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SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

OR

Commission File Number: 0-15097

WESTIN HOTELS LIMITED PARTNERSHIP

Delaware

91-1328985

1111 Westchester Avenue

1-800-323-5888

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

      Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes o     No x     

      Indicate the number of shares (Units) outstanding of each of the issuer’s classes of common stock (Units), as of the latest practicable date:

135,600 limited partnership Units issued and outstanding

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PART I. FINANCIAL INFORMATION

WESTIN HOTELS LIMITED PARTNERSHIP

The accompanying notes are an integral part of these consolidated financial statements.

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WESTIN HOTELS LIMITED PARTNERSHIP

The accompanying notes are an integral part of these consolidated financial statements.

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WESTIN HOTELS LIMITED PARTNERSHIP

The accompanying notes are an integral part of this consolidated financial statement.

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WESTIN HOTELS LIMITED PARTNERSHIP

The accompanying notes are an integral part of these consolidated financial statements.

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WESTIN HOTELS LIMITED PARTNERSHIP

Note 1. Basis of Presentation

      The accompanying consolidated financial statements include the accounts of Westin Hotels Limited Partnership, a Delaware limited partnership (the “Partnership”), and its subsidiary limited partnerships, The Westin St. Francis Limited Partnership (the “St. Francis Partnership”) and The Westin Chicago Limited Partnership (the “Chicago Partnership”) (collectively the “Hotel Partnerships”). The St. Francis Partnership owned and operated The Westin St. Francis in downtown San Francisco, California (the “St. Francis”) through April 26, 2000, and the Chicago Partnership owns and operates The Westin Michigan Avenue, Chicago (formerly The Westin Hotel, Chicago) in downtown Chicago, Illinois (the “Michigan Avenue”) (individually a “Hotel,” collectively the “Hotels”). All significant intercompany transactions and accounts have been eliminated.

      The consolidated financial statements and related information for the periods ended March 31, 2003 and March 31, 2002 are unaudited. In the opinion of the general partner of the Partnership (“General Partner”), all adjustments necessary for a fair statement of the results of these interim periods have been included. All such interim adjustments are of a normal recurring nature. The results of operations for the periods ended March 31, 2003 and March 31, 2002 should not be regarded as indicative of the results that may be expected for the full fiscal year ending December 31, 2003.

Note 2. Further Information

      Reference is made to “Notes to Consolidated Financial Statements” contained in the Partnership’s Form 10-K filed for the year ended December 31, 2002 for information regarding significant accounting policies, Partnership organization, accrued expenses, long-term obligations, the employee benefit plan, operating leases, commitments and contingencies and related party transactions. The consolidated financial statements should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere herein.

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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

      Certain statements contained in this report 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 report. Such forward-looking statements may include statements regarding the intent, belief or current expectations of the Partnership or Hotel Partnerships (as defined below) or their respective general partners and their officers or directors with respect to the matters discussed in this report. All such forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the forward-looking statements, including, without limitation, general economic conditions including the duration and severity of the current global economic downturn, the continuing war on terrorism and the situation in the Middle East, traveler fear of exposure to contagious disease, business and financing conditions, cyclicality of the real estate and the hotel and leisure business, operating risks associated with the hotel and leisure business, relationships with customers, domestic and international political and geopolitical conditions, competition, governmental and regulatory actions, and the other risks and uncertainties set forth in the annual, quarterly and current reports of the Partnership. The Partnership undertakes no obligation to publicly update or revise any forward-looking statements to reflect current or future events or circumstances.

General

      The Michigan Avenue’s primary market focus is on business travelers, conventions and other groups. The Hotel’s business activities generally follow national economic trends. The level of tourist business is influenced by the general global economic environment and political climate and, to a lesser extent, by the strength of the U.S. dollar in relation to foreign currencies. The Michigan Avenue generally experiences seasonal trends, with the lowest occupancy levels occurring during the first quarter, followed by higher occupancies during the last three quarters of the year.

      Westin Realty Corp. is the sole General Partner of the Partnership. 909 North Michigan Avenue Corporation and St. Francis Hotel Corporation are the respective general partners of the subsidiary limited partnerships, the Chicago Partnership and the St. Francis Partnership, which directly own and operate (or in the case of the St. Francis Hotel Corporation, owned and operated) each Hotel. Since January 2, 1998, the General Partner has been a subsidiary of Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”).

