Tory leader blames Covid for Hilton hotel failure

The Hilton Garden Inn in Fletton Quays remains unfinished despite works starting eight years ago

A Hilton hotel project failed in a city due to the Covid pandemic and building material costs rising "three times", a Conservative city group leader said.

In 2017, Peterborough City Council borrowed £15m from the government for the scheme in Fletton Quays and loaned it to developers. By 2020, the project had stalled, and the firm went bankrupt in 2023.

The local authority is now seeking a buyer for the unfinished hotel and hopes to recoup the investment.

Councillor Wayne Fitzgerald, leader of the Conservative group in Peterborough, said: "On paper, it seemed a very good idea at the time [and I] would have agreed to the hotel, but I wouldn't have agreed to lending the money for the project".

What do councillors think?

Wayne Fitzgerald said he did not agree that the failure of the Hilton project was solely the Conservatives' fault and called it a "collective responsibility of the council"

The deal was fostered under the leadership of a former Conservative Councillor in 2017.

"A lot of people think it was me that authorised the signing of the hotel, it wasn't, but we have collective responsibility and the decision to do the deal was put to council and voted through", Mr Fitzgerald said.

"Unfortunately, who knew something called Covid would come along, where the construction costs would skyrocket. The developer got into trouble with costs, which were not the council's fault.

He continued: "I also think offices have not been strident enough to find a practical solution."

Despite the setbacks, Mr Fitzgerald said he remains confident the hotel will be completed.

"With my wider role as a planning commissioner for the county's mayor...we want to see Peterborough grow, and this would be a great addition to the skyline," he added.

'Huge mistake'

Christian Hogg believed the Hilton hotel, when finished and operating, "will be a great asset to the city"

Leader of the Liberal Democrats, Councillor Christian Hogg, described the situation as an "unfortunate saga" and said disposal is the "best course of action for the council".

"This deal was done by the previous Conservative administration with the promise it would bring much-needed profits into the council, and has ended up costing us millions.

"Clearly, this was a huge mistake, and there doesn't seem to have been any ramifications for those involved."

Leader of Peterborough's Green Party, Councillor Heather Skibsted, said: "We hope this news means we can recoup a significant sum back from what has been described as a failed project by the council.

"The Green Party continue to demand more controls and scrutiny around decisions that affect council finances, and this is a clear example of where controls have been inadequate"

'Best possible outcome'

The council said to complete and operate the hotel, it would require "significant additional borrowing", so its cabinet will be asked to approve selling the asset through administrators on 2 October.

Previous attempts to sell the building fell through after a prospective buyer walked out.

Mohammed Jamil, a Labour councillor and cabinet member for finance and corporate governance, said: "It is also clear that the council does not have the skills and expertise in-house to manage the operation of such a specialised asset."

Labour MP for Peterborough, Andrew Pakes, said lending the money to the company, which then went bankrupt, was "one of the craziest things the councils have ever done".

"I have sympathy for the current administration; they have inherited the problems, but I think now cutting your losses and getting back to business is the best course of action," he said.