Hilton Hotels Corporation could be close to reaching a settlement with Starwood Hotels over its alleged corporate espionage following the departure of Ross Klein, the executive who headed up the group’s Denizen brand.

Starwood, Klein’s former employer, accused him of looting confidential information about W Hotels, which he used to try and launch Hilton Denizen lifestyle brand.

Sources close to the company told The Times that Klein, who had been placed on paid administrative leave in April after the launch of the legal action, has now left Hilton. He is being replaced by John Vanderslice, former chief executive of Miraval Spa in Tucson, Arizona.

The news of Klein’s departure has fuelled speculation that Hilton, which is also being sued, is close to agreeing a settlement over the botched launch of Denizen.

The writ accused Starwood of “the clearest imaginable case of corporate espionage, theft of trade secrets, unfair competition and computer fraud”.

It alleges that Klein, the group’s global head of luxury and lifestyle brands, and Amar Lalvani, a former Starwood colleague who defected with him to Hilton, “stole massive amounts of proprietary and highly confidential Starwood information”.

It alleges that this information “was used to expedite Hilton’s entry into the lifestyle hotel market, reposition its luxury brands and substantially reduce its costs and risks of doing so”.

The suit claims that Mr Klein and Mr Lalvani “directly and through other Starwood luxury brands employees they recruited to Hilton, stole more than 100,000 electronic files before and after they joined Hilton”.

It adds that confidential information on Starwood’s successful W brand was used in the development of the Denizen brand, launched by Hilton in March.