      The Partnership Agreement requires that the General Partner use its best efforts to sell or refinance the Hotels by the end of 2001. On April 26, 2000, upon obtaining consent of a majority of the limited partners, the sale of the St. Francis was completed for gross proceeds of approximately $243.0 million resulting in a gain of approximately $52.6 million after transaction costs. In accordance with the Partnership Agreement, approximately $158.9 million of the proceeds were used to repay the St. Francis’ portion of the mortgage loans, which was secured by the St. Francis; the St. Francis’ portion of the subordinated note due to the General Partner; deferred incentive management fees related to the St. Francis; and costs and expenses related to the sale. The remaining proceeds of approximately $84.1 million and additional Partnership cash of approximately $1.3 million were distributed to the limited partners.

      In February 2001, the Partnership retained Jones Lang La Salle Hotels, a nationally recognized broker (“JLL”) to market the Michigan Avenue for sale. In April 2001, formal marketing materials were distributed and discussions with several potential purchasers subsequently commenced. After the occurrence of the terrorist attack on September 11, 2001, certain of the most qualified potential purchasers indicated they would expect significant discounts on their preliminary offers made prior to the attacks. Based on the unstable and depressed hotel real estate market, resulting from the weakened general worldwide economic environment, the

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      The General Partner has also engaged JLL to assist in exploring a refinancing of the Partnership’s debt and has recently directed JLL to focus its efforts towards pursuing refinancing alternatives. JLL sent materials to a large number of potential lenders and received several preliminary loan proposals. The General Partner has negotiated a loan application with Column Financial, Inc. (“Column”), an affiliate of Credit Suisse First Boston, and has made a $75,000 deposit with Column, however no commitment has been obtained from any lender, including Column, to make a loan to the Partnership. In the immediate future, the General Partner plans to file a preliminary consent solicitation statement with the Securities and Exchange Commission which would be used to obtain the consent of the limited partners to effect a refinancing of the Partnership’s debt. There can be no assurance, however, that a refinancing proposal will be presented to the limited partners.

      The General Partner cautions limited partners that there can be no assurance that: (i) the General Partner will be able to sell the Michigan Avenue or refinance the Partnership’s debt, and if a sale or refinancing is consummated, the timing of such a transaction, or (ii) if the hotel is sold or the debt refinanced that the limited partners would receive a distribution promptly after a sale or refinancing.

Results of Operations

      Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) discusses the Partnership’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and costs and expenses during the reporting periods. On an ongoing basis, management evaluates its estimates and judgments, including those relating to revenue recognition, bad debts, inventories, property and equipment, financing operations, commitments, contingencies and litigation.

      Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions and conditions.

      The Partnership believes the following to be its critical accounting policies:

      Revenue Recognition. The Michigan Avenue’s revenues are derived from its operations and include revenues from the rental of rooms, food and beverage sales, telephone usage and other service revenue. Revenue is recognized when rooms are occupied and services have been performed.

      Inventories. Inventories consist of food and beverage stock items as well as linens, china, glass, silver, utensils and guest room items (“Par Inventories”). The good and beverage inventory items are recorded at the lower of cost (first in, first out) or market. Significant purchases of Par Inventories are recorded at purchased cost and amortized to 50% of their cost over 36 months. Normal replacement purchases are expenses as incurred. Par Inventories are classified as a component of property and equipment.

      Property and Equipment. Property and equipment are recorded at cost. The cost of improvements that extend the life of property and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. Costs for normal repairs and maintenance are expensed as incurred. Depreciation is provided on a straight-line basis over the estimated useful economic lives of 40 years for buildings; the remaining life of the building for building improvements and; 3 to 12 years for furniture and equipment. Gains or losses on the sale or retirement of assets are included in income when the assets are sold.

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      The Partnership evaluates the carrying value of the Hotel’s long-lived assets for impairment by comparing the expected undiscounted future cash flows of the long-lived assets to their net book value to determine if the long-lived assets are impaired.

      The results of operations and key statistics presented and discussed below are for the Michigan Avenue only and do not include the costs related to Partnership administration.

      The following table presents a reconciliation of net loss to EBITDA:

(1)

EBITDA represents net earnings (loss) before interest expense and depreciation. The Partnership believes this metric is useful to investors and management as a measure of the Michigan Avenue’s operating performance due to the significance of the Michigan Avenue’s long-lived assets and level of indebtedness and because such metric can be used to measure the Michigan Avenue’s ability to service debt, fund capital expenditures and pay cash distributions. EBITDA is not intended to represent cash flow from operations as defined by accounting principles generally accepted in the United States (“GAAP”) and such metric should not be considered as an alternative to net income, cash flow from operations or any other performance measure prescribed by GAAP. The Partnership’s calculations of EBITDA maybe different from the calculation used by other companies and therefore, comparability may be limited.

