Starwood Lured to Connecticut With Tax Credits and Loans

Starwood Hotels & Resorts Worldwide Inc. will move its headquarters from White Plains, N.Y. to Stamford, Conn. by 2012 because of $80 million in tax credits and an almost $10 million loan from the Connecticut Department of Economic and Community Development, Starwood announced today.
Frits van Paasschen, Starwood's president and chief executive, said the company expected to see a 20 percent drop in rent for its new 250,000-square-foot digs in downtown Stamford. In August, Hilton Hotels Corp. also moved its headquarters from tony Beverly Hills to suburban Virginia to cut costs.

Starwood has been one of the few chains that has been expanding throughout 2009 and plans to continue to do so in 2010. But despite the expansion, Starwood, like most hospitality chains, is bleeding cash. As I wrote earlier according to documents filed with the U.S. Securities and Exchange Commission, Starwood is more than $3 billion in debt and those notes, on average, reach maturity in the next four years. Two weeks ago Starwood sold off its Bliss spa and product line for $100 million to raise cash and this latest move will save the company close to that same amount via tax incentives and loans.

I predict other hotel chains will also begin shopping around for tax breaks and financing at a state near you.