification to its focus on air quality, minimizing pollutants and toxic chemicals and managing energy effectively we are gathering useful learnings for all our brands.

At Element, green is part of the experience...not just a card that says "don't wash my towels... "

I often compare Element to Whole Foods...a premium product that also happens toI often compare Element to Whole Foods...a premium product that also happens to have a mission we can relate to...the whole experience is just better...and in Element's case, you get this premium without a hefty price tag... eco-chic and affordable ...there is no suffering for your beliefs with product like this.

And these efforts are resonating broadly including Starwood being recognised as being one of Newsweek's Greenest big companies.g g p

One thing all of these innovations have in common is a distinct design point of view...design was in and of itself a major innovation for Starwood... and being out in front of this really aligned us with consumer trends. Over the last decade there has been a real democratisation of design- when products as mundane as vaccum cleaners, razors and toasters have become increasingly design-centric...

you know that design is not only for elites, but for the everyman....you o t at des g s ot o y o e tes, but o t e e e y a

Retailers in particular have invested heavily in delivering curated experiences - think NikeTown or Apple Stores. And they have the consumer for a relatively short time -our consumer is with us for a night, a week or in case of our most loyal guests half their life in any given year. So how much more important that we deliver appropriate and inspiring design.

From the zen-inspired calm of the Westin public spaces, through the appropriate opulence of the St Regis to the lively b&f outlets of our Global W's design delivers the p g y gbrand personality powerfully and distinctly.

A recent great example of bringing a brand to life through design is Le Meridien's new arrival experience. Research told us that the first 10 minutes were critical to pperception of the stay.

Making those 10 minutes memorable and meaningful can add real value. Where we have executed the arrival experience effectively the impact is undeniable.

To maintain our design leadership, we opened the Starwood Design Centre in NYC in April- a real demonstration of our commitment to leading in this area. Integrating our p g g g2D graphic, 3D interior and Digital design capabilities to drive integration, communication and efficiency, it is a creative and brand-enhancing space that acts both as magnet for creative staff and a showcase for our owners, developers and other brand partners. It provides an environment that is unique to the hospitality space at this level- and an attitude that sets us apart.

Our commitment to design is paying major dividends today, as we open new brand flagships around the world...we are elevating our own game and enhancing our brands g p g g gby taking hotel design to a new level. ..

We have also been investing heavily in elevating our approach to consumer communications and loyalty.y y

When we launched Starwood Preferred Guest in 1999 we changed the game by eliminating black out dates...meaning members could redeem whenever and wherever they wanted...we made headlines, won countless awards, and were surprised to see that it took our competition the better part of a decade to catch up with varying degrees of effectiveness. Today SPG remains an industry leader.

Reflective of our status as the most global hospitality company, we are building a loyal customer base where we see the most opportunity and upside. Today, 40% y pp y p y,of SPG members are from outside the US –that’s double the percent of international members in the Marriott Rewards program. At Starwood, we continue to cultivate our international membership. In fact, of our new members, 53% come from outside the US which is up from 39% just four years ago.

Not only do we have a global membership base, but our portfolio of brands and footprint of luxury hotels in more global destinations truly resonates with the p y g ymembership. Our average platinum member books across the brand portfolio staying in at least 4 different brands. And it drives connection at each end of our business spectrum and with new and established hotels. In luxury space SPG share of occupancy for St Regis and W brands is 60% and 58% respectively. And for our newest brands in select serve we are already at 59% for Element and 53% for aloft.

Building on the strength of our membership, we're focused on changing the hotel loyalty model to go well beyond the simple point collecting transactional and instead build those all-important emotional connections with our guests.

As we discussed earlier we are looking to create “loyalty beyond reason”. As well as offering them access to "more luxury in more destinations" than any other hotel g y ycompany as rewards for their custom we have looked to build partnerships that offer experiences that money cannot buy through our SPG moments programme.

Examples of SPG moments in last year or so have included personal golf clinics with Jim Furyk and Colin Mongomerie, Luxury Suite seats at the US Tennis Open with Bud J y g , y pCollins, a tennis clinic with Pro James Blake, VIP Access to the Grand Prix in Monaco, and a private dinner with Mario Batali. . It’s incredible to think that our highest bid for a Moments experience was 500,000 starpoints to attend the superbowl - the equivalent of 50 free nights at one of our luxury properties!

Our exclusive partnership with Live Nation, as well as giving access to shows for our SPG elite members around the world, also offers further exceptional, unique , p , qopportunities for our membership such as singing on stage with Sting, a VIP experience at the Hyde Park Festival in London to see artists like Jay-Z and the Kings of Leon, a Drum Lesson from Nickelback, and VIP experiences with Lady Gaga, Dave Matthews and John Mayer amongst many others.

Another critical partner is AMEX. This year, we took the SPG Co Branded AMEX card global – launching in both the UK and Canada. This card has a cult following g g gespecially in the consulting industry. Today 1 in 4 Elite members carry the card.

