Now that Starwood Hotels has announced it's to be bought by Marriott International, there's the small matter of state incentives to be worked out.
Starwood completed the move of its headquarters to Stamford from New York in 2012, lured by state incentives, in a deal that was originally struck in 2009 during the Rell administration. Starwood received a $9.5 million loan and $75 million in tax credits. The loan could be partially forgiven based on the company creating 813 jobs. It achieved that target in May of 2014 and received a $7 million forgiveness, but still has a balance outstanding from the original loan.
It got a second round of loans and tax credits in 2014, in return for promising to create more jobs. That $5 million loan has forgiveness based upon the creation of 340 new jobs and the retention of 980 jobs for at least a year. The Department of Economic and Community Development confirmed Monday that Starwood has not yet received forgiveness for this loan, and the company is current on its payments. It's also not scheduled to receive any tax credits until 2018.
And now the picture becomes more complicated. In recent months Starwood has been struggling to grow its market share, and earlier this year ousted its CEO and announced it would look for a sale or restructuring of the company. Marriott announced Monday it will pay $12.2 billion for Starwood - the combined company will be the largest hotel group in the world, with more than a million hotel rooms in 5,000 properties. But that may not be good news for Stamford.
Marriott Chief Financial Officer Carl Berquist told a conference call they’re looking to keep the combined companies’ headquarters in Maryland , and will look for $200 million in annual savings.
"As you sit back and you look at our structure, versus Starwood's structure, the structures are very similar, so we think we'll be able to get some real economies of scale, looking at 'the best of the best' between the two companies," he said.
Neither company will say as yet what the implications might be for jobs, or even Starwood’s presence in Stamford, but Joseph McGee of the Business Council of Fairfield County told WNPR he’s watching it closely.
"Certainly that is a major concern. I mean we have 1,100 employees in Starwood. They're a major member of ours and very active in the community," he said.
The partners said they hope the deal will close by mid-2016, and it's unlikely the final shape of the company will be clear for some time after that. McGee stressed that Stamford is used to corporate mergers and acquisitions reshaping its landscape, but it does bring with it a measure of uncertainty.
"We're hoping that a large chunk of the company will remain here, but you always have to be prepared for the eventuality that they're not."
Meanwhile a spokesman for the Department of Economic and Community Development said it will wait to see if Marriott will assume the agreements the state made with Starwood, and maintain employment here. If not, all of the loan assistance will be repaid, along with a five percent penalty, and no further tax credits would be issued.
