The salary freeze will affect about 20 of Starwood's 8,500 employees in Hawai'i, said company spokesman David Uchiyama.

Top executives, hotel managers and some of the company's regional staff will be the only ones to see no increase in pay next year in Hawai'i, Uchiyama said.

Starwood manages Sheraton's four Waikiki properties – the Sheraton Waikiki, Princess Ka'iulani, Sheraton Moana Surfrider and The Royal Hawaiian – and 10 other hotels in the state.

Starwood Chairman and Chief Executive Barry Sternlicht mentioned the salary freeze on a conference call today.

The company hasn't frozen salaries previously, he said.

Starwood, the largest hotel owner, also said today it will earn less than expected in 2003 as companies cut back on business travel spending. The company's third-quarter profit rose 73 percent as a drop in interest and tax expense made up for little revenue growth.

Sternlicht said the company would emphasize marketing to companies that are spending more on corporate travel, such as drug companies.

"You can't go after Lucent or Nortel when they've laid off 100,000 people," he said.

Starwood also wants to sell $500 million in assets by the end of 2003, Sternlicht said.

The company said net income for the third quarter rose to $52 million, or

26 cents a share, from $30 million, or 14 cents, a year earlier. Revenue rose less than 1 percent to $970 million. Profits were about half what they were in the same quarter in 2000.

"Corporate America is not having a good year," said Steve Burton, an analyst with Clarion CRA Securities, which oversees $2 billion of securities under management, including shares of Starwood. "One line item they're going to slash and burn is corporate travel and entertainment."

Business travel, the most profitable for hotel companies, is below 2000 levels, and about 75 percent of Fortune 1000 companies will spend the same amount or less on travel in 2003, Bear Stearns Cos. found.

Results for the quarter matched Wall Street's expectations, based on the median estimate of analysts polled by Thomson First Call. Starwood shares fell $1.10 to $22.82 in afternoon trading on the New York Stock Exchange, and are down 24 percent this year.

The White Plains, N.Y.-based company said it will earn 20 cents a share to 25 cents in the fourth quarter, and $1.15 a share to $1.30 in 2003. Analysts were expecting a profit of 38 cents a share in the final three months of the year, and $1.32 in 2003, according to First Call.

Starwood owns 165 hotels and has a stake in, manages or franchises 740 properties worldwide. The company's owned hotels include New York's St. Regis and Sheraton Manhattan hotel, Chicago's Westin Copley Place and the Sheraton Chicago.

On the basis of revenue, Starwood is smaller than Marriott International Inc., which gets most of its sales from managing and franchising.

Hilton said yesterday that it would earn in the "mid to high 50-cent range" in 2003, below analysts' estimates of 60 cents.

Starwood's revenue per available room, a measure of average occupancy and room rate, fell 2.7 percent at its owned North American hotels.

For the year, revenue per room will fall 5 percent to 6 percent. It will rise 2 percent to 5 percent in 2003, the company said.