The connections we’ve established with our members is paying dividends. We mentioned earlier that nearly 1 in 2 stays is now an SPG member stay. A key y y y ybarometer of member ‘stickiness’ is growing share of wallet with members. This year members who stay 10+ nights has emerged as our fastest growing member segment – up over 15%. Not only are members staying more, but our member retention is off the charts—93% of these platinums retain their status year to year.

In summary, our loyalty program is not only more global, but it is an extraordinary business driver - during the down turn when the industry was really hit hard, total nights from our SPG guests actually grew 7%. And our targeted member promotions SPG drove over $1B in revenue this year.

Finally we are innovating in communications. Digital is our fastest growing booking channel but the digital space is dynamic and we have to move with it. We are driving g p y gdialogue with our members through a range of social media channels at spg.com/stayconnected. Whether it is on our Facebook pages for our brands or hotels, our twitter accounts, or our twitter/googlemaps collaboration, SPG insider ,we are connecting with our consumers where they are living today.

Our i-phone app is one of the top travel applications - version 1.0 allowed guests to check basic account info, past and future reservations, find and book hotels, access , p , ,customer support centers and read posts from our blog at Thelobby.com. Version 2.0 provides engaging property tours,builds awareness of our global footprint and leverages emerging technology to push the boundaries of communications innovation. We're also one of the first travel companies to have a robust Blackberry application. Mobile connectivity continues to grow – in fact mobile revenue for SPG increased 10x over last year with 70% of mobile bookings are for stays within 1 day of bookingbooking.

So Starwood has made its name by reimagining the hotel experience... its part of our DNA... But clearly we have to keep pushing - both leveraging our current ideas and developing new thinking.

For the former it is important to recognise that the runway for innovation in our industry is long.

The design and lifestyle edge that W created 10 years ago is still capable of causing a stir in new markets around the world as it has from Hong Kong to Santiago, Doha to Barcelona in the last year or so. We are seeing the same energy as we roll out the aloft brand in international markets, re-invent the Le Meridien experience globally, introduce Westin's unique wellness positioning outside the United States and continue our elevation of the Sheraton brand in North America to International standards.

For the latter we also have a robust pipeline of Innovations in R&D...we're turning our innovation lens on all aspects ofthe guest experience. Some areas of focus :

• Putting check-in in the palm of your hand. Extending our keyless entry pilot at aloft to allow room access through PDA's.

• Re-inventing the approach to meetings - which accounts for close to a third of our globally. It has not fundamentally changed for generations. Newer generations were educated and interact differently which we are looking to address with new meeting room models incorporating connectivity and modularity whilst delivering enhanced experience through natural lighting and seating designed for ultimate comfort.

• Continuing to elevate our sustainability credentials as we roll out further element pilot programmes including a state of the art energy management system.

• Further elevating our focus on the Chinese consumer by delivering an enhanced offering of bespoke services as they travel around the world.

• Further extending our digital communications capabilities with particular focus on network solutions in social media space including extending to location-based services like FourSquare and Facebook Places.

• And of course we will continue to deepen our SPG member connection with meaningful programme enhancements.

Our approach to branding, innovation and design is designed to drive business results and the efforts I have outlined today have really been delivering Across the portfolio as we have sharpened and focused our brandoutlined today have really been delivering. Across the portfolio as we have sharpened and focused our brand offering we have gained share faster than our competition.

Leading the charge in grabbing more than its fair share is Sheraton - our largest and most important brand from both a footprint and revenue standpoint. As the most p p pwell recognized hotel brand around the world with awareness at 92% among business travelers, Sheraton is hands down the most sought after hotel brand in fast growing global markets.

That is who it was so imperative that we invest in the brand in North America It was imperative we and our owners - as we look ahead to that new and powerful wave of international travelers whose expectations of the brand is up here Our 3 year $6international travelers whose expectations of the brand is up here. Our 3-year, $6 billion investment in thebrand included the renovation of over 90 hotels and the removal of 35 off brand hotels in North America. And it's paying off:

• Guest satisfaction including overall satisfaction and likelihood to return is at record highs and market share is up almost 200 basis points in North America.

Source: Ipsos Reid Brand Tracker 2007

Westin continues to be a category killer. A perennial outperformer, Westin occupies a space of its own with a unique and profitable vantage between upper upscale and p q p g pp pluxury. And by nearly every measure, Westin dominates its competition:

A consistent rate leader, Westin commands a RevPAR premium over competitors like Hyatt and Hilton, with a global RevPAR of$117. Its ADR is 5% higher than its competitive set in North America.

That strength in North America is now translating internationally. The powerful combination of Starwood's global infrastructure and Westin's reputation as a "surecombination of Starwood s global infrastructure and Westin s reputation as a sure thing" is propelling its growth. For most of its 75 year history, Westin was almost exclusively a North American based brand but 90% of its pipeline is outside the U.S. And despite being a new brand on the lodging scene in many markets, Westin is opening strong right out of the gate with hotels in market like Tianjin, China and Hyderabad, India outperforming their comp set in less than a year after opening.

And while Westin still has a long runway to grow around the globe, sister brand Le Meridien has an impressive footprint internationally, but is totally underrepresented p p y, y pin North America.

