"I feel a great sense of responsibility and proprietorship for the company, but it has become increasingly difficult for me to fulfill that global responsibility in the face of the needs of my family and my other activities," he says.

Sternlicht, who has served as CEO since 1995, will co-chair a search committee of Starwood's board of directors to help identify and select a successor. Upon the CEO's selection, Sternlicht will become executive chairman. In that role, he says he intends to reduce the day-to-day role and focus on long-term strategy. He also expects to "provide guidance on capital investment and real estate matters, nurture the expansion of the W brand, and fill a meaningful ambassadorial role for the company."

Another reason Sternlicht cited was his belief that a growing "best practice" in corporate governance is the separation of chairman and CEO positions.