     Three Months Ended March 31, 2003 Compared with Three Months Ended March 31, 2002. The Michigan Avenue had net loss of approximately $1,822,000 for the three months ended March 31, 2003, compared to $2,692,000, which represents the majority of the results of the Partnership, in the same period of 2002. EBITDA for the three months ended March 31, 2003, was $1,196,000 compared to $40,000 in the same period 2002.

      The Michigan Avenue’s rooms revenue for the three months ended March 31, 2003 were $5,587,000, which represents a 27.5% or $1,206,000 increase from the same period of 2002. REVPAR for the three months ended March 31, 2003, was $82.66, a 27.5% increase from the same period of 2002. The rooms revenue and REVPAR increases were due to the comparison over the first quarter of 2002, which was still experiencing the significant declines in demand following the terrorist attacks on September 11, 2001. For three months ended March 31, 2003 the Michigan Avenue had increases in both transient and group travel business. The Michigan Avenue reported a decrease in average daily room rate of 1.5% to $129.26, however, its occupancy rate increased 14.6 percentage points to 64.0%. The Michigan Avenue’s rooms department profit margin for the three months ended March 31, 2003 increased 230 basis points to 71.4% from the same period of 2002 due to the significant increases in occupancy previously noted.

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      The Michigan Avenue’s food and beverage revenue of $1,780,000 for the three months ended March 31, 2003 increased approximately $417,000 as compared to the same period of 2002. This increase primarily resulted from additional banquet and catering revenue associated with the higher group bookings previously discussed, as well as increases experienced in honor bar and room service from transient occupancies. The Michigan Avenue’s food and beverage department profit margin for the three months ended March 31, 2003 increased approximately 14.5 percentage points to 20.4% over the same period of 2002, as the food and beverage operations in 2003 consisted primarily of banquet and catering revenues, which have a higher margin than other services.

      Other operating departments had revenue of approximately $825,000 for the three months ended March 31, 2003, an approximate $37,000 increase over the same period of 2002, primarily resulting from increased ancillary revenues (such as telecommunications) experienced due to higher occupancies and higher garage and restaurant rental income.

      The Michigan Avenue’s operating expenses for the three months ended March 31, 2003 increased 9.3% to $9,396,000. The increase was due to higher rooms and food and beverage costs associated with increased occupancy as well as higher depreciation expense resulting from capital expenditures over the past 24 months. Management fees for the three months ended March 31, 2003 increased approximately $95,000 from the same period of 2002 to $901,000 due to increased Partnership Net Operating Cash Flow, as defined in the Partnership Agreement.

Liquidity and Capital Resources

      As of March 31, 2003, the Partnership had cash and cash equivalents of approximately $29.6 million, a $9.7 million decrease from December 31, 2002. The decrease in cash during the three months ended March 31, 2003 was due primarily to a $5 million prepayment on the mortgage loan discussed below and a $3.5 million payment of deferred incentive fees to affiliates of the General Partner. The first quarter is typically the weakest quarter of the year, generating less cash flow from operations than the remaining quarters. Total net cash used in operating activities for the three months ended March 31, 2003 was approximately $2.8 million.

      Pursuant to the mortgage loan restructuring agreement (the “Restructuring Agreement”), the Partnership is required to make quarterly deposits to a furniture, fixtures and equipment (the “FF&E” Reserve Account) reserve account, in accordance with the Restructuring Agreement, based upon 5.0% of gross revenues through the maturity of the mortgage loan in 2006. The Michigan Avenue’s FF&E Reserve Account balance of approximately $2.1 million is included in other assets in the accompanying consolidated balance sheet as of March 31, 2003.

      The Restructuring Agreement also requires that the Hotel make deposits into a tax escrow account for payment of real and personal property taxes. The balance of this tax escrow account is included in cash and cash equivalents in the accompanying consolidated balance sheets.

      The Michigan Avenue spent $252,000 on capital expenditures during the three months ended March 31, 2003 primarily related to the completion of the renovation of the lobby and upgrades to telecommunications equipment. All capital projects have been approved by the mortgage loan lender, as required by the Restructuring Agreement.

