|Barry Sternlicht had previously indicated his intention to step down after hiring Steven Heyer.
Mr. Sternlicht, who also resigned as chairman of the board of directors, will assume the title of founder and chairman emeritus.
The move is not a surprise. Mr. Sternlicht has consistently said he wanted to spend more time with his family and devote more interests to Starwood Capital, the real estate investment and private equity firm that he founded.
In a statement, Mr. Sternlicht said his "commitment to lead the search process for a new CEO and stay through the transition period has been fulfilled."
Ironically, in one of their first interviews together, Messrs. Sternlicht and Heyer contradicted each other several times about the direction of the company, and one analyst openly questioned whether the two "strong personalities" would butt heads.
But Mr. Sternlicht apparently feels strong enough to step away from the day-to-day activities of the business and, subsequently, the move should bolster Mr. Heyer's position.
Starwood shares fell 23 cents to $54.02 in afternoon trading on the New York Stock Exchange.