Sep. 28--With room bookings and hotel financing scarce, Starwood Hotels & Resorts Worldwide is poised to seek major changes in its planned 1,120-room "headquarters hotel" at the $800 million convention center being built in South Boston. 

According to industry sources, Starwood is considering a number of options, including a request for public subsidies, a delayed opening, phased construction, and cutbacks in the size of the $264 million hotel. 

Some members of the Massachusetts Convention Center Authority board fear Starwood may even decide to withdraw from the project -- though cancellation could cost the company its $15 million deposit. 

Convention authority leaders are scheduled to meet with Starwood officials today at company headquarters in White Plains, N.Y., to discuss the project and the struggle to find financing. 

Authority officials declined to reveal what they might do to sweeten the deal and to ensure a new hotel is built as planned, next door to the new South Boston Convention and Exhibition Center. 

"It's way too early to speculate about what might happen," said the authority's chairwoman, Gloria Larson. 

"We have a deal with Starwood, and we are moving forward with the project. We are well aware of the marketplace issues and the tough financing climate, but we have not been notified that they are seeking any changes in the deal." 

Since the terrorist attacks, Starwood's stock, like most of the leisure industry's stocks, has nose-dived, and Starwood has announced that it is cutting its US work force by 23 percent. 

Starwood's chairman and chief executive, Barry Sternlicht, told analysts the company was delaying, deferring, or freezing work on planned projects over $3 million. 

Starwood owns both the Sheraton and Westin hotel chains. 

"It was brutal [to find financing and build hotels] before, and it's gotten increasingly difficult," Sternlicht said. "We are reviewing our projects with owners and partners and saying maybe this will be delayed." 

In a conference call, Starwood did not mention the Boston convention center hotel specifically, and company officials did not respond to the Globe's requests for an interview this week. 

Many observers expect Starwood will ask for tax relief or credits to offset the projected shortfall of business at the new facility. 

Sternlicht is leading the industry's lobbying campaign on Capitol Hill for a federal bailout of the tourism industry. 

Starwood won the hotly contested campaign to become the anchor hotel for the new $800 million Boston convention center in November 1999, by offering a package of base rent and a percentage of gross revenues estimated to be worth $629 million over 50 years. 

At the time, the authority's board members crowed that the "unprecedented agreement" with Starwood not only excluded public subsidies but required the hotel company to pay rent. 

Within weeks of winning the designation, though, Starwood officials were quietly floating a variety of subsidy options, including financing the project with federal tax-exempt bonds. They were rebuffed by state and local officials, but negotiations dragged on for months as Starwood struggled to find financing. 

In November, authority officials threatened to pull Starwood's designation, but the hotelier finally posted a required $15 million deposit. In turn, the MCCA agreed to renegotiate the rent downward, to a package estimated to be worth $421 million, or $8.4 million a year, versus the $12.6 million specified in the original deal. 

In the meantime, Starwood continued to search for investors. At one point, FleetBoston Financial Corp. expressed interest in offering a construction loan, and Starwood talked with the AFL-CIO's real estate investment fund about investing, but a financing package remained elusive. As a result, business sources in Boston and New York predict Starwood will soon ask the authority for further givebacks. 

Should Starwood seek major changes in its deal, the board could decide to rebid the contract rather than offer a subsidy or incentive package to Starwood. In that case, other contenders, such as runner-up Marriott International, which bid along with local partner Boston Properties, and Hilton Hotels & Resorts, which had teamed up with local developer Steve Karp, may choose to place another bid -- assuming, of course, they can find financing. 

Even developer Nicholas Pritzker, who has slashed the size of his family's waterfront project near the convention center site, has hinted he might be interested in building the anchor hotel if subsidies were included, business sources said. Pritzker's family controls the Hyatt hotel chain. 

At the same time, construction of the $800 million publicly financed convention center project is moving forward. Electrical, plumbing, and other major contracts will be awarded shortly. Within the next two months, roughly $500 million of the $800 million project will be committed. 

The Starwood hotel, to be built adjacent to the convention center, was expected to play a key role in making it a success and in ensuring further development of the Seaport area. Starwood had agreed to reserve 75 percent of its rooms for conventioneers. It was also committed to opening the hotel at the same time the convention center opened, now scheduled for 2004. 

But to meet that deadline, Starwood will have to break ground early next year. Even convention center boosters agree that seems unlikely, and many expect the new hotel won't be completed until a year after the new center opens its doors. That would make it hard to persuade groups to book space at the new facility during the first few years. There are no firm bookings for 2004 yet, authority officials said. 

Critics, including the Pioneer Institute, continue to question the need for a new convention center. 

"There is absolutely no market for a new, bigger convention center here in Boston -- and without an anchor hotel, the project is destined to be a disaster," said Charles Chieppo, a spokesman for the Pioneer Institute. "There is not a convention center headquarters hotel in America that has been built without subsidies . . . and after Sept. 11, the amount of subsidies that are going to be needed are dramatically higher." 

With state subsidies for the existing Hynes Convention Center in Back Bay now running at roughly $20 million a year, political leaders are skeptical of additional subsidies. 

And while the legislation authorizing the new convention center specifies the Hynes must remain open, state Secretary of Administration and Finance Steve Crosby has suggested that after the center opens, the authority may opt to sell Hynes to pay down the debt on the new center. 

Planners originally estimated bookings would gradually increase to full capacity within 10 years, but given the current economic climate, authority officials acknowledge the "ramp up" could take longer. 

The Greater Boston Convention & Visitors Bureau recently commissioned a study on how the market for the convention center has changed since lawmakers agreed to fund the waterfront project four years ago. The results of the study, being conducted by PricewaterhouseCoopers, are expected next month. 

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