      Principal payments of $5.2 million and interest payments of $617,000 were made on the mortgage loan during the three months ended March 31, 2003. These payments include a $5 million principal prepayment that was made on March 1, 2003. Scheduled principal and interest payments for the remainder of 2003 total approximately $2.3 million. In February 2003, the General Partner notified the lender under the mortgage loan that it would repay an additional $5 million of principal on June 1, 2003. Since that time, the General Partner has had discussions with the lender regarding a reduction in the amount of the prepayment premium that

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      At this time, the Partnership anticipates that cash on hand and cash flow from operations will provide adequate funding for 2003 capital expenditures and principal and interest payments on the mortgage loan. A cash distribution of $6.72 per Unit was paid on March 16, 2003. Future distributions will be based on Available Net Cash Flow, as defined in the Partnership Agreement, and are dependent upon the Net Cash Flow, as defined, generated by the Hotel and the adequacy of cash reserves. The amount of each distribution will be determined by the General Partner at the end of each calendar quarter according to economic conditions and the terms of the Partnership Agreement and will be distributed to the Partnership’s limited partners within 75 days of the end of the quarter. However, if a refinancing of the Michigan Avenue is consummated and a special distribution is made in connection with that transaction, there can be no assurance that there will be sufficient cash flows after such a distribution to continue quarterly distributions to the Limited Partners at the current levels.

      There were no material changes to the information provided in Item 7A in the Partnership’s Annual Report on Form 10-K regarding the Partnerships market risk.

      Based on their evaluation, as of a date within 90 days of the filing of this Form 10-Q, the Company’s Chief Executive Officer and Chief Financial Officer have concluded the Company’s disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended) are effective.

      There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II. OTHER INFORMATION

Affiliate Transactions

      The Partnership reimbursed the General Partner for third-party general and administrative expenses incurred on behalf of the Partnership totaling approximately $125,000 during the first quarter of 2003 primarily for investor relations and legal fees. Affiliates of the General Partner, including Starwood, as manager of the Hotels (“Hotel Manager”), received base management fees of approximately $287,000 in the first quarter of 2003. The Partnership accrued incentive management fees, payable to the Hotel Manager, of approximately $614,000 for the first quarter of 2003. The Michigan Avenue paid affiliates of the General Partner $3.5 million in March 2003 related to deferred incentive management fees that were payable based on calculations of Partnership Net Operating cash flow, as defined in the Partnership Agreement. Marketing fees of approximately $123,000 were paid by the Partnership to the Hotel Manager for the first quarter of 2003.

      In June 2000, the Michigan Avenue, leased, in an arms length transaction, its only restaurant to Grill Concepts Inc. (“Grill Concepts”). Grill Concepts operates the restaurant under the name The Grill on the

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Investor Relations

      The Partnership’s investor relations function is handled by Phoenix American Financial Services, Inc. at 2401 Kerner Boulevard, San Rafael, CA 94901-5529. The toll-free number for Phoenix American Financial Services, Inc. is 1-800-323-5888.

Unit Sales

      Through April 30, 2003, the General Partner has processed requests for the transfer of 1,173 Units. Sale requests processed through the date of this filing for 825 Units were in conjunction with tender offers at a range in price of $225.00 to $395.00 per Unit. The remaining 348 Unit sale requests were completed through limited partnership exchanges at a range in price of $330.00 to $465.00 per Unit. The per Unit sales prices are the actual contracted price agreed upon by the respective limited partner and new purchaser. This price does not reflect any reductions in the sales price due to distributions made to the limited partner, as specified by some of the mini-tender offers. Relying on the protection of the 5% safe harbor pursuant to Section 7704 of the Internal Revenue Code, the General Partner will suspend Unit sales once 6,848 transfer requests are completed. The General Partner, however, will continue to accept paperwork for Unit sales for processing in 2004.

(a) Exhibits.

(1)	Incorporated herewith.

(b) Reports on Form 8-K.

      No reports on Form 8-K were filed during the first quarter of 2003.

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SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WESTIN HOTELS LIMITED PARTNERSHIP
	(a Delaware limited partnership)

	By:	WESTIN REALTY CORP.,

	Its sole General Partner

	By:	/s/ THEODORE W. DARNALL

	Theodore W. Darnall
	President, Principal Executive Officer

	By:	/s/ ALAN M. SCHNAID

	Alan M. Schnaid
	Vice President

Date: May 8, 2003

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I, Theodore W. Darnall, certify that:

	1.	I have reviewed this quarterly report on Form 10-Q of Westin Hotels Limited Partnership;
	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
	3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and We have:

	a.	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b.	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c.	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

	5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a.	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

	6.	The registrant’s other certifying officer and I have indicated in this quarterly report whether or not here were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 8, 2003

	/s/ THEODORE W. DARNALL
	Theodore W. Darnall
	President, Principal Executive Officer

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I, Alan M. Schnaid, certify that:

	1.	I have reviewed this quarterly report on Form 10-Q of Westin Hotels Limited Partnership;
	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
	3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and We have:

	a.	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b.	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c.	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

	5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a.	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

	6.	The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 8, 2003

	/s/ ALAN M. SCHNAID
	Alan M. Schnaid
	Vice President

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EXHIBIT INDEX

(1)	Incorporated herewith.

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