Starwood acquired the brand five years ago, because we liked its global footprint. We also thought we had a real opportunity to add value by growing the brand here and repositioning Le Meridien with a distinctive and compelling point of view. When we bought it, Le Meridien was essentially one of those commodity brands Frits talked about: reasonably nice hotels in good locations, but totally generic...again, simply swap the flag and you had a fine InterContinental.

And reposition we have ... Le Meridien is a French born brand and we have translated a certain French appreciation for food, culture, design, aesthetic into the hotel experience...we've also done some pruning... exiting 45 hotels that weren't up to our standards... and we've opening 20 new hotels including flagships here in the United States in markets like Boston, San Fran, Minneapolis and Philadelphia. With 85% of it h t l t id N th A i L M idi h h th t ti l i N thits hotels outside North America, Le Meridian has a huge growth potential in North America.

Five years in, we see Le Meridien is a real success story....and by all measures, including guest satisfaction and ADR, the brand is performing at historic highs reaching a RevPAR index of 113 in Europe, its largest market.

Source: STR – October 2010

Speaking of Europe our W brand will within the next few months make its long awaited debuts in London and Paris - two critical markets that have been on our wish list since the brand's inception. This is the big story for W.. .in just 12 years we've taken this brand from a NewYork born brand to an American phenomenon to a global powerhouse. Today we're at 37 hotels, 10 outside the United States. We will reach 50 luxury hotels in next 2-3 years – achieving in less than 15 years what it took Four Seasons the better part of 40 years. Importantly, the hotels we are opening today in markets like Barcelona, South Beach, Santiago and Hong Kong are truly upping the ante for the brand and we're elevating W in the eyes of worldwide trend setters in theante for the brand, and we're elevating W in the eyes of worldwide trend setters in the realms of music, fashion and design....quite frankly, the brand outgrew some of its original hotels, which is the reason we chose to sell and deflag the W's Court and Tuscany earlier this year.

W's leadership in this unique, design and style led space - has proven difficult for our competitors to imitate, and our global lead continues to lengthen.. .it will be very hard p g gfor others to replicate.

Moving to our more traditional luxury brands, The Luxury Collection and St. Regis, adds a further 100 luxury hotels – more than Four Seasons or Ritz Carlton - making us the biggest player in the luxury field by far. And we're outperforming - TLC has highest RPI at HOT at 116 and SR boasts highest RevPAR at $241

We established The Luxury Collection in 1994 when ITT acquired the iconic Ciga brand. And while several of our competitors have launched their own versions of p"collection" brands in the last year or two, The Luxury Collection today has 75 of the world's finest hotels and resorts in more than 30 countries across the globe.. .like W, this is a space where Starwood enjoys a huge

head start. We continue to attract a growing number of owners and developers who are looking to maintain their independence while tapping into the power and breadth of the Starwood network. In 2010, The Luxury Collection added hotels in markets including China, Dubai and Peru, which is illustrative of its growth trajectory moving forward, with 70% of its pipeline in emerging markets.

Source: STR – October 2010

Meanwhile, St. Regis with 23 hotels has doubled its portfolio from where it was three years ago, and in the last month alone debuted new, iconic flagships in Puerto Rico, y g , , g p ,Osaka and Lhasa.

Looking at St. Regis's pipeline, 40% is in China and 30% in the Middle East... between The Luxury Collection and St. Regis, we're capitalizing on that long global legacy and entrenched teams that Frits spoke of, and growing our luxury brands in the world's fastest growing luxury markets.

At the other end of the spectrum, our Select Serve portfolio offers us a huge t t e ot e e d o t e spect u , ou Se ect Se e po t o o o e s us a ugeopportunity to grow.

Starwood is not only underpenetrated in this segment here in North America, but mid market itself is in growing demand in emerging markets as infrastructure builds out....huge white space throughout China and India for instance.

Aloft has had the fastest launch in hotel history with over 40 hotels open within 2 years. It is also the first global launch in our history... debuting in Canada, the U.S., y g y g , ,the Middle East, Europe, China and India.

Both Aloft and Element are getting a big boost in brand awareness with debuts in New York City Our first Aloft opened in Harlem last week and we’ll add a second AloftNew York City. Our first Aloft opened in Harlem last week and we ll add a second Aloft in Brooklyn in January. Plus, our newest Element just opened on Nov 18 a few blocks from here in Times Square. Element is fast becoming a cult favorite – with highest GSI amongst all our guests……a real breakthrough for a select serve brand.

And finally Four Points by Sheraton - our largest and most global mid-market brand with 156 hotels in 26 countries. Its simple proposition around "comfort isn't p p pcomplicated" really resonates with guests, and the halo effect from its affiliation with Sheraton make it a developer favorite. Four Points has the second largest pipeline in our system, and the third largest footprint and pipeline in China.

So we are in great shape. But we recognise that consumer needs are dynamic and ever-evolving.g

We intend to maintain a laser-focus on continuing to lead in delivering cutting-edge design and innovation and will invest appropriately to protect that position.

Leveraging our brand heritage, consumer understanding and innovative spirit we are confident of delivering further enhanced "Individual Spirit and Collective Strength" in